Packaging Industry in South Africa
Euromonitor International's Packaging Industry in South Africa Euromonitor International's World Market for Glass Packaging report offers insight into key trends and developments in global and regional consumer glass packaging. It provides analysis of the major growth markets and end-use applications, together with analysis of the corporate strategies of the leading companies.
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Chapters: 5 | Tables: 27 | Publication date: Aug 2007
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Executive summary
Consumer boom boosts packaging market
During 2003-2006 South Africa has experienced growth in consumer spending on durables and non-durables boosted by increases in employment, social grants and property prices, combined with stable interest rates. The effect on packaging and the competitive environment has been substantial, although tempered by a corresponding increase in imports.
Cheap imports and rising raw materials affect profits
One of the reasons for the boom in consumer spending has been the flurry of cheap imports on the local market. This has been aided by the strengthening of the rand up until early 2006, which has resulted in packagers not benefiting as much as they could have. Many marketers have not only been taking advantage of cheaper plastic packaging from China, but have also increased the number of pre-packaged products they import. This has been compounded by the continual rise in fuel prices and hence transport costs.
Continued consolidation within the competitive environment
The packaging environment in South Africa is consolidated with one company tending to dominate one major packaging type – Consol in glass and Nampak in paper and metal. Nampak had ventured into other format types namely plastics, but in order to focus on its key activities the company has been withdrawing from these ventures. The result of this has been the growing dominance of Astrapak within plastics. Its continued aim is to not only be the number one player in the market but to completely dominate it. This has been furthered through its numerous acquisitions in 2005 and 2006.
Glass booms as demand grows
Although not the largest of the packaging formats in South Africa, glass has been by far one of the biggest benefactors of the recent consumer boom. Consol, the main producer of glass packaging, has posted positive results for its 2006 financial year. This has not only come from an increase in consumer purchasing power, but also from a shift from plastic to glass packaging within cosmetics, beverages and even household care. Marketers are increasingly using glass as a means of differentiating their products in order to make them appear more premium to other mainstream brands.
Growth in recycling initiatives
Thanks to an increase in consumer awareness and government initiatives there is a growing trend towards the need for recycling or reusing packaging. Non-profit organisations have been established by the leading manufacturers in order to increase the collection of waste products nationally. This is expected to be aided by a new piece of legislation, the Waste Management Bill, the aim of which is to draw manufacturers and retailers into the loop of responsibility through tighter limits on the amount of packaging used in the manufacture and marketing of products.
Table of contents
EXECUTIVE SUMMARY
Consumer boom boosts packaging market
Cheap imports and rising raw materials affect profits
Continued consolidation within the competitive environment
Glass booms as demand grows
Growth in recycling initiatives
MARKET BACKGROUND
PACKAGING LEGISLATION
Lack of packaging legislation in South Africa
New waste legislation
Companies are anticipating the change in legislation
RECYCLING AND THE ENVIRONMENT
South African consumers are very environmentally-aware
Reusable packaging on the increase
New Waste Management Bill to be introduced in 2007
New PET recycling initiative has a good first year
Glass recycling receives a boost
South Africa continues to be one of the most successful metal can recycling countries
Table 1 Overview of Packaging Recycling and Recovery in South Africa 2004/2005 and Targets for 2007-2010
CORPORATE ACTIVITY IN PACKAGING
South African packaging market is very consolidated
International players not prominent on local market
Astrapak continues its acquisition strategy
Nampak helps Transpaco improve its share of the flexible plastics market
Ethos Private Equity Fund bids for Consol
MAJOR MARKET PLAYERS (LOCAL COMPANY PROFILES)
NAMPAK LTD
Nampak continues to dominate the packaging market in South Africa
Imports keep volume growth low in 2006
Nampak withdrawing from plastic bags
Nampak maintains its dominance in beverage cans
Aerosol cans lead growth in 2006
Improvements in OTC healthcare market likely to aid growth
