Jun 19, 2020
Covid19 Impact on Paper and Packaging in the Materials and Packaging Industry
- Materials & Packaging
- May 16, 2020
The coronavirus pandemic is causing widespread concern and economic deprivation of business, consumer and communities all over the world. Manufactures encounter several challenges due to this crisis paper and packaging producers are no exception. Self-isolation has resulted in short supply and plethora of manufacturing units is sourcing supply chains away from china.
The impact of covid-19 on the packaging industry will have mixed impact and it depends on their portfolios to different end-users of packaging. Most of the packaging manufacturers supply their products and services to important industries including pharmaceutical packaging, packaged food, labelling of hand sanitizers and disinfectants, and packaging of soaps, detergents and hand washes which are currently in high demand. However, without significant packaging, entire food, pharmaceutical, and consumer goods industry will collapse.
China is considered to be the leader in the packaging sector and economy is likely to decrease up to 50 % during and after the pandemic, due to all the companies who are relying on China for packing is now shifting their businesses to other countries such as India.
China, which is the leader in the packaging sector, lost its clients, and its economy is likely to decrease up to 50% during and after the pandemic. This is because all the companies who were relying on China for packing are now shifting their businesses to other second world countries such as India. Also, after the control of coronavirus outbreak, many companies prefer to rely on other nations rather than China.
IMPACT OF COVID19 ON DIFFERENT PACKAGING INDUSTRY
- Food and Beverage Packaging Industry
The food and beverage segment plays a vital role in packaging industry. The primary reason of the food and beverage industry before the pandemic includes the increase in on-the-go consumers and rise in adoption of packaged and ready to eat food products. The outbreak of covid-19 pandemic has mixed impact on this segment. Offline food chains which includes cafes and restaurants which are entirely closed in all the regions which will impact negatively in the market. Moreover, the packaged food and beverages are witnessing an upsurge in the demand, due to rise in necessity food products, and shelf stable foods. China is the largest importer of dairy products is down with 30%-40% with the world market. However, demand of grocery segment, dairy products segments increases and it drives the revenue of the manufactures of vacuum packaging, trays, protective films, including PVC film and shelf life-extending modified atmospheric packaging and others.
Companies such as Coca Cola have experienced a delay in supply chain and unable to receive raw material from China consequently, experienced delay in production.
The US Food and Drug Admiration announce that it will provide temporary flexibility regarding nutrition labelling on packaged food during the pandemic.
- Healthcare Packaging Industry
Pandemic will not hamper the growth of packaging products in healthcare industry. Plastic which is banned by the government is back in the business due to the pandemic. The plastic sector has the highest demand and several manufactures has started using plastic for health care safety. In the current situation, the government has allowed running of packaging plants with minimal strength. However, due lack of workforce, shortage in raw materials, and transportation restrictions hamper the supply of products. Demand will rise for specific products including dietary supplements such as flexible blister foils, closures, rigid plastics, pumps, to name few.
- E-Commerce Packaging Industry
E-commerce also encourage social distancing, due to which there has been an exponential rise in online purchase of necessity consumer goods including grocery and hygiene products drive the growth of packaging industry. E-pharma, e-consultations, saw 55%-70% spike in the growth. Moreover, initial raise in food delivery declined in second phase over the world. However, there has been a decline of 25%-30% in electronics, including mobile phones as China accounted for most cases of COVID-19 and as per the International Trade Union Federation (ITUF); the country is the largest producer of the electronics and its parts globally. Protective inner packaging, flexible padded pouches, and traditional corrugated cardboard boxes are benefiting significantly from the increase in ecommerce spend.
POSITIVE IMPACT ON DEMAND BY COVID-19
WHAT STRATERGIC INITIATIVES ARE COMPANIES IMPLEMENTING DURING COVID-19?
- Berry Global is running its nonwoven production lines in the Europe, Asia, and U.S. at maximum production levels to attempt to meet demand for the critical input for N95 masks. In U.S., the demand of N95 and other masks is expected to be 3.5 billion masks in 2020.
- Plastic packaging supplier Amcor, for instance, is operating its production sites of food and healthcare solutions.
- Berry M&H target the production of frontline packaging products including, inhalers, hand sanitizers, and disinfection products for household and commercial purpose. The company also offers several off the shelf packaging solutions to underpin its supply chain.
- INEOS plans to build a hand sanitizer plant within ten days so that, it can produce on million bottles per month.
- IN the UK, The British Plastics Federation (BPF) surveyed about the effect of pandemic in UK packaging industry, almost 80% of the companies surveyed expected a drop in turnover and around 90% anticipated supply chain issue.
- International Paper, a leading producer of renewable fiber-based packaging, pulp, and paper donates corrugated boxes and paper to local organizations which will help addressing immediate hunger, hygiene, and other needs.
- Apart Group has working manufacturing facilities which are providing food, healthcare products, and consumer products. Broadly company is providing dispensing and packaging solutions for antibacterial soaps, lotions, hand sanitizers, surface disinfecting, infant nutrition closures, valves, nasal spray pumps, to name a few.
- Aptar Italia produced GSA pumps for Spanish manufacturer Laboratories Maverick, enabling it to speed up production of hand sanitizers for Spanish hospitals
- Georgia-Pacific has doubled double the normal demand for items such as toilet paper and sanitizing products.
With some manufacturers shutting down production or shifting to new products that are essential to fight the pandemic, forest, paper and packaging companies need to remain focused and nimble to navigate this crisis.
Manufacturers are aiming to achieve optimum business growth through the implementation of various strategies such as increasing production capacity, new product launches, product availability. The rapid growth of packaging in sector such as healthcare, e-commerce, food and beverage, and others is anticipated to offer favorable opportunities for the key players operating in the market. Factors such as the distribution and sales locations are expected to help in strengthening the overall position of the companies. Domestic small players and emerging players especially in developing countries are likely to gain opportunities to establish themselves in the market.
WHAT THE FUTURE FOR THE PAPER AND PACKAGING INDUSTRY?
In line with the conclusion, the packaging industry has less impact due to coronavirus pandemic. Global supply chain is set for a major over haul as the pandemic has exposed the vulnerability of countries and companies. Several packaging companies have started re-evaluating their supply chains and are in the process of shifting their supply chains to other countries. However, plastic manufactures conclude the issue as short-term. However, with some manufacturers shutting down production or shifting to new products that are essential to fight the pandemic, forest, paper and packaging companies need to remain focused.
The pandemic has also show case Indian pharmaceutical companies an opportunity to become an alternative hub for manufacturing of intermediates which will consequently rise the demand for domestic packaging manufactures and suppliers.
Proper availability of raw material is a greater concern for the market. If the raw material is not available in the appropriate quantities, according to consumer demand, the production cannot be done properly, due to which manufacturing has to face losses and business growth happens at a very low rate. Now plastic and paper is used as raw material for many products. Thus, on conclusion, due to the decline in the availability of the proper quantity of raw materials for the production of packaging type, it will hamper the impact the packaging industry drastically.