Packaging: a voice of sanity

“The imposition of lockdown (shelter in place) rules in H1 2020, caused a boom in demand for packaged goods. Shoppers stayed at home and stockpiled many essentials, particularly food, leading to a peak in demand for printed folding cartons. In the short term, one consequence of this was that run lengths of mainstream core products increased,” the report said.

Ashish Pradhan, president Asia, Siegwerk, says that flexible packaging had a great year last year, but it seems to be losing steam this year. “It is tough to generalise because there’s so much volatility in the market. The Covid situation makes it very diffi- cult to predict. For example, we had a strong month in May in 2021, but June was rather weak. This is because the stocking pattern of our mono carton and flexible packaging customers are changing. In anticipation of the third wave, the customers stocked requirements, and our sales went up. This gave a sense that the markets are reviving. And then the sales fell, because our customers deployed the inventory which was stocked in May,” he says.

The ink industry in India had a rocky 2020, but it has been a downright dystopian 2021. Pradhan says, “Therefore, predicting 2021-22 with the last year as the base year, is going to be risky.” Overall, the FMCG growth has slowed down. It is still moderate to good. There are shifts within the FMCG consumption. Clearly, the middle class is climbing down on the sophistication pyramid. Impulse buying is reducing. For example, chocolate consumption seems to be affected.

“Teenagers picking up Lays chips and Diet Coke off the shelf is not happening, because children are not going to schools and colleges. These are issues related to Covid-19,” explains Pradhan. Now, disposable incomes are under threat. As a result, people are moving down the value chain or the food chain. The basics are intact but the high-end stuff has got impacted. This impact is not merely related to the flexible packaging segment but also to sheetfed offset mono cartons. “The exception in sheetfed offset being the liquor segment. AlcoBev has picked up due to the apprehension of lockdown and closures of shops which is driving sales. Even though corporate parties and the big Indian weddings are not happening, alcohol consumption still seems to be robust,” says Pradhan.

Sheetfed offset has averaged out and has been tapering this year. The same is the case with flexible packaging, but flexible’s deceleration is starker because the sector had a robust last year. “The sheetfed offset segment did not have a great last year, so you don’t see a big dip. For example, in July, some of the packaging majors have reported poor sales. That’s a reflection that things are slowing down,” points out Pradhan.

So, what’s his message to his team? Pradhan says, “Keep your eyes and ears as close to the customers as possible. Also, be as agile as possible in the decision- making with the customers.

Everyone in the Siegwerk team has been empowered to take quick but prudent decisions. In these times, we have to be agile and aware of ground reality.”

Also read:
Has Covid altered Indian print forever?
Corrugation and label industry: hopes for post-pandemic demand
Wide-format industry: sluggish growth
Spotlight: Malayala Manorama and Dainik Bhaskar
Insights on the next six months for print
Vox Populi: Industry's take on pandemic blues