UAE Packaging Market - Growth, Trends, and Forecast (2020 - 2025)

UAE Packaging Market - Growth, Trends, and Forecast (2020 - 2025)

Market Overview

The UAE packaging market was valued at USD 2675.25 million in 2019 and is expected to reach a value of USD 3510.06 million by 2025, recording a CAGR of 4.6% during the forecast period of 2020-2025. The United Arab Emirates, in collaboration with Saudi Arabia, invested AED 5 billion toward several food security initiatives, which open several market opportunities for the packaging industry in the country.

  • The investments into manufacturing are majorly spurred by the recent economic slowdown caused by low crude oil prices and reduced activity in the upstream oil and gas industry. The years 2017 and 2018 had a severe impact on the country’s economy.
  • Following the crisis, the Abu Dhabi government, on June 2018, announced an AED 50 billion economic stimuli to strengthen its manufacturing front as well as to draw foreign investments into several industrial sectors in the country. The country also took some measures to attract foreign investors by relaxing rules on foreign ownership and corporate fines by creating an investor-friendly environment for foreign companies.
  • Moreover, the trend of economical smaller packages and super-saver bulk packages are highly adopted in the food and beverage industry. For instance, as of 2018, Nutella launched a 750gm format in spreads in the UAE market. These packs are proving to be increasingly popular, as they offer better value to the consumer.
  • Further, the standardization of the ‘Made in UAE’ initiative, which introduces the local manufacturers to the global market, is helping the country to reduce its reliance on imports and to strengthen its export potential. The positive growth of this kind in the manufacturing sector encouraged considerable investments in the packaging industry.
  • However, the region’s unstable economy and decreasing oil prices may hinder the growth of the market.
Scope of the Report

Packaging refers to the process of designing, evaluating, and producing packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. In many countries, it is fully integrated into government, business, institutional, industrial, and personal use.

Key Market Trends

Retail Segment to Execute a Significant Growth Rate Over the Forecast Period
  • The retail segment is one of the largest contributors to Emirates’ non-oil economy. According to the UAE Monthly Dashboard of August 2018 published by the Ministry of Foreign Affairs and International Cooperation, retail trade, along with the wholesale and repair services, accounted for 17% of the total non-oil GDP of the country.
  • With the increase in the number of discount outlets, the number of private-label lines offered by these retailers also increased rapidly. This has created considerable demand for packaging products in the Emirates at the SME level, in the past few years.
  • The e-commerce firms, such as Noon, Souq, Ounass, and Nashimi enacted a range of initiatives, aside from discounted prices, to improve the range of products offered and delivery options. The same same-day and next day delivery services offered by several e-commerce players in the country have attracted several consumers to shop online.
  • Moreover, with high mobile and internet penetration and highest expenditure by online shoppers with USD 1,648 (average purchasing power/ year), the country provided an excellent growth platform for the e-commerce industry/internet retail. It is estimated that e-commerce was responsible for 3% of total retail sector sales in the country, in 2018.
  • However, the estimates in 2018 of Dubai Chamber suggested a 17% growth in the UAE retailing market by 2021 (from 2018) by creating several opportunities for the packaging market in the country.
Food and Beverages Sector to Account for a Significant Demand
  • According to Dubai Exports, the United Arab Emirates accounts for a large number of food and beverage manufacturing units, totaling around 575 units with a total investment of AED 39.5 billion. Products, such as vegetable oil, canned beans, carbonated and non-carbonated beverages, chicken franks, and reconstituted juices, are generally exported in rigid containers, which are in high demand from the country’s food processing sector
  • In most cases, these products are targeted for exports to the EU market. Hence, to meet stringent packaging regulations imposed by the EU, the local food processors and contract packaging companies have a high preference for rigid packaging solutions for such exports.
  • Additionally, some locally produced foods are of very high quality at competitive prices. Over the forecast period, as the number of food processing companies is expected to increase, locally produced products are likely to compete with imports of consumer-ready foods, creating considerable demand for price in competitive packaging from the local food manufacturers.
  • Further, the growing internet retailing and omnichannel vendors in the region are further expected to boost the production of food and beverage in the country. According to the recent statistics from the Dubai Chamber of Commerce and Industry, internet retailing in the country is growing rapidly. In 2018, the sector witnessed growth by 19%, reaching AED 360 million, representing a CAGR of 65% from 2013 to 2018.
  • Moreover, the e-commerce sector also enables cross-border retailing of products that are expected to improve the demand for secondary packaging from the food and beverage industry over the forecast period.
Competitive Landscape

