MEA PACKAGING OUTLOOK

The Middle East’s packaging sector looks set for continued growth, propelled by its youthful demographics and Iran’s expected recovery from the economic impact of sanctions

Across the Middle East, the future looks bright for packaging across all its segments: food and beverage, cosmetics, personal care, healthcare, luxury, or bulk/industrial. But Packaging MEA sees the outlook as especially promising for specific sectors and countries.

IRAN
With international sanctions on Iran being lifted, and with the country boasting one of the MENA’s most advanced and diversified economies, how likely is it that Iran will become the next Middle Eastern superpower by 2025?

Iran is likely, in fact, to become a regional economic powerhouse over the next 10 years, with a growth rate of around 3.5% expected this year as sanctions begin to loosen. This would place Iran as the second-fastest growing of the MENA economies. According to the IMF, since 2011, sanctions have taken 15–20% from Iranian GDP.

A potential headwind, though, could be the attitude of the new administration in Washington, which has criticised deals struck under former president Obama.

Within the packaging space, Iran’s food technology market has attracted most interest from international investors. Iran is MENA’s second-largest economy and its demand for packaging technology has steadily grown, driven by the rising consumption of foodstuffs by its youthful population, of whom 60% are aged between 5 and 30.

The creation of the Iran Packaging Institute (IRIP) in 2016 with the assistance of the world Packaging Organisation (WPO) is also a spur to future development.

“One of the first and most important activities of the Iran Packaging Institute was the signing of an agreement with a local Tehran-based bank,” said Keith Pearson, WPO general secretary. Part of the agreement includes the commitment of the WPO’s packaging education support. The first sponsored packaging education workshop will be run in Tehran next August.

“Packaging education is a priority for the Iranian packaging industry as the country prepares for the lifting of sanctions and the resultant export opportunities.

EGYPY
Young Populations helps keep Egypt ,Morocco, and  Tunishaamoung Africa’s top ten consuming countries. And the outlook for theses three countries is positive

For Egypt, three key factors stand out. First, its 90 million inhabitants make it the most populated MENA nation. Cairo’s 17 million inhabitants also make it the centre of the largest metropolitan area in Africa and the Arab region and the 10th largest urban area in the world.
Egyptians are also natural-born consumers, especially for food and ready-meals. In addition, agriculture is the backbone of the economy, providing opportunities for food processing and packaging.

Egypt’s food market was among its sectors least affected by the uncertainties of the 2011 revolution. Amid a slowdown in GDP growth in 2011, the packaged food market stayed in expansion, with volumes up 3% in 2013. Today, the packaged food market volume performance is back to the same levels as the pre-revolution years.

Modern retailers are also winning a larger share of Egypt’s channel distribution. In the last two years, the shift from grocery retailers and open markets towards supermarkets and hypermarkets has continued. Hypermarkets have shown the fastest growth rates in value share. They continue to offer wide product ranges at competitive prices against traditional grocery retailers thanks to economical bulk packs and attractive price promotions. Safety concerns and curfews amid political upheaval have made hypermarkets a more attractive environment for consumers. Metro, Carrefour, Hyper One, and Spinneys are burgeoning in the major city outskirts.

SAUDIARABIA
Saudi Arabia’ dynamic packaging sector is currently seeing a shift towards plastic and away from metal and glass, as flexible packaging expands alongside solid packaging.

Demand for safe and sustainable packaging is also growing in line with rising food consumption. Saudi Arabia already makes up almost 70% of the GCC’s packaging market in the GCC and its packaging sector continues to expanding.

Saudi Arabia has started construction on four new cities with about $70 billion in seed investment, designed to attract businesses through a world-class infrastructure, cutting-edge design, special incentives and streamlined procedures.

UAE
Euromonitor’s latest report on the UAE’s packaging sector gives an upbeat outlook, predicting the sector will post continuing market expansion.

“High average income levels” insulated the country from an economic downturn at thestart of the period analysed by Euromonitor while a recovery towards the end of the review period prompted higher spending and a flurry of fresh expat arrivals.

As a percentage, the research company expects the market’s growth to slow. But in absolute terms, packaging’s rise is poised to accelerate, set for “stronger growth for many product areas at the end of the review period”, according to the company.

PACKAGING TRENDS
Development in the UAE also illustrate changes likely to come into play within the sector across the region.
Euromonitor reports that pack sizes, for instance, are becoming more active around certain size segments. Towards the end of its review period, activity around certain size segments became more polarised.
Health concerns have increased the appeal of smaller packaging. This is mainly to portion-control food intake and facilitate on-the-go consumption, and is seen mainly in confectionery, beverages, and ice cream. Larger pack sizes are mainly consumed by families and price-conscious consumers.
Light weighting and sustainability aremeanwhile becoming more important in consumer engagement activities. Euromonitor found that weight reduction in plastic bottles was effected by most companies over the last part of its review period and reached an optimum in terms of per unit pricing and product protection.

Sustainability is becoming a key development agenda in the United Arab Emirates with many consumers and companies becoming more zero waste compliant, according to the research firm.
Global trends dominate packaging formats in the UAE, according to the report. International brands lead most categories and drive packaging trends.

Consumers favour functionality that reflects individualisation and specialisation is favoured amongst consumers. Brands have, therefore, continued to introduce pack types to reflect this. Pack types, sizes and closures have been targeted towards very specific demands to fulfil consumer demand. For instance, international brands within premium facial suncare sold through pharmacies, which are usually recommended by dermatologists, come in smaller pack sizes with higher unit prices than mass brands.

Increasing incomes have also prompted consumers to begun to look for premium products, so manufacturers have launched products with premium packaging in many categories to increase their value shares. Packaging redesigns and innovative shapes of packaging have been adopted to promote a premium image.

A premiumisation trend in categories such as perfumes and skincare continues to drive demand for secondary packaging, especially through folding cartons. Supermarkets remains the main distribution channel for mass beauty and personal care products in the country, although pharmacies, department stores and specialist retailers are becoming more important, leading to growing availability of premium products.

Packaging manufacturers are expected to continue to invest in innovative packaging over the forecast period, in terms of both design and the materials used, considering demographic and lifestyle changes.

Functionality is likely to remain the most important feature, which will be crucial and need to be integrated into packaging.

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