Nampak, one of the largest packagers in Africa
Summary 1 Nampak Ltd Operational Indicators 2006
Summary 2 Major End-Use Markets for Nampak Ltd by Pack Type 2006
CONSOL LTD
Consol Ltd purchased by Ethos private equity fund
Glass division shines
Input costs rise
Expansion to follow increasing demand
Consol withdraws from plastics
Consol looks to develop its glass exports to East and West Africa
Summary 3 Consol Ltd Operational Indicators 2006
Summary 4 Major End-Use Markets for Consol by Pack Type 2006
ASTRAPAK LTD
Astrapak maintains growth through acquisition strategy
Growth below predicted
New start-up looks promising
Plastic flexibles and films affected by rising input costs
Rigid plastics under-performs
Summary 5 Astrapak Ltd Operational Indicators 2006
Summary 6 Major End-Use Markets for Astrapak by Pack Type 2005
TRANSPACO LTD
Acquisitions help sales to surge
Transpaco purchases Nampak Flexible
Attempts to make business more cost efficient
Further entrenching its position within the recycling market
Growth in paper likely to come from growth in pharmaceuticals
Summary 7 Transpaco Ltd Operational Indicators 2006
Summary 8 Major End-Use Markets for Transpaco Ltd by Pack Type 2006
BOWLER-METCALF LTD
Increase in cost of raw materials affects plastics division
Consumer goods boom, helps boost sales
Increasing demand for PET expected
Summary 9 Bowler-Metcalfe Ltd Operational Indicators 2006
Summary 10 Major End-Use Markets for Bowler-Metcalfe Ltd by Pack Type 2006
TETRA PAK SOUTH AFRICA (PTY) LTD
Tetra Pak dominates local dairy market
New product for Danone Clover extends shelf life of milk
Environmental concerns lead to recycling initiatives
Summary 11 Major End-Use Markets for Tetra Pak South Africa (Pty) Ltd by Pack Type 2006
POLYPAK (PTY) LTD
Polypak, regional player in plastics
Polypak purchases Consol Flexibles business
Summary 12 Polypak (Pty) Ltd Operational Indicators 2006
Summary 13 Major End-Use Markets Polypak (Pty) Ltd by Pack Type 2006
POLYOAK PACKAGING GROUP
Polyoak, key provider of rigid plastic in South Africa
Dairypak continues to introduce innovative products
Polyoak launches new PET range for wine
Summary 14 Major End-Use Markets for Polyoak Packaging Group by Pack Type 2006
CONSUPAQ (PTY) LTD
Consupaq increases capacity for plastic tubes
Recent corporate activity to benefit Consupaq going forward
Summary 15 Major End-Use Markets for Consupaq (Pty) Ltd by Pack Type 2006
BOXMORE PLASTICS INTERNATIONAL (PTY) LTD
Boxmore benefits from growth in beverages
Soft drinks growth limited by CO2 shortages
Boxmore forms agreement with Kortec
Summary 16 Major End-Use Markets Boxmore Plastics International (Pty) Ltd by Pack Type 2006
LENCO HOLDINGS LTD
Lenco, one of the largest packaging companies in South Africa
New machinery gives company a competitive advantage
Lenco signs deal with Southern Africa’s largest beverages manufacturer
Summary 17 Major End-Use Markets for Lenco Holdings by Pack Type 2006
SAPPI LTD
Summary 18 Sappi Ltd Operational Indicators 2006
Summary 19 Major End-Use Markets for Sappi Ltd by Pack Type 2006
MAJOR MARKET PLAYERS BY PACK TYPE
RIGID PLASTIC
Numerous players active in rigid plastic
Rising input costs reduce profit margins
Astrapak continues to grow
Bowler Plastics see growth in PET
Lenco Holdings secures ABI contract
Burcap targets the reusable container market
Growth coming from PET going forward
Summary 20 Major Rigid Plastic Packaging Manufacturers by Pack Type 2005
METAL
Metal continues to fall out of favour
Bevcan dominates beverage cans
New can aims to reduce quantity of metal
Launch of the slim line can
DivFood dominates food cans
Summary 21 Major Metal Packaging Manufacturers by Pack Type 2005
FLEXIBLE PACKAGING
Market suffering from oversupply
Consolidation in local market
Flexible packaging used as a means of differentiation in toiletries
Growing trend towards refill packaging
Summary 22 Ranking of Major Flexible Packaging Manufacturers 2005
GLASS
Consol maintains control over the local glass market
Demand for glass increases as consumers demand more premium products
Nampak produces first glass bottle for energy drinks
Summary 23 Ranking of Major Glass Packaging Manufacturers 2005
LIQUID CARTONS
Cartons dominated by international players
New Clover milk packaging takes market by storm
Summary 24 Share of Major Liquid Carton Manufacturers 2005
PAPER-BASED PACKAGING
Nampak dominates paper-based packaging
New opening and dispensing features for paper cartons
Paper-based packaging likely to see growth from OTC healthcare
Summary 25 Major Paper-based Packaging Manufacturers by Pack Type 2005
CLOSURES
Nampak continues to dominate the closures market
Tetra Pak develops new closure for Danone Clover
First metal tamper-evident closure developed
New double-seal closure
Increase in demand for screw tops in wine leads to new closures
Summary 26 Ranking of Major Closure Manufacturers 2005