FOR INTERNAL PURPOSES ONLY INDIA MARKET REPORT GLOBAL OPPORTUNITIES IN PACKAGING ( ) (NPeS7. lfvoma. ft PrintPromotion PRODUCED BY

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1 FOR INTERNAL PURPOSES ONLY INDIA MARKET REPORT GLOBAL OPPORTUNITIES IN PACKAGING ( ) (NPeS7 lfvoma ft PrintPromotion -- PRODUCED BY

2 Table of contents Executive summary Overall print packaging market Print packaging segments Drivers of change: Industry and external Drivers of change: Macroeconomic and demographic Recommendations Deep dives Appendix: Regional profiles Appendix: Country profiles Appendix: EIU methodology Appendix: Definitions 2

3 Background to the study The Worldwide Market for Print 2.0 (WWMP 2.0) study examines the current state and outlook for the global print packaging market The Economist Intelligence Unit (EIU), in partnership with NPES -- The Association for Suppliers of Printing, Publishing and Converting Technologies -- and VDMA -- Verband Deutscher Maschinen- und Anlagenbau -- has conducted a study of the global print packaging industry. The objective of the study was to develop a historical assessment of the global print packaging market between 2011 and 2015 and to project its development over 2016 to The study examined five segments of the print packaging industry: corrugated, folding carton and paperboard, flexible, labels and tags, and other print packaging. The EIU developed the market sizing, forecasts and insights in this report from February to September Primary and secondary research efforts were combined with statistical techniques to estimate the historical market sizes ( ) of the print packaging segments. Product scope Corrugated print packaging Folding carton and paperboard print packaging Flexible print packaging Label and tags printing Other print packaging Geographic scope 26 countries 6 deep dives Time period historical forecast WWMP 2.0 follows on from the WWMP 1.0 study (2013), also conducted by the EIU, which covered more than 50 countries spanning WWMP 2.0 Packaging study 5

4 Geographic scope 26 countries spanning all global regions, representing 80% of global GDP and 70% of the world s population, were selected and analyzed, based on their overall size and global importance within the industry, as well as the potential growth opportunities they present. North America Canada United States Western Europe France Germany Italy Netherlands United Kingdom Central & Eastern Europe Poland Russia Turkey Latin America Brazil Chile Colombia Mexico Middle East Iran Saudi Arabia Africa Nigeria South Africa Asia-Pacific Australia China India Indonesia Japan Philippines South Korea Vietnam WWMP 2.0 Packaging study 6

5 India Deep dive

6 India: Overall and key takeaways India is quickly rising in the ranks of the print packaging industry, going from the 8 th largest market in 2011 to 5 th in By 2020 it will become the 4 th largest market, passing Germany, and at this rate, shortly after the 2020 horizon, India will surpass Japan, becoming the 3 rd largest market in this study. India is the fastest-growing print packaging market across all segments, growing on average 12.1% per year in local currency terms in Since 2011, India went from being the 8 th largest print packaging market to 5 th in It will pass Germany in 2020, and it will be just $557m behind 3 rd -placed Japan. The flexible print packaging market in India is much larger than folding carton. However, the folding carton segment in India is still sizable because of exports, in particular luxury goods and cigarettes. According to experts, the fastmoving consumer goods and food goods are the sectors that offer the best opportunities for print packaging. Print packaging market by segment in India in 2016 and 2020 (US$) Billions Flexible Labels & tags Folding carton Corrugated CAGR 11% Other Note: Compound annual growth rate in US dollar terms. Segment growth in India Flexible Labels & tags Folding carton Corrugated Other Total % 12.1% 12.6% 12.0% 12.2% 11.9% 12.3% 12.2% % Note: Figures presented are compound annual growth rates in local currency terms.

7 India: Current dynamics and trends Print packaging market size by segment in India in (in Indian rupees) Billions 1,400 1,200 1, Flexible Labels & tags Folding carton Corrugated Other India growth (%) Asia-Pacific growth (%) Note: Regional and all countries growth is a simple average of growth rates. 1 10% 6% 2% 0% India macroeconomic indicators Population (m) 1, , , , , ,389.0 GDP (% real change pa) Consumer prices (% change pa; av) Private consumption per head (US$) ,040 1,140 1,280 1,410 Exchange rate LCU:US$ (av)

