Local flexible packaging now a Tk6,000cr industry

Demand for packaged consumer goods was already on a gradual rise, with people becoming more health conscious, cities growing, and disposable incomes rising.

But with the pandemic hitting, the market for packaged goods has been witnessing a huge surge as more and more people are opting to buy packaged items over loose ones – further contributing to the flexible packaging growth.

According to industry insiders, the market size of the local flexible packaging industry is around Tk6,000 crore with an annual growth rate of around 20%.

Infographics: TBS

The industry employs around 50,000 people and has a local annual demand for 2 lakh tonnes of flexible packaging material, with 80% being met by domestic companies. The remaining 20% of the demand, primarily pharmaceutical items, is met by imports.

Safius Sami Alamgir, president of the Bangladesh Flexible Packaging Industries Association, said pharmaceutical companies will also begin sourcing local products once the least developed country (LDC) import facilities expire, which will boost the local market further.

In 1978, the first production of flexible foils started in the country with Tampaco Foils Ltd, but the sector did not see significant growth at the time.

The demand for packaging products began to increase after 2000, leading to new companies investing in the industry. The sector has been witnessing a growth rate of about 20% since 2007-08.

Though there are at least 100 local companies that produce flexible foils products, 7-8 key players hold nearly 50% of the market share.

People involved with the industry said the sector, which was once completely import-dependent, is now meeting around 80% of local demand. Akij Group has established a Tk1,000 crore backward linkage factory to support the industry with raw materials. 

Akij's key market peers include Arbab Poly Pack Ltd, Famous Printing and Packaging, Merchant Packaging Industries, Premiaflex Plastics Limited, Shajinaz Eximpack, Meghna Packaging, r-pac Bangladesh and Mohona Packages.

Made of non-rigid materials like paper, plastic, aluminium foil, flexible packages are growing popularity for their customised and readily-changing shapes. Major users include food and beverage, personal care and pharmaceutical industries.

Flexible packaging-makers need polyethylene, polyester, nylon, film foil laminations and ink as raw materials. Around 80% of the raw materials are imported, while local sourcing stands at 20%.

According to manufacturers, they import these items from China, Korea, Thailand, Singapore, and European countries.

Akij's packaging concern Akij Biax Films Ltd says it can meet the demand for local raw material.

But the company is unable to utilise its full production capacity owing to a lack of bonded warehouse and tax protections, according to M Hossain Iraz, director (operations) of Akij Biax Ltd.

Hossain Iraz told The Business Standard that the firm has already started exporting packaging inputs.

Global plastics use has soared in recent decades, reaching an estimated 460 million tonnes in recent years, according to Statista. Packaging accounted for roughly 31% of this total, making it the largest plastics-consuming segment by far.

The global flexible packaging market was at $265 billion in 2021. The market is forecast to reach almost $400 billion by 2027.

Safius Sami Alamgir, managing director of the country's first packaging-maker Tampaco Group, sees huge export potential for local players. Tampaco now manufactures packaging items for 485 products in nine segments, including major brands Pran, British American Tobacco Bangladesh and Nestlé.

With 10,000 tonnes of annual production, Tampaco holds 8%-10% of the domestic market share. But Safius Sami said they are yet to begin direct exports.

"We need policy support and government assistance in finding out new markets abroad," he told The Business Standard.