How are your FMCG products, confectionaries, frozen foods packed ?

Its Flexible packaging !!!

Siddharth K S , Research AssociateChemicals and Materials – South Asia & Middle East

23th March 2011

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Today’s Presenters

Siddharth K S, Research AssociateFrost & Sullivan

Tanu Chopra, Assistant Manager, Corporate Communications Frost & Sullivan

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Focus Points

• Research Scope

• Market Overview

• Product & Geographic Segmentation

• Product Lifecycle

• Market Forecasts

• Industry Challenges

• Key Market Drivers & Restraints

• Competitive Scenario in the GCC

• Key Competitive factors

• Conclusions

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Research Scope

Market: Flexible Packaging

Region: GCC

Study Period: 2006-2016

Market: Flexible Packaging

Region: GCC

Study Period: 2006-2016

This research service analyzes the GCC flexible packaging market from 2006 to 2016. The base year of the research is 2009. There are several end-user segments such as food and beverages, pharmaceuticals, consumer goods, and other industrial applications. This research study mainly analyzes the film production in the GCC.

Film Manufacturers Converters End UsersResin ManufacturerResin Manufacturers

SABIC

QAPCO

TASNEE

Oman Polypropylene

Taghleef Industries

Novaa Industries

Flex Industries

Napco Group Arabian Packaging

Sun Packaging

Manama Packaging

Printopack

Nestle

Masafi

KraftAl Marai

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Market Overview

• The GCC flexible packaging market is one of the fastest growing sectors in the packaging market due to its extraordinary growth in the past decade. The significance of GCC flexible packaging market is justified by the ease of minimizing the package size, extended shelf life and dynamic shift in user’s mind to convert to flexible packaging over the rigid packaging.

• UAE is the largest manufacturer for flexible packaging in GCC with a share of 46%, followed by KSA (32%) and rest of GCC (22%).

• The foods industry is the largest end user of flexible packaging with 60% market share while FMCG holds 25%, Medical industry holds 10% and others constituting 5% of the market. Market Share Split by Key Regions (GCC),2009

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan

Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan

Market Share Split by Key End-user Industry (GCC),2009

Kingdom of Saudi Arabia

32.0%

United Arab Emirates

46.0%

Rest of GCC22.0%

Food60.0%

FMCG25.0%

Medical10.0%

Others5.0%

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Product Segmentation and Geographic Segmentation

The GCC flexible packaging market has been divided into three segments, namely Kingdom of Saudi Arabia, the United Arab Emirates, and rest of GCC (which includes Kuwait, Oman, Qatar, and Bahrain). Within each region, the market is segmented by different product categories, such as polypropylene, polyethylene, polyvinyl chloride, polyester and others.

Product Segmentation

Polypropylene

Polyethylene

Polyvinyl chloride

Polyethylene terephalate

Others (polyamide, polyolefin, polycarbonate)

Geographic Segmentation

Rest of GCC (Kuwait, Qatar, Bahrain and Oman)

United Arab Emirates (UAE)

Kingdom of Saudi Arabia (KSA)

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Product Life Cycle

IntroductionGrowth

Maturation Decline

Time

Use of Flexible

packagingMaterial

The polyethylene based packaging market has attained the maturity level, with HDPE,LDPE, and LLDPE product segments. BOPP and

CPP are extensively used in flexible packaging for laminating and printing. Polyolefin and polyamide are in their growth stages, mainly

due to their barrier properties. The bio based films made from starch and cellulose are eco friendly and are gaining importance in the

packaging market.

Total Flexible Packaging Market: Product Life Cycle (GCC), 2009

Source: Frost & Sullivan

POF

PVC

PET

PE

PA

PP

BioBio Based Films

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Market Forecasts

0

100

200

300

400

500

600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

-1

1

3

5

7

9

11

KT/Year

Growth Rate (%)

KT

/Yea

r

Unit G

rowth

rate (%)

Year

CAGR : 8.4 %

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Industry Challenges

• Environmental Concerns

• Fluctuating raw material cost

• Lack of proper marketing of flexible packaging

• Political Climate

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Key Market Drivers and Restraints

Higher preference Towards processed And packaged foods

Growth inFMCG & Retail

Sector

Replacement/Substitution of

Rigid Packaging

Increased Competition from

Countries like IndiaAnd China Preference towards

Low cost and low Quality packaging

Key Drivers

Key Restraints

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Competitive Scenario in the GCC

•KSA is the leading end user of flexible packaging in the GCC.

•Major suppliers of flexible packaging films are Gulf Pack, Napco, Obeikan flexible packaging & Olayan flexible packaging among others.

• Major film manufacturers holds about 75% of the market

• KSA has fewer flexible packaging film manufacturers. Thus, the raw materials are imported from other GCC states and also from other countries in Asia, Europe, and the United States. The films procured from other countries are processed into flex packs by the converters operating in the region.

Kingdom of Saudi Arabia United Arab Emirates

•UAE is the leading manufacturer of flexible packaging in the GCC.

•Major suppliers of flexible packaging films are Taghleef Industries , Flex Middle East FZE, JBF Rak LLC, Novaa Industries among others.

• Major film manufacturers holds about 74% of the market

•UAE is also a leading end user of flexible packaging in the GCC , behind KSA.

•With free trade zones and friendly government policies, UAE is witnessing high foreign direct investment.

•There is minimal imports of films into the country. There are also lots of converter companies operating in the country.

•The flexible packaging market in the rest of GCC region is at very nascent stage.

•There are a few convertors who operate in the region with capacities to manufacture basic polyethylene films internally.

•The main film manufacturer in the region is Taghleef Industries at Sohar ,Oman and Qatar Plastic products company.

•The other major companies with limited film production capabilities in the rest of GCC region are Manama Packaging in Bahrain , Sun Packaging and FIPCO in Oman.

• With Qatar, winning the bid to host the football world cup, the scene is poised to change in the rest of gcc region.

Rest of GCC- Qatar/Oman/Kuwait & Bahrain

12P3F7-39

Key Competitive Factors

Product quality and innovation

Market Responsiveness

Distribution network

Customer service

Price

Market Leader

Source: Frost & SullivanSource: Frost & Sullivan

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Conclusion

CONCLUSIONS

The GCC flexible packaging market is currently growing at CAGR of 8.4%. The major powerhouses for the flexible packaging are the countries like UAE , KSA and Qatar. Qatar, especially with an impressive GDP and with the license to hold the world cup showcases immense potential for growth in the flexible packaging market. UAE has most number of converters and film manufacturers in the region, while KSA holds the largest market share. With the economic recovery and preference towards processed foods , the GCC flexible packaging market is at the threshold of attaining global importance for packaging. Another major emphasis is on the environmental impact of packaging. The concept of sustainable packaging is seen to be taking shape in the region. The 3 R of recycle, reduce and reuse are being practiced by most of the companies operating in the GCC region.

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Key Industry Participants

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For Additional Information

Vishnu Shankar Industry ManagerChemicals and Materials Practice+971 44 33 1882vshankar@frost.com

Gayathry RamachandranResearch ManagerChemical and Materials Practice(91)-44 -6681 4303gayathryr@frost.com

Tanu ChopraAssistant ManagerCorporate Communications, MENA+91.22.6607 2037tanu.chopra@frost.com

Ravinder KaurAssistant ManagerCorporate Communications- South Asia+91 44 6160 6666Ravinder.kaur@frost.com