- Plastics outperforms traditional materials and gains favor among food retailers
BUENOS AIRES, Argentina, July 12, 2012 /PRNewswire/ -- A favorable economic climate and a rising middle class, fostered by government policies to reduce poverty, have increased disposable incomes, food and beverage consumption and thereby, plastic packaging uptake. Argentina's economy was reasonably insulated from the economic downturn, lending some stability to its gross domestic product (GDP) growth rate, which is expected to grow at 6 percent in the next few years and stabilize at 3.5 percent by 2017.
New analysis from Frost & Sullivan (http://www.chemicals.frost.com), Commodity Plastics Market for Food and Beverages Packaging in Argentina, finds that the market earned revenues of $1.25 billion in 2010 and estimates this to reach $1.91 billion in 2017. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: polypropylene (PP), linear-low-/low-density polyethylene (LL/LDPE), high-density polyethylene (HDPE), polystyrene (PS), polyvinyl chloride (PVC), and polyethylene terephthalate (PET).
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Growth in GDP rates directly influence commodity plastics consumption, where for every GDP point, the PP segment grows by 1.2 percent, and PE by 1 percent. The demand for food and beverages is growing at 4 percent and is expected to mirror the growth rates of the GDP. The requirement for food, and hence plastic food packaging, is non-cyclical and 'income inelastic.'
Consequent to the economic stability, supermarkets are thriving in Argentina and retailers hold a lot of sway over the type of packaging used in the food and beverage industry. Food retailers require packaging that extends shelf life, as it allows them to better manage their logistics and therefore, several plastics manufacturers are investing in R&D to improve this quality.
"Moreover, the lightness of plastics does not add extra weight to the product and hence, makes it easier for distributors to carry plastic packaging than glass, board, paper, or metal," says Frost & Sullivan Industry Analyst Hernan Cavarra. "Retailers are pressuring food and beverage manufacturers to use plastic packaging as they are shatterproof and have lesser volume, making them easier to stock."
Plastic packaging has widened the gap with other materials through further improvements in polymer performance properties and processing technology. Their faster filling rates and the ability to hold foodstuffs that are still hot have given plastic packaging yet another competitive edge over other materials.
However, plastics packaging manufacturers have to strategize to counteract the high prices of feedstock, as they reduce margins. Resins constitute 50 to 70 percent of the total converted cost of plastic packaging and the frequent fluctuations in their prices have compelled resin producers to increase prices. Food and beverage manufacturers are unwilling to pay more for the packaging, as they know that it is a buyer's market due to the fierce competition among converters.
Packaging manufacturers can take heart from the shale gas discoveries in Argentina, as it could enhance polymers production capacities, which are currently low due to domestic gas scarcity, especially in winter.
"Manufacturers are realizing the importance of developing biodegradable plastics to counter the depletion of oil and gas resources, especially at a time when customers are becoming increasingly environment conscious," notes Cavarra. "Thus, alternative raw materials as well as recycling (only in PET products) can offset rising resin prices, international oil prices, and domestic gas scarcity."
Commodity Plastics Market for Food and Beverages Packaging in Argentina is part of the Chemicals & Materials Growth Partnership Services program, which also includes research in the following markets: Food Packaging market in Colombia, Engineering Plastics in Latin America. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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Commodity Plastics Market for Food and Beverages Packaging in Argentina
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