Increasing demand for flexible packaging
- Hectic lifestyles of consumers and changes in consumer preference for more suitable and portable packaging materials drive the growth of the flexible packaging industry in Indonesia. In addition, demographic factors such as the increase in disposable income and the rise in spending capability also boost the market growth of the flexible packaging industry in Indonesia.
- With increasing busy lifestyles, consumers are demanding smaller, on-the-go packs that are readily available in Flexible packages.
- For instance, the population in Indonesia is increasing at a rate of 1.1 percent and reached around 270.6 million in 2019. and more than 50 percent of the population in Indonesia live in urban areas. To cater to the need for a huge urban population that mainly depends on various packaged goods, many local and international packaging industry players are active in Indonesia, driving the market growth of the flexible packaging industry.
- Food & beverage industry is one of the leading end-users of the flexible packaging market in Indonesia due to various conveniences offered by it. For instance, the value sale of Packaged food and drinks in Indonesia accounted for USD 33 billion in 2015 and is expected to reach USD 56 billion by 2020. The demand for ready to go food parcels by young working Indonesian citizens is driving the market growth.
- Various food and other good industries in Indonesia are in need of specialized packaging style and labeling, which drives the innovation in the flexible packaging market.
- For instance, the halal industry in Indonesia has become one of the most competitive industries due to the vast Muslim population of more than 200 million (2nd largest Muslim populated country) and has promising business industry prospects.
- Factors such as Internal social and political forces in Indonesia have helped in the implementation of mandatory halal certification for domestic producers of food products that need specialized packaging solutions. The requirement of such specialized packaging is driving the growth of the Indonesia flexible packaging market.
- On October 17, 2019, exclusive Halal Product Law (“Halal Law”) was implemented in Indonesia, which has hugely affected the food & beverages industry in the country as food companies have to change their packaging, labeling and certification method according to the law. This law has created a new opportunity for flexible packaging market players to acquire more market share by their new halal-certified packaging methods.
- Regardless of a lack of acceleration in economic growth, Indonesia has been able to attain macroeconomic and financial constancy. The balance of payments has been increasing since 2016, with a narrow account deficit of below 3.0% of GDP—and a surplus trade balance has provided smooth cash flow to the middle class and has increased the per capita income.
- The increase in income has also affected the purchasing capability of the substantial middle-class population of Indonesia is driving the flexible packaging market due to growing business in necessary industrial sectors such as food & beverages, pharmaceuticals etc.
Increasing innovation in packaging material and machinery
- With time, machinery is becoming more complex than ever, providing higher speeds, customizable features, and diversity in function. The invention of high-pressure processing (HPP) is one of the examples. This technology drives production, food safety, and food quality to a whole new level with the help of IoT and machine learning. The development in technology will create quality products with less time, creating more opportunities in the future.
- Now, brand owners are focusing on sustainability which shifts the focus from plastic packaging to various other alternatives presenting new opportunities for the companies.
- For instance, bioplastics have grabbed much attention and provide opportunities for growth. This market segment comprises biodegradable, marine-degradable, compostable, PCR, and recyclable packaging options. According to the industry insiders, the market has the potential of growing with above 30% CAGR.
- Additionally, improvement in recycling technology drives the companies to shift from linear take-make-dispose model to circular model to protect the environment.
- For example, The CEO of Unilever suggested the consumer goods industry to “abandon the linear take-make-dispose model of consumption and adopt a truly circular model that emits no waste.” Walmart also has pledged to have 100 percent of its private-label products in recyclable packaging by 2025.
- In addition, innovation in digital printing is making speed-to-market better and faster than ever, enabling just-in-time (JIT) systems to function more efficiently as well as enabling customization, portion packaging, and small-run printing, which will boost the Indonesia flexible packaging market further.
- Smart packaging is another technological improvement that is niche yet has the highest potential to grow. It refers to packaging with embedded sensors and is applicable with foods, pharmaceuticals etc. The combination of flexible packaging with smart monitoring systems is expected to create a new product portfolio for the flexible packaging market.
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