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Business growth of Biodegradable Packaging in Industry


The global biodegradable packaging industry is a rapidly evolving market. The current scenario in the global biodegradable packaging market is dominated by number of major players that include International Paper (U.S.), BASF SE (Germany), Mondi Group (U.K), Stora Enso (Finland), Smurfit Kappa Group (Ireland), RockTenn (U.S.), and so on. Most of these companies are leaders in the production of paper and plastic biodegradable packaging along with other products.

These companies are focused on investment for, acquiring existing businesses and establish new production facilities and capacity expansion of biodegradable packaging facilities to achieve economies of scale, product innovation, and expansion in order to capture and improve market share.

Market players are concentrating on acquiring existing business as a major growth strategy as the biodegradable packaging market is a relatively saturated one. Companies are focusing on innovations and development of new products as per consumer preference in order to address the growing demand in emerging markets.

In the recent past, acquisitions have dominated the strategies adopted by biodegradable packaging players globally. The major market players have invested large amounts to enter and enhance their market position through acquisitions, new product launches, and capacity expansions. For instance, Smurfit Kappa Group acquired Mondi U.K’s corrugated board packaging assets for approximately $57 million. Smurfit Kappa also acquired packaging businesses of Orange County Container group for $340 million in 2012.

New product launch is the second most preferred strategy among the biodegradable packaging market players. This strategy emphasizes the fact that leading players have turned to product innovation through new product launches in different geographies in order to obtain competitive advantage through portfolio synergies. During 2010 to 2013, new product launches accounted for 22.85% of the global biodegradable packaging market growth strategies. The leading market players interestingly have invested in their R&D facilities to develop new products to meet their customers’ needs.

In developed countries, the demand for cheaper, more effective, and widely useable products is continuously increasing. To meet these requirements, the market players such as BASF SE (Germany), Mondi Group (U.K), and Novamont (Italy) introduced new products at a regular interval in the recent past. These new launches have helped the companies to increase their market share in the global biodegradable packaging market.

The market leaders have adopted different strategies for the developed and developing countries. In developed countries, the demand for food packaging and beverage packaging is expected to grow at a higher rate; whereas, in developing countries, the personal and home care packaging and pharmaceuticals packaging along with food packaging and beverage packaging have shown positive response. The strategy of the market players is focused on acquisition of existing players in new geographies through investment, developing technology, and expanding production capacities. However, there are different challenges associated with each of these markets. While most of these markets are the countries with diversified cultures, languages, and lifestyles, these are also battling with adversities such as poverty in certain regions, lack of proper infrastructure, low literacy rate, disinterest on the part of governments to promote the use of biodegradable packaging. This is a major challenge for the biodegradable packaging industry as there cannot be a single solution to fit all while approaching this business.

Related Reports:

Biodegradable Packaging Market by Packaging Type (Plastic and Paper), Applications (Food Packaging, Beverage Packaging, Pharmaceuticals Packaging, Personal & Home Care Packaging, and Others) & by Geography (North America, Europe, Asia-Pacific, and ROW) - Global Trends & Forecast to 2019

 

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