Demand from middle class and growing F&B sector drive Plastics Packaging in South Africa

The Southern African plastics packaging market witnessed constant growth from 2000 to 2008 due to the developing economy. More recently, the emerging middle class has contributed greatly towards the demand for plastics packaging. Although fluctuating polymer prices have significant knock-on effects on this market with major price pressures for suppliers, the outlook for the long term is positive. The main drivers of this market are continued substitution of conventional materials with plastic and the sustained growth in the food and beverage end-user sector. New analysis from Frost & Sullivan finds that the market earned revenues of US$1.01 bln in 2009 and estimates this to reach US$1.41 bln in 2016. The end users covered in this research service are food and beverage, industrial, households and other segments such as pharmaceutical packaging. "Greater consumer demand for plastics packaging is expected due to the spurt in food and beverage production," says Frost & Sullivan Chemicals, Materials and Food Research Analyst Kholofelo Maele. "Additionally, the general industrial use of plastics packaging has increased after the global economic downturn and is expected to sustain the demand for plastics packaging." The total plastics packaging market will witness stable growth due to increases in consumer demand. Compared to other industries, the Southern African plastics packaging market will witness better growth rates in the short term and consistent growth rates in the medium and long terms.However, low-priced imports of finished products from the east are restraining local growth. The government's trade agreements with eastern countries have eased the process of importing goods, making it particularly challenging for the smaller market participants to compete with established producers. "The import of inexpensive finished goods has increased after the South African government signed trade agreements with China," explains Maele. "Furthermore, Southern Africa's distance from high consumption markets restrains the infrastructural development for plastic exports." While the Southern African plastics packaging market will only see opportunities for growth in the long term, much progress has been made in key sub-Saharan African countries, with energy-related infrastructural developments opening up opportunities for industrial growth. Plastics packaging suppliers are looking into these emerging markets for expansion. "Suppliers should start tapping into the opportunities in the emerging sub-Saharan African countries and focus on expanding into these markets," concludes Maele. "The recent energy related infrastructural development in these countries will pave the way for industrial growth with potentially lucrative prospects."
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