10pc annual growth seen for food packaging
Dubai, February 24, 2009
Al Bayader International, a leading manufacturer of food packaging products, has said that the industry in the Middle East is expected to continue to grow at an average of 10 to15 per cent annually.
“This growth is in line with international forecasts that confirm that food companies and industries related to food, such as disposable items and other sectors, will escape unscathed from the economic and financial market developments,” said Nidal Haddad, chief executive officer of Al Bayader. “They will even increase their market by 10 percent in 2009.”
The comment was made at the opening ceremony of the 14th Gulf Food Exhibition in Dubai which kicked off yesterday (February 23) at the Dubai World Trade Centre, and confirms analysts’ views that are supported by market research.
One such recent survey conducted in the US and which looked at more than 800 companies, concluded that the food and packaging industries increased more than 10 per cent during the fourth quarter of 2008. The survey found that 59 per cent of food and food packaging companies project revenue increases for the next 12 months.
The majority of food and packaging manufacturers in the US also expect to increase their workforce over the current year, with 10 percent predicting they would hire new employees in the period.
“Food and food packaging companies don't have the same concerns in the current global economic challenges. Ours is a demand driven message. The food packaging industry remains healthy and will continue to be so, driven by the fact that food and food packaging consumption is not going to weaken and that changing social trends will lead to increased usage of disposable food packaging,” added Haddad.
Al Bayader remains on track with its five-year expansion plan. The new Jebel Ali logistics hub supports the company’s ever-growing markets’ network and the manufacturing facilities in the UAE and Qatar continue to feed the market with 30 per cent of Al Bayader’s sales. New production lines are also expected to be installed in the Qatar facility once the new QR17 million ($4.7 million) hub is completed later next month.
“Food and food related industries like packaging and disposable packaging companies have historically been a ‘safe haven’ during turbulent times for the market,” he explained.
“Current share prices of diversified food and food packaging companies validate this fact. They remain strong globally.”
Prices of raw materials have also declined. “The commodity costs are starting to decline; PS resin prices went down from $1800 per ton in September 2008 to $800 per ton in January 2009. Aluminum and paper also witnessed a huge decrease in price,” Haddad elaborated.
“The food packaging industry is considered more conservative than the market overall and usually forecasts and expansion plans are built on solid facts. It will have better access to capital going forward.”
Globally, banks and financial institutions are today looking at supporting low-risk industry sectors such as the food and food packaging industries, spare parts and medicine, according to market analysis. Branded companies are also coming out quite well for the food packaging industry in the current market environment.
Brands that are highly differentiated or are in categories that are not commoditized are performing better. Al Bayader’s Fun brand is a case in point. Fun has established a strong awareness since its launch 12 years ago supported by innovation, quality and a comprehensive line-up of products.
Nidal Haddad stated that new social trends as another factor that is helping grow the food packaging sector. “People are beginning to eat more at home, ordering food from take- away restaurants or buying food from fresh food counters in hypermarkets and supermarkets,” he said.
“All the vital signs for the disposable food packaging industry<