Packaging industry sees growth as urbanisation rate rises

Nigeria’s packaging industry has seen significant growth, recording about 40 percent expansion in the last five years, according to Naomi Peterson, managing director, Nampet Ventures Nigeria Limited, producer of disposable plastic materials based in Port Harcourt, Rivers State.

In a recent survey, PCI Film Consulting says Nigeria’s packaging industry has accounted for 12 percent of the $4 billion recorded by Middle East and African markets in the last five years.

One reason for this is the steady rise in urbanisation rate as more people move from rural and less developed areas to cities. In 2012, the United Nations Organisation (UN) put Nigeria’s urbanisation rate at 51 percent, suggesting that over 80 million people lived in the cities. Currently, the UN says this number is growing at an annual rate of 3.5 percent.

On July 24, McKinsey Global Institute, a management consulting firm, released a report entitled, ‘Nigeria’s Renewal: Delivering Inclusive growth in Africa’s largest economy.’ The report gives a spotlight on rapid urbanisation taking place in many developing and emerging economies, including Nigeria. “Today, a new wave of urbanisation is transforming the developing world at an unprecedented rate and on a scale never before seen,’’ says the report, which estimates the country’s consumer potential as 160 million, greater than the populations of France and Germany combined.

The report says the growth of Nigeria’s urban population is expected to continue at about 4 percent per year, which would mean that more than 60 percent of Nigerians could be living in urban areas by 2030.

Rise in the demand for plastic containers is occasioned by rapid need for packaged food and drink products in the country’s market.

“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,” says Peterson.

Research has shown that consumption rate for packaged products is much higher in urban areas, where a chunk of 170 million potential consumers, fast-growing middle-class and over 60 percent youths are.

Real Sector Watch’s findings show that most packaging firms find their markets in urban areas, where consumers patronise more of canned/preserved foods, plastic drinks, among others.

Work pressure and demand for convenient lifestyle in the cities combine to drive demand for packaged goods. These have brought about a gradual shift from traditional to packaged foods, thus driving the growth of modern, super and hyper market outlets, said Patrick Olubunmi Marinho, CEO, Avante Consulting Solutions.

Euromonitor International, a market research firm, says although this category is largely mass-based, growing urbanisation and increase in formal working employment are creating demand for less time-intensive food preparation.

“A desire for convenience is therefore driving strong growth in products such as noodles and baby food as consumers move away from the traditional unpackaged food products popular in Nigeria,” it says.

Recall that in February 2014, Nampak, Africa’s biggest packaging firm, concluded negotiations to pump $301 million on acquisition of Alucan investment, another packaging firm in Nigeria. Currently, some of the packaging firms in Nigeria are Eagle Packaging Printing, Salimonu Company Nigeria, Avon Crowncaps and Containers, Tetra Pak, among others.

ODINAKA ANUDU