Packaging Demand Surges with E-commerce Growth

Global e-commerce sales grew 13% in 2017, hitting an estimated $29 trillion, according to the latest UNCTAD data. This is primarily due to a surge in the number of online shoppers. With the increasing population, rising demand for packaged foods, and the numerous growth opportunities offered across different regions, many food manufacturing multinational companies (MNCs) are setting up their manufacturing facilities, which, in turn, is increasing the demand for packaging and boosting the demand for adhesive equipment. The Asia-Pacific region is the largest consumer in the packaging industry, owing to food in major economies, such as China, India, and Japan. India is one of the major consumers of packaged foods and beverages. The Indian packaging industry's turnover is expected to reach USD 80 billion by 2022 growing at an annual rate of over 10-12% per year. In Japan, the food and beverage industry is expected to reach USD 22,200 million by 2023. This growth is attributed to the increase in demand for packaged food and beverages and increasing consumer’s affordability. Furthermore, in the United States, the packaging market is worth USD 280.3 billion in 2022. It is estimated to witness a CAGR of about 5%, by revenue, during the forecast period (2020 to 2025).  This expected growth in the packaging industry, especially the food and beverage packaging industry, is expected to influence hot-melt adhesives equipment demand positively.

Earlier, adhesive equipment was designed only to use either a hot melt applicator or cold glue applicator. A wide range of technological advancements is currently taking place concerning applicators, becoming a motivation factor for adhesive equipment demand.   Adhesive manufacturers and dispensing equipment suppliers can partner in helping disposable hygiene manufacturers efficiently produce higher quality products while reducing costs.

The COVID-19 pandemic is harming the global economy, disrupting industrial investments and activities in 2020. The virus has hit all the major economies globally. Some states or regions have been under complete lockdown, and many factories are running on minimal staffing or even closed temporarily. Countries like the U.S., India, Japan, Italy, and France are among the novel coronavirus's hard-hit markets. The activities' levels are deficient in the manufacturing sector, and production halted in most non-essential industries, and many project schedules changed or postponed. Due to all these interruptions, industrial activities and plant construction projects have also been affected across all industries. Such a global scenario has been creating negative repercussions on the global adhesive equipment market for the existing plants in the end-user industries, such as automotive, electronics, and construction industry were temporarily shut down all across the world.

The adhesive equipment market is estimated to witness a Y-o-Y growth of 5.69% in 2019. However, the annual increase is likely to turn negative at -2.70% in 2020 owing to the disruptions caused by the pandemic. Production halts in H12020 led to lower demand for adhesive equipment from automotive, electronics, construction, and several other industries. However, the packaging industry has witnessed positive growth with increased e-commerce sales and demand for hygiene packaging in food and other industries. This has led to the increased demand for adhesive applicators during the pandemic. India is one of the worst affected countries, with the second-largest number of cases. The government has entered a complete lockdown scenario in late March, and the economic activities have been resuming slowly in a step-by-step manner from early August. A recent report by the National Statistical Office (NSO), the country's GDP contracted by 23.9% in the April-June period (Q1) of 2020. 

Moreover, the United States is one of the largest construction industries in the world. The construction investments in the country have been decreasing due to rapidly growing cases. The country's construction spending has declined from USD 1,436.73 billion in March 2020 to USD 1,364.57 billion in July 2020. However, hotels' construction is expected to dip by 1% in 2020 and 0.7% in 2021. On an optimistic note, office spaces' construction is expected to increase by 0.5% in 2020 and further by 3% in 2021. According to Euroconstruct, the construction growth in Europe has reached the highest level in 2017 and is expected to grow up to 2022. The growth rate in 2020 before the corona outbreak is expected to be 1.1% compared to 2.3% in 2019. With the pandemic's explosion and almost zero economic activity, the construction growth rate is expected to be negative. It is likely to impact the market studied on a short-term basis.  The automotive industry witnessed a slowdown over the last two years. According to OICA, the automotive production in 2018 decreased by 1.1% with 95.6 million vehicles, followed by the decline of 5.2% in 2019 with a total production of 91.79 million vehicles. 

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