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Brand influx to boost packaging industry

24 January 2018

As Government of India announces sweeping changes to its FDI regime, including relaxation in the much touted 100% FDI in single-brand retail under the automatic route. IKEA group is expected to be immediate beneficiary considering the fact that it already has the necessary FDI approval in place and an active plan of action too. The company is set to open 25 stores by 2025 and has invested over 11,000 crore. It has an approval to invest up to 110,500 crore. IKEA is expected to bring Hej Home starting from its Hyderabad store, which is slated to open early 2018, followed by Mumbai in 2019 and then Bengaluru, Delhi-NCR

h-m-699x380 Fashion brand H&M during a branch opening in Mumbai (source: twitter)

Global fashion brands ready for Indian shores

A report in a leading financial daily, states that the growing success of international brands like Zara, H&M etc., has prompted serious interest in several mid-level fashion brands like Avva, Colin’s, Collezione and Mavi Jeans with plans to enter the market through joint venture or franchise route.

According to Franchisee India, 250 to 300 brands are expected to enter India, bringing in investment of about $1 billion over the next two years. The focus though is expected to be top cities and lack of infrastructure is being sighted as the reason for the brands not venturing into the tier II and III cities.

Top food and beverages brand are also said to showing keen interest post 100% foreign ownership in business-to-business (B2B) e-commerce and food retail, for food products manufactured in India.

E-commerce boost for packaging

A report by financial services company, The Avendus group states that the transit/parcel packaging segment in India is set to grow from $170 million to $660 million, a whopping four times thanks mainly to the burgeoning e-commerce market.

India now contributes to mere 1% to overall parcel shipments worldwide in comparison to US and China which together contribute to more than 60%.

The size of online retail market is chalked at $16 billion with China leading the pack at $610 billion. This is considered as the indicator of the possible market size of online retail and thereby packaging requirement in the near future.

Conservative estimates states that online retail should grow at 12% in the next five years. This should also increase the packaging outlay of these vendors and make it one of the fastest growing packaging segments.

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