The UAE packaging market has a wide portfolio of suppliers from the local and international market. This factor leads to high competition among the vendors. In many cases, due to the absence of multiple distribution channels, the vendors directly interact with the end-users to sell their products. This scenario leads to long-term deals with end-users. Hence, the vendors often choose to retain their clients or make new clients by competitive pricing strategies. Additionally, as most of the packaging material is sourced from imports, there is a high competition among the suppliers to capture a limited number of players in the market. This factor is intensifying the competitive rivalry among the local and foreign manufacturers.

Some of the key players in the market include Gulfeast Paper & Plastic Industries LLC, Arabian Packaging Co. LLC, Amber Packaging Industries LLC, among others. Some of the key recent developments in the market include:

  • April 2019 - Huhtamaki launched blue loop to enable circular packaging models and respond to the consumer demand for sustainable packaging. Huhtamaki blue loop is a platform aiming to make flexible packaging circular and introduce a range of recyclable solutions with mono-material structures utilizing PP, PE, and paper.
  • February 2018 - INDEVCO Paper Containers acquired the SCA Arcwise license to produce the first curved corrugated packaging in the Middle East and North Africa (MENA). In addition to making the product stand out through its attractive shape and design, the new curved packaging solution enables better stacking strength compared to straight-edged packaging. It also offers a better grip, minimizing the movement of products inside the package during transportation.
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    1 INTRODUCTION
    1.1 Study Deliverables
    1.2 Study Assumptions
    1.3 Scope of the Study
    2 RESEARCH METHODOLOGY
    3 EXECUTIVE SUMMARY
    4 MARKET DYNAMICS
    4.1 Market Overview
    4.2 Introduction to Market Drivers and Restraints
    4.3 Market Drivers
    4.3.1 Regulatory Reforms and Automation
    4.3.2 Increase in Recycling Activity
    4.4 Market Restraints
    4.4.1 Unstable Economy and Volatile Oil Prices'
    4.5 Value Chain / Supply Chain Analysis
    4.6 Industry Attractiveness - Porter's Five Force Analysis
    4.6.1 Threat of New Entrants
    4.6.2 Bargaining Power of Buyers/Consumers
    4.6.3 Bargaining Power of Suppliers
    4.6.4 Threat of Substitute Products
    4.6.5 Intensity of Competitive Rivalry
    4.7 PESTLE Analysis
    4.8 Regulatory Environment
    4.9 Comparative Ranking and Cost Breakdown
    4.10 Import and Export Analysis
    4.11 Pricing Analysis
    5 MARKET SEGMENTATION
    5.1 By Material Type
    5.1.1 Paper/Paperboard
    5.1.2 Plastic
    5.1.3 Metal
    5.1.4 Glass
    5.2 By End-user Industry
    5.2.1 Retail
    5.2.2 Industrial
    5.2.3 Food and Beverage
    5.2.4 Other End-user Industries
    6 COMPETITIVE LANDSCAPE
    6.1 Company Profiles
    6.1.1 Gulfeast Paper & Plastic Industries LLC
    6.1.2 Arabian Packaging(Al Ghurair Group)
    6.1.3 Amber Packaging Industries L.L.C.
    6.1.4 Rotopak U.A.E
    6.1.5 Hotpack Packaging LLC
    6.1.6 Interplast Co Ltd.
    6.1.7 Huhtamaki Oyj
    6.1.8 Fujairah Plastics Factory
    6.1.9 Emirates Printing Press LLC
    7 MARKET OPPORTUNITIES AND FUTURE TRENDS
    8 INVESTMENT ANALYSIS

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