The Latin America Flexible packaging market is expected to register a CAGR of 3.89% during the forecast period (2021-2026). With the recent outbreak of COVID 19, flexible packaging manufacturers have been flooded with a pool of issues that are expected to be only for the short -term. Some of the effects of lockdown include supply chain disruptions, lack of availability of raw materials used in the manufacturing process, labor shortages, fluctuating prices that could cause the production of the final product to inflate and go beyond budget, shipping problems, etc.
- According to Population Reference Bureau, 79% population of the Latin America lives in cities. The growing rate of urbanization across the region has resulted in a higher focus on sustainability and convenience in packaging. The healthy growth of end users, such as pet food, fresh food, and coffee that require convenient packaging is expected to drive the need for producing higher flexible packaging. The general trend of the shift from rigid to flexible to avail the benefits of convenience packaging and fit the changing lifestyles, along with the growth of smaller households, is increasing the need for single-serve options.
- Further, the advanced packaging styles, such as collapsible/reusable pouches and bag-in-box, among others, are driving the usage of flexible packaging in combination with rigid packaging formats. Products, such as pouches, liners, bags, and shrink wraps, are opening an extensive range of new applications in the flexible packaging market in the region. Additionally, consolidation of the e-commerce sector in the region is anticipated to make flexible packaging one of the rapidly growing packaging approaches over the forecast period.
- Millennial customers generally drive the demand for flexible packaging products, and millennials account for 30% of the total Latin American population. These people have an ardent preference for single-serving and on-the-go style food and beverage foodstuffs. As these products are usually designed to be durable, portable, and lightweight, flexible packaging is a famous option for packing such products. It seems to govern the demand for flexible packaging from the food and beverage industry of the region.
- The increasing awareness about the negative environmental impact of single-use plastic and unsustainable business practices has empowered consumers to demand a higher standard of product and forced the governments to make laws over its limited or no-use. Countries like Chile, Paraguay, Uruguay already passed laws that establish measures for the prevention and mitigation of environmental impacts due to plastic bags. Brazil, local legislations such as Rio de Janeiro enacted Law 8006 in 2018, which provides that the delivery of single-use plastic bags must be replaced within 18 months by reusable or returnable bags. Furthermore, the city of Sao Paulo approved a ban on single-use plastics in commercial establishments as of January 1, 2021.
- Furthermore, initiatives, such as the promotion of sustainable packaging undertaken by some of the companies in the packaging market across the region are expected to have a negative impact on the market growth during the forecast period. For instance, in September 2019, Sonoco, major sustainable, diversified global packaging manufacturers, announced the creation of its EnviroSense sustainable packaging initiative. The primary goal of the initiative was to have a reduced environmental impact, optimized package -to -product ratio, and shipping optimization.
Key Market Trends
Pouches are Expected to Grow Significantly
- The ability of plastic pouches to enable co-polymerization and the addition of plasticizers, blowing agents, antibacterial additives, and color-changing additives to them fuel the growth of the pouches segment. Pouches are flexible, easy to carry, and lightweight. The advances in pouch characteristics (such as resealable closures, spouts, and tear notches) and pouch manufacturing technologies (such as machinery with increased line speeds) continue to lower the production costs, making pouches more competitive with other forms of flexible packaging.
- Tailored barrier materials in pouches and other forms of flexible packaging help protect the food from moisture, oxygen, UV rays, grease, and contamination. They can significantly extend the products' shelf-life. The market is witnessing the usage of flexible packaging in many innovative ways. These packaging solutions range from single-use pouches, zip locks, to resealable closures.
- There is also an extensive demand being driven for kraft paper in wrapping, pouches, and sacks. The increasing trend for environment-friendly packaging is creating a demand for kraft papers that can be easily recycled, as their pulping process allows easy waste recovery.Similarly, in February 2020, TC transcontinental, Montreal-based packaging manufacturer, with presence in the United States and Latin America, announced plans on increasing post-consumer, recycled content in flexible packaging offerings such as pouches. It has also begun investments in allied equipment to convert flexible plastics from sorting facilities and other sources.
