Market Overview

The Saudi Arabian plastic packaging market was valued at USD 8.07?billion in 2019, and it is projected to reach USD 11.24?billion by 2025, registering a CAGR of 5.6% during the period of 2020-2025. Most of the manufacturers are introducing additional functionalities of EVOH films for packaging. Functionalities, such as cost-effectiveness and high seal strength, are displaying an emerging trend in EVOH films for packaging. EVOH films are used as a food packaging solution, as they can successfully retain the properties of food products, thereby, preventing it from contamination during shipments.

  • Demand for oxo-degradable plastics is expected to increase with new regulations being enforced. The new regulation is expected to affect a wide range of products, such as plastic cases, plastic bags, and other plastic packaging products. According to the new rules implemented by the Saudi organization (SASO), plastic products must now be made of approved oxo-biodegradable material. This is expected to drive the investment for innovation and is projected to result in the introduction of new packaging solutions in the market, over the next two years, to adhere to the unique regulatory needs as well as the needs of the end-user clients.
  • Increasing flexible plastic packaging solutions demand across the end-user industry is driving the market to grow. In FY 2019, the Saudi government introduced a 17% increase, an estimated USD 45.86 billion, in the funds allocated for healthcare and social development. Out of these allocated funds, approximately USD 12.72 billion has been earmarked for being spent on healthcare projects, directly linked to Saudi Arabia’s Vision 2030. The developments in the markets for healthcare, pharmaceuticals, and cosmetics are expected to remain the primary drivers of the demand for plastic packaging products.
  • Environmental concerns over recycling and safe disposal and price volatility of the raw materials are restraining the market to grow. The contribution of plastics to microplastic pollution poses a huge environmental risk when they are not properly managed at the bottom level of the value chain, throughout their prolonged lifecycle, particularly in the ocean.

Scope of the Report

Saudi Arabia is one of the largest markets for the packaging industry in the Middle Eastern region. The country has a huge consumer base and wide range of industrial activities. Moreover, according to the SDIF, as of 2018, there were around 791 food manufacturing facilities, 173 beverage manufacturing facilities, 94 textile manufacturing facilities, 102 apparel manufacturing facilities, and 45 pharmaceutical manufacturing facilities in the country, which account for 16% of the total industrial manufacturing establishments in Saudi Arabia, by which the demand for plastic packaging increases.

Key Market Trends

Rigid Packaging in Healthcare Products Expected To Significant Market Growth

  • As the largest economy in the region, by both GDP and population, Saudi Arabia has the largest pharmaceuticals market in the GCC region. The sector has grown from worth about USD 3 billion in 2008, to about USD 7.4 billion in 2016. In 2018, the government allocated USD 39.2 billion for the healthcare and social development sector, an increase by 10%, when compared to 2017.
  • Moreover, the development of four ’economic cities’ is also expected to create new opportunities for the establishment of pharmaceutical processing and packaging units in this region. For instance, the King Abdullah industrial city has been mooted for the growth of the pharma sector. The companies, like Pfizer (Saudi), invested in developing pharma manufacturing and packaging facility in the area.
  • With the increasing costs of imported pharmaceuticals, the government is motivating the local packaging and manufacturing activities. In addition, the easing of trade sanctions is expected to open new avenues for these players to set up their packaging and processing plants. Boehringer’s recent market activity can be considered as a significant example, as the company collaborated with Cigalah and Tabuk (local companies) for the secondary packaging of its products in compliance with local regulatory standards.
  • Collaborating with local companies remains a considerable challenge for the global companies, as they need to meet the quality standards and comply with regional regulations. The Saudi Food and Drug Authority (SFDA), in conjunction with other GCC member countries, is responsible for the pricing of pharmaceutical products in this region. The primary objective of the SFDA is to secure complete control over the medicine supply chain in the country. The counterfeit drugs are an issue in the region, along with smuggling and illegal sales of drugs. To control this, SFDA is currently rolling out the track-and-trace system, which is further estimated to increase the adoption of advanced rigid packaging in the pharma sector.

Cosmertics & Personal Care in Flexible Packaging Account for Significant Market Growth

  • Saudi Arabia has a lot of potential for cosmetic and beauty products in the Middle East and Africa region. The country has the highest consumption rates of cosmetics and is the leading country for the consumption of hair care and skin products in the MEA region. Consumers tend to spend a lot of money on their appearance supplementing the cosmetic industry in the country.
  • Flexible plastic packaging is highly preferred among the manufacturers, due to its wide applications and low-cost properties. Companies prefer plastic as a packaging material to pack the product into small units.
  • Companies, across the country, are focusing on the middle-class consumer group. This has led the companies to introduce small size packaging of the product, thereby influencing the demand for the flexible plastic packaging industry. Innovation in the product lines of the companies also plays a vital role in the growth of the market. For instance, the introduction of anti-aging creams has led to an increase in the number of packaging materials in the recent past.
  • Moreover, Saudi Arabia is witnessing a growing demand for halal beauty products. As the country majorly constitutes the Muslim population, these products have gained enormous popularity in the region among consumers. These products are not excluded or limited to Muslim community only, these products have gained importance among the Non-Muslim consumers also, which is the major factor for the growth of halal cosmetics and vegan cosmetic products in the region.

Competitive Landscape

The plastic packaging industry is highly fragmented in the country, comprising of market incumbents (such as Napco Group and APICL Takween, and others), and accompanied by several regional Saudi Arabian contract packaging firms. Sustainable competitive advantage can be gained through innovation in design, technology, and application. The levels of market penetration in Saudi Arabia have grown significantly over the last decade, aided by the growing demand from the food and beverage and pharmaceutical industries. Recent developments in the market are -

  • Mar 2019 - SABIC introduced its COHERE S-series, produced using NEXLENE technology. It was developed in response to market demand for solutions with more effective sealing properties to better protect its contents and properties, to allow higher production efficiency in the flexible packaging industry. This will potentially support the reduction of waste and cost savings.
  • Apr 2018 - SABIC announced the opening of its first-ever polyacetal (POM) plant in the Middle East & African region at a joint venture manufacturing affiliate, the National Methanol Company (Ibn Sina), in Jubail, which is likely to give a competitive edge to the company, in the highly dynamic global engineering thermoplastics industry.

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