Southeast Asia ripe for flexible pack growth despite eco-challenges

By Neil Merrett

- Last updated on GMT

Related tags Southeast asia Packaging

Flexible packaging suppliers could see strong growth for their products in the food markets of South East Asia, though a parallel rise in environmental concerns may require further investment and developments in biodegradable alternatives, suggests a new report.

According to analyst Frost & Sullivan, demand within the region for flexible pack products is expected to reach $2.2bn (€1.57bn) by 2015, with market value standing at $1.41bn (€1bn) at the end of last year.

The report says that growth in demand of food exports in South East Asia, particularly across countries like Thailand, Indonesia, Malaysia and the Philippines, due to increasingly affluent consumers, has already seen a number of multinational groups move into the area.

Despite growing potential in this market place, the analyst says that a number of challenges still await food processors and pack groups looking to take push flexible products. Development of bio-plastics and wider fears about material costs were two issues high up the agenda.

Eco challenge

Environmental concerns have been identified as a key area for development amongst packaging suppliers in Southeast Asia, with a mixture of consumer education and improved technology required to ensure the segment can prove to be feasible from both a cost and sustainability standpoint.

“This may lead to more widespread usage of bio-plastics in the future,”​ states the report. “In Southeast Asia, bio-plastics are currently perceived as a niche market, while being beset by cost and performance issues.”

To some degree, while work is still required in developments of biodegradable packs in the region, products that are being linked to certain sustainability benefits are already being see on the market, says the analyst.

According to the report, flexible pouch products with re-sealable closures are one example of market developments that may offer reducing energy use and carbon footprints in the supply chain.

Potential greener benefits linked to the packs, which were also linked to cost reductions, were seen by Frost & Sullivan as a key factor driving shifting interest from consumers and processors from rigid packaging designs.

“Flexible packaging scores better than rigid packaging in terms of solid waste generation,”​ claims the analyst. “This trend of favouring flexible packaging over rigid packaging acts as a key driver for growth.”

Material volatility

However, in light of global fears relating to the economic downturn, the report says that volatile raw materials costs remain at the heart of all manufacturer concerns, particularly in packaging choices.

“When the price of raw materials escalates, the higher cost cannot be passed on to food companies completely due to fierce competition in the packaging market,”​ states Frost & Sullivan.

With polymer resins though to account for 60 per cent of production costs in relation to packaging materials, the report suggests that all plastic packagers will be put under pressure to evaluate their production costs.

In looking to the future, the reports says that more affluent middle-class consumers will be looking for food products and packaging that can meet changing lifestyles across Southeast Asia.

“The growth in demand for exports is another factor enhancing the food industry, consequently driving the food packaging industry,”​ states Frost & Sullivan. “Changes in technology and the replacement of rigid packaging with flexible packaging also act as catalysts for market expansion.”

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