MENA’s Packaging Market to Register Growth Despite Unrests

    Rising real incomes, higher economic activity, continued urbanization, further development of retail infrastructure in several MENA countries and a relatively young and growing population make the region a target market for the packaging industry. The MENA packaging market is forecast to grow during the period 2014-2019 at a CAGR of 5% to USD52.4 billion. This represents a higher growth rate than the global packaging market, which is forecast to grow at just over 4 % during the same period. On the other hand, the unrest in the region, together with adverse economic conditions in global markets, have negatively affected development of the packaging industry in some countries. 

    Key Drivers & Trends
    There are various key drivers and trends that are likely to impact the Middle East & North Africa packaging markets to 2019; these are economic, political, demographic, packaging and retail. Firstly, it is expected that there will be a largely positive impact on packaging demand from rising economic activity and growing incomes per capita, but there are wide variations between countries; in addition, there is a major threat to economic growth from political instability in the region. Worsening geo-political violence could restrain economic development, and hence packaging demand, during the forecast period. Demographically speaking, a high proportion of young people and a growing population are major drivers of packaging demand. In terms of packaging trends, packaging sales are supported by increased investment in food production and processing, significant investments in new flexible packaging converting capacity and increased availability of locally produced and competitively-priced base substrates. Lastly, the retail trend is likely to positively impact the packaging market in this region to 2019, as packaging demand benefits from the development of a retail infrastructure and growing penetration of pre-packed foods. Hypermarkets/supermarkets are gaining market share, though small and local artisan stores still dominate in most MENA countries. 

    A closer look at the market
    Turkey is the largest packaging market in the MENA region accounting for a projected 22% share of total market value in 2014. Saudi Arabia is the second largest packaging market, followed by Iran and Egypt. Libya is a relatively under-developed packaging market, but is predicted to grow packaging consumption at the highest rate, provided that the current civil unrest in the country does not persist for a prolonged period of time. Qatar, Morocco, Saudi Arabia and the UAE are also expected to grow at a rate faster than the market average. The relatively more developed packaging markets of Kuwait and Turkey are expected to grow packaging sales at rates lower than the regional market average. Iran still faces the effect of recently lifted economic sanctions which restrained economic growth and packaging market sales. Rigid plastics form the largest packaging product group accounting for a projected market value share of 28.2% for 2014. Board packaging is the second most important category with 25.6% of consumption, followed by flexible plastics with a 13% share. Rigid plastics and flexible plastics are predicted to grow at the fastest rates during the forecast period. Plastic packaging is gradually replacing glass bottles, metal cans and paper and board packaging in the MENA and other world regions because of its lighter weight, cost saving potential and greater design flexibility. Food and beverage packaging represents a much higher proportion of overall packaging demand for the developing countries of the MENA region compared with the world packaging market. Food and beverages in the world packaging market account for just over 40% of sales, while in MENA region they represent almost 59% of packaging sales. Food and drink packaging sales are predicted to grow their market share further over the forecast period with industrial/bulk also growing steadily. 

    Smithers Pira