8 India: dynamics and outlook India is the fastest-growing market for all print packaging segments in this study, and it will continue to grow strongly in The print packaging industry in India will grow strongly over , with each component segment growing at similarly fast paces. The fastest will be labels & tags, which will grow at an annual average rate of 12.6% in ; the slowest segment will be corrugated, which will grow at an annual average rate of 12.3% in the period. India is the 5 th largest print packaging market in our study with revenues of $12.2bn in By 2020, revenues will reach $18.6bn, just below Japan, the 3 rd largest market in our study with $19.1bn in print packaging revenues. Numerous international food brands are targeting the Indian market, such as Unilever, Nestlé and Pepsi. Those international companies will bring with them more demand for more sophisticated print packaging, which will lift revenues for flexible, labels & tags and folding carton. Indian consumers are not yet as eco-conscious or focused on green packaging as are consumers in mature markets. However, there is an expectation that these trends will reach India in the forecast period, which will lift further flexible print packaging revenues. Segment growth in India in % India print packaging segments market share in 2020 Flexible 30.2% Other 7. Corrugated 29.6% Flexible Labels & tags Folding carton Corrugated Other Note: Growth in local currency terms. Labels & tags 11. Folding carton 21.0%

9 India: Print packaging highlights India s fast-changing demographics will be the key driver to watch for the print packaging industry. It will be underpinning growing print packaging demand for luxury goods, pre-packaged processed foods and fast-moving consumer goods. A challenge for India s print packaging industry is the rising labor costs coupled with inflation, which raises costs and could result in the outsourcing of those print packaging plants to other cheaper labor markets. According to experts, manufacturers in India are generally not very sophisticated when it comes to print packaging and marketing. Designs are generally provided by brand owners, but even agencies employed by those brand owners are not very up to date and innovative. Some print packaging firms employ graphic designers to design for smaller companies who can not afford agencies, filling in the gap in the supply chain. The Indian packaging market is very fragmented, with estimates reaching 22,000 firms (including print packagers as well as other firms in the supply chain for packaging). Furthermore, according to experts, the informal market is large in India. The folding carton informal print packaging industry could be producing up to 25% of the market, in the form of candy boxes and shoe boxes. Rising incomes, urbanization and young people have significant implications for the print packaging sector, as more fast-moving consumer goods are sold, lifting folding carton, labels & tags and flexible print packaging. Furthermore, India s youthful population is becoming brand- and fashion-conscious, especially in big cities, where increasingly affluent households are acquiring a taste for luxury items. Many global brands are targeting this segment. Number of households by income range in India in 2016 and 2020 ('000s) > US$75,000 US$50,000 US$75,000 US$25,000 US$50,000 US$15,000 US$25,000 US$5,000 US$15,000 < US$5, , , In 2020, about 83m more households will earn more than $15,000 compared to This translates into about 420m new people in households earning more than $15,000, the overwhelming majority of whom will be rising from a lower income bracket.

10 India: Key segment analysis Labels & tags Positive outlook 20% 0% Labels & tags growth Total growth Consumer expenditure: Total Note: Print packaging growth is in local currency terms. CAGR 12.6% Demand for soft drinks has traditionally centered on fresh juices and bottled water (which use labels print packaging). Carbonated drinks will become more popular as innovative package sizing increases affordability. Per-head consumption of alcoholic drinks is small, but India is the world s largest whisky market in volume terms and will remain a major global spirits market (which use labels print packaging). Flexible Positive outlook 0% Flexible growth Total growth Consumer expenditure: Food, beverages & tobacco Note: Print packaging growth is in local currency terms. CAGR 12.5% Young city-dwellers are consuming more pre-packaged processed foods (which come in flexible and folding carton packaging) and the expectation is for this trend to strengthen. The industry is shifting away from folding carton and other rigid packaging to flexible because its considered more attractive, cheaper, and easier to transport.

11 India: Key segment analysis Corrugated Positive outlook Folding carton Positive outlook 20% 0% 20% 0% Corrugated growth Total growth Retail sales (LCU) Note: Print packaging growth is in local currency terms Folding carton growth Total growth Retail sales (LCU) Note: Print packaging growth is in local currency terms. CAGR 12.3% CAGR 12.2% E-commerce and exports will drive corrugated print packaging. A US investment bank, Goldman Sachs, estimates that Indian e-commerce is worth $23bn in the year to March 2016, from $11bn in 2015, a doubling of the market. Online retail will continue to grow as urbanization continues and more people are connected to the internet. Folding carton will be the slowest print packaging segment at an average annual pace of 12.2% in While the majority of the population will continue to rely on basic, unprepared foods, such as cereals, there is a growing demand for packaged foods, like ready meals and canned goods, especially in urban areas. This will support growth in the flexible, labels & tags, and folding carton print packaging markets.