- In May 2021, Amcor introduced a recycled plastic packaging for powdered chocolate in Latin America wich is a more sustainable packaging solution compared to the previous packaging. This new solution reduces the package's carbon footprint by 53% and water consumption by 84% when it is recycled. The new sachet has a high-barrier feature to protect against humidity and will be available to consumers in its 25g sachet format in Colombia this month.
- Pouches are one of the most significantly used materials for the packaging of e-commerce products. Pouches are becoming the most common format of flexible packaging in the food, beverage, personal care, and pharmaceutical industries that cater to most products in the e-commerce markets. Players operating in the e-commerce sector opt for pouch packaging, as it is one of the most efficient and economical packaging solutions. Latin America eCommerce retail sales grew at 19.4% (approx.) in 2020.
Brazil is Expected to Hold Significant Market Share
- Brazil is one of the leading countries in Latin America for economic growth and in terms of getting maximum FDI. They have a huge demand for food and industrial goods which are catered by imports. Flexible packaging will be important for this area to store the products from getting damaged. With the middle income class percentage increasing, there will be more demand for packed food, and this will enable the flexible packaging market to grow.
- According to the Brazilian government, by the year 2021, the retail sales in the packaged food market in Brazil is anticipated to reach USD 116.6 billion, a growth rate of 32.2% since 2016. High growth rates in the forecast include ready-to-eat meals, breakfast cereals, baby food, sauces dressings and condiments, processed meat, and seafood and soup, This will fuel the growth of flexible packaging market.
- In November 2019, a team of scientists from Brazil developed a biodegradable plastic with the application of ozone gas (O3) to cassava starch (a root vegetable). Scientists state that the bioplastic produced with the application of ozone (O3) gas changed the molecular properties of the starch to produce a 30% tougher material than the biodegradable plastic made up of the starch from potato, rice, or maize. Such plastic is ideal to be used for food packaging or carrier bags. This material innovation is bringing sustainability to flexible packing.
- Despite the pandemic and related uncertainties, the Brazilian personal hygiene, perfume and cosmetics sector closed the year 2020 with a 5.8% growth, according to the index of the Brazilian Association of the personal hygiene, perfumery and cosmetics industry (ABIHPEC). Alone, Personal care category revenue reached to USD 12.77 billion (approx.) and it is further expected to grow by 7.5% in 2021.
- There is a trend supporting premiumization in this market. Despite being price-sensitive, Brazilians are willing to spend on cosmetics. This caters to the demand for flexible packaging, as flexible plastic materials, such as polyamine and polypropylene, provide packages with outstanding visibility and appealing structure, along with safety features.
Latin America Flexible Packaging Market comprises several global and regional players, vying for attention in a contested market space. As the market poses low barriers to entry for the new players, several new entrants have been able to gain traction. This market is characterized by low product differentiation, growing levels of product penetration, and high levels of competition. Sustainable competitive advantage can be gained through innovation in design, technology, and application.
- January 2020 - Amcor partnered with Moda vacuum packaging systems in North America and Latin America. With this partnership, combining Amcor's shrink bag and roll stock film for meat and cheese with Moda's system, the producers in these regions are expected to gain operational efficiencies and drive total cost savings.
- January 2020 - Sealed Air launched a new version of BUBBLE WRAP brand packaging material that is made with at least 90% recycled content. It offers the same level of protection and air retention as the original invention yet enables a circular plastics economy, reduces carbon footprint by 30%, and serves as a resource-efficient packaging solution.
- January 2020 - Coveris launched a new, sustainable, and high -performance version of its CPP film. It is made up of cast polypropylene film (CPP), the Coveris Print Layer (PP CPL), designed for flexible packaging of a wide range of food, pet food and non-food products. With its improved structure, it offers significant stiffness that protects the product from external damage.
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