The Saudi Arabian paper and paperboard packaging market (henceforth referred to as the market studied) was valued at USD 1926. 3 million in 2020, and it is expected to reach USD 2508. 4 million by 2026, registering a CAGR of 4.
New York, July 20, 2021 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Saudi Arabia Paper and paperboard packaging Market - Growth, Trends, Covid-19 Impact and forecast (2021 - 2026)" - https://www.reportlinker.com/p06106058/?utm_source=GNW
2% during the period of 2021-2026 (henceforth referred to as the forecast period).
With the outbreak of the COVID-19, the Saudi Arabian paper and paperboard packaging market witnessed a decline in growth during the initial month of the outbreak, as most of the manufacturing plants were shut down owing to lockdown, and the pandemic has affected trade and global supply chains of essential and non-essential goods and services.
Further, many companies have shifted away from the sustainability goal of banning plastic. Some studies suggested that the virus can be passed on through cardboard and plastic, which has resulted in increased usage of single-use materials across supermarkets to wrap products, such as cling film for fruit and vegetables in the country. In addition, paper and packaging manufacturers in the region faced fluctuations in demand as the COVID-19 pandemic intensified, with potentially disruptive effects on production and revenues.
- Due to the rising focus on sustainability, consumers prefer easily recyclable paper packaging over other packagings. The growing demand for customer-friendly packages and heightened product protection is expected to boost paper and paperboard packaging as a viable and cost-effective solution in Saudi Arabia. According to General Authority for Statistics (Saudi Arabia), the industry revenue of the manufacture of paper and paper-based products in Saudi Arabia is expected to reach USD 5.52 billion in 2024 from USD 4.01 billion in 2020.
- Further, according to FAO latest statistic, the production of paper and paperboard in Saudi Arabia accounted for 118,600 metric ton in 2019, and production of carton board accounted for 150000 metric ton in 2019. The increasing production of paper and paperboard-related products in the region is expected to bolster the studied market growth.
- Moreover, Saudi Arabia is one of the largest markets for the packaging industry in the Middle Eastern region. The country has a huge consumer base and a wide range of industrial activities (apart from the oil and gas sector), adding to the rapid growth in the demand for paper and paperboard packaging from the country. ??
- The low crude oil price situation in the global market realized the need for a stronger non-oil sector. To strengthen the country’s non-oil sector, Saudi Arabia has been implementing several initiatives and regulatory reforms, such as National Industrial Development and Logistics Program (NIDLP), Vision 2030, etc., that may increase the industrial production in the region. ??
Key Market Trends
Regulations on Plastic-based Packaging Products Contributes to Higher Demand
- The government and authorities in the country are taking significant steps to minimize the environmental impact due to packaging in the country by imparting some regulation or ban on the usage of plastic packaging.
- Plastic has become one of the biggest health threats to humanity as toxic chemicals leach out of plastics and enter the food chain. According to the Saudi Standards, Metrology and Quality Organization (SASO), in 2017, 16 types of polypropylene and polyethylene products with thicknesses lower than 250 microns were used for packaging, such as carrier bags, wrappings, and similar applications were banned.
- Also, according to the regulations of the responsible Saudi organization (SASO), plastic products must be made of approved oxo-biodegradable material. Further, SASO announced that the plastic products and the packaging materials for the consignments must gradually bear the "biodegradable" logo. This is to ensure that even disposable plastic products made of polyethylene or polypropylene with a film thickness of 250 microns or less, which are commonly used for packaging (are oxo-biodegradable.
- Also, in September 2020, the Gulf Cooperation Council (GCC) Standardization Organization (GSO) requested discourse on a Draft Standard on Polyethylene Bags For Food Packaging Applications. ?The Draft Standard bans the use of recycled materials in polyethylene bags used for food packaging and states that such bags must be free of heavy metals like lead, cadmium and mercury, inks, dyes, pigments, adhesives, coatings, and stabilizers.?Also, the Draft Standard specified that polyethylene bags that are to be used for food packaging applications would be classified according to their physical properties and designated by type through a five-digit number. ?
- All these regulations pertaining to curbing out or lowering the usage of plastic-based packaging in the country is significantly driving the market for paper and paperboard-based packaging in Saudi Arabia.
- Moreover, various vendors in the country are adapting and innovating new packaging with paper and paperboard packaging material to reduce the environmental impact of packaging and launching various initiatives for recycling. For instance, in February 2021, TetraPak announced a new initiative in Jeddah in partnership with the District Model Center of Muhammadiyah in Jeddah, and with Naqaato collect used carton packages and recycle them to support sustainable consumption practices.
Food and Beverage Vertical is Expected to Witness Significant Growth
- Saudi Arabian consumers are increasingly becoming savvy when it comes to food and beverages as their demand for new products with a stronger health focus is growing. Online shopping of food combined with the growing proliferation of food delivery services is expected to accelerate the demand for sacks, kraft papers, folding cartons, and liquid cartons. According to the Saudi Arabian General Authority for Investment (SAGIA) forecasts, the spending on foodservices is expected to grow by 6% per annum over the next five years, with food consumption reaching SAR 221 billion by the end of 2021.
- The demand for online shopping for food and beverages further accelerated in the country owing to the recent effects of the pandemic. According to a study conducted by Choueiri Group in May 2020, which involved inputs of 2,800 Saudi participants, consumers in Saudi Arabia ramped up their online purchases of food and beverages during the pandemic; about 55% of the population purchased grocery items online in April, which exponentially higher compared to the 6% before the outbreak.
- Among the top online purchased products, dairy products (69%) observed the highest propensity of consumers in online buying preference, followed by fruits and vegetables (67%) and bread (62%). Owing to such growing consumer preference for online purchases, the demand for innovative and unique packaging solutions is expected to increase in the country as well.
- Apart from this, the Saudi Arabian food and beverages industry is the largest in the Middle East region, which was valued at USD 45 billion, according to the JLL MENA study in June 2020. The study also found that consumers in the country are moving toward healthy and sustainable, eating which is where paper, corrugated, and carton box packaging is expected to gain traction in the industry.
- Along with the government, even consumers are looking to opt for products from home-grown brands, and recently such companies are doing significantly well in the country. For instance, in April 2021, Almunajem Foods, one of the largest private food companies in the country, reported a successful 2020 and is maintaining a positive outlook for 2021 despite the effects of the pandemic. The company serves more than 22,000 customer outlets, including retail, food services, and wholesale channels.
The Saudi Araba Paper and Paperboard Packaging market comprises major companies such Obeikan Investment Group, Gulf Carton Factory Company, Eastern Pak Limited., among others occupying major market share owing to regular investment in technological advancements and product launches. Furthermore, as the entry to the barrier is low to moderate, the existing companies are catering to the increasing demand. Also, with the growing opportunity in the market, new and current companies are being compelled to invest in product innovations. This depicts the rapid increase in the competition level in the market, thereby having a highly competitive rivalry, which is expected to increase in the forecasted period.
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