How packaged foods increase demand for plastic containers
The increase in demand for packaged foods and the stocking of these locally produced foods in mega stores has been driving up demand for food packages, especially disposable plastic containers.
Naomi Peterson, managing director, Nampet Ventures Nigeria Limited in Port Harcourt, Rivers State, producers of disposable plastic materials, says demand for plastic containers as food packages has gone up by about 40 percent in the last five years.
“The demand for plastic containers is being driven by the need to package food in very attractive containers. The fact that these containers are disposable is also helping the continuous demand,” she says.
According to Foraminifera, a marketing research company, the annual production of polythene material which is the most widely used plastic material in Nigeria is currently about 80 million metric tonnes. This infers that in the last five years, annual production of plastic increased by over 30 million metric tonnes from about 50 million metric tonnes.
Also, a report by Mckinsey and Company says that as the Nigerian economy develops, the demand for plastics is estimated to rise at about seven percent annually over the next few years while its consumption of plastics would expectedly grow significantly corresponding to those of other developing countries.
Experts say though that this demand is driven mainly by the aspirational tastes of Nigeria’s expanding middle class and the standards set by the mega stores that have emerged to serve them.
Jimi Johnson, a licensed stockbroker and SME consultant says the packaging of snacks such as cashew nuts, groundnuts and beverages such as malt, juice and soft drinks with plastic containers and the increasing popularity of bottled water, makes food packaging plastics to rank very high in output volume than other range of plastics in the industry.”
He however observes that the demand for plastic containers is also being driven by products other than food, such as pharmaceuticals, cosmetics and washing liquids but that in recent years, the main driver of growth has been food. Johnson says that demand for food packaging plastics is rising daily, as population increases, as does the sophistication of the Nigerian middle class for well packaged local foods.
He says research conducted by his firm reveals that most of the new players in the plastic or polythene manufacturing market, between now and five years ago, are medium and small scale producers, hence they are not big names.
“The dominant players in the market are mostly Indians and a few Lebanese. Some Nigerians are making gradual in-roads into the industry but not at the same scale with these foreign owned companies. The few entrants operate mainly in the petrochemical (pet) plastic line for packaging of food, fruit drinks, water and other beverages,” says Johnson.
Some of the big players in the industry also attests to a massive demand for food grade plastic containers in the last three years. A top executive of a leading Indian-owned Lagos-based plastic manufacturing firm says this increased demand for food plastic containers has helped to keep the firm stable inspite of the infrastructural challenges, mainly epileptic power supply.
According to Johnson, with a pet blowing machine and power generating set to machine capacity, people with the technical know-how are setting up these cottage-sized factories. He says, “They mostly operate underground (maybe for taxation and standardisation purposes) till they grow big, and they are sited in interior places where they can get more hours of power supply than in more congested areas.”
Mackinsey report also shows that the plastic manufacturing subsector is currently fragmented with numerous small players creating a wide variety of plastics and that these plastic manufacturers rely on the upstream petrochemical sector and imports to provide them with the resin raw material inputs.