An enhanced and upgraded economic performance in the region, compounded by progressively sophisticated consumers and a greater purchasing power, has molded the packaging market in Mexico. The outcome is the appearance or emergence of higher quality packaging, offering convenience, and graphic appeal. More than 75% of all finished products in Mexico need packaging, of these, 90% are in the food and drinks category. Confirming Mexico’s significance to the global industry, its paper packaging segment has seen robust M&A activity as well as investment in new dimensions. This growth and expansion have not yet kept up with the demand, as a substantial amount of its apparent consumption is achieved and satisfied with imports.

- In addition to a developing middle class, improving the condition of the poorer customers has fueled robust expansion in packaging volumes, creating a key opportunity for packaging firms. The industry offers an extensive and diverse range of opportunities where beverages, food processing, personal care, and pharmaceutics are the main sectors.

- The foremost market driver has been the demand for an elongated shelf life of products and varying and changing the lifestyle of people. Additionally, the shelf life can be augmented by protecting products from potential deteriorating agents, such as oxygen, microbes, and moisture. To defend and guard the products, businesses need a cost-effective packaging solution, and at the same period, provide adequate protection to the product.

- Packaging has longer and superior barrier abilities and can effectually defend the product from moisture and oxygen. Though concerns about the environment and recycling are anticipated to restrict and limit market growth.

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Key Market Trends

Increasing Industrial Demand for Downgauging to Drive the Market

- Packaging is preferred in many instances, owing to its low usage of resources and energy, as compared to alternative forms of packaging methods. It provides significant performance advantages over rigid packagings, such as significant reductions in packaging costs, materials used, and transportation costs. Flexible packaging for commodity goods and services requires large volumes of raw materials, despite the low-profit-margin for product polymer manufacturers, as there are a plethora of raw material suppliers in the industry to cater to this demand.

- The price of plastic feedstocks is subject to the variability of the global hydrocarbon market, which determines the price and the costs incurred by plastic polymer manufacturers. To counter this, packaging manufacturers are looking for alternatives, to provide improved solutions, which have a lower impact on the environment and are more efficient.

- Downgauging refers to reducing the amount of material in a product, while still maintaining or even improving the properties of the material. Improved plastics have been recognized to offer tremendous downgauging opportunities in packaging. A gram or two saved in the weight of a package has been identified to have an enormous impact on the environment and the energy efficiency it can achieve, considering the millions of individual packages produced annually.

Food and Beverage End-user Segment to Have the Largest Market Share

- The steady decline in poverty rates, coupled with a growing middle-class population, has led to the growth of the food industry in Mexico. Packaged food products have recorded high growth, owing to the growing need for convenience and ‘on-the-go’ lifestyle of the local populace.

- Packaging companies around the world are manufacturing packages that help achieve these objectives so that food manufacturer can safely transport and sell their products to end customers. Mexico is witnessing the fastest growth for retail packaging in the food sector, after Brazil, in Latin America.

- Owing to the slump in soft drink consumption in North America and Europe, Mexico is seen as a potential market. Though carbonated soft drinks sales are declining, due to growing conscientious population, high growth is witnessed in the RTD drinks, energy drinks, and fruit juices.

- From morning juice to rejuvenating drinks, consumers currently are spending more on products that are safe to consume to keep them refreshed. On the other hand, the consumption of alcoholic drinks in this country is on the rise, due to low taxes, unregulated marketing, and flexible government policies.

- This country has one of the highest per capita consumers of alcohol and there is a surge in the demand for packaging. The packaging for alcohol has increased the portability in the supply chain, allowing consumers to consume at their comfort.

Competitive Landscape

The packaging industry in Mexico is highly competitive and consists of several major players. In terms of market share, few of the major players currently dominate the market. These major players, with the prominent share in the market, are focusing on expanding their customer base across foreign countries. These companies are leveraging on strategic collaborative initiatives to increase their market share and profitability.

- February 2018 - Switzerland-based Amcor Flexibles Kreuzlingen AG filed a patent application for flexible multilayer packaging film with ultra-high barrier properties.

- January 2018 - Mondi Group partnered with its customer, Royal Vaassen Flexible Packaging, a global specialist in packaging for food and drink. Using Mondi Speciality Kraft Paper’s Advantage MG Coating, Royal Vaassen is expected to supply market leaders within the food industry, with solutions for spiral-tube packaging like pack and display chips.

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