A wider offering of rigid packaging will allow manufacturers to adopt new packaging solutions to help them grow their brands and defend margins in the competitive food industry.
China is already the world's biggest producer of plastic film, made from bi-oriented polypropylene (BOPP), but with plentiful domestic capacity, demand from the growing food industry has been met by domestic players. After significant investment in new capacity over the past five years, the country now produces around 1.4 million tonnes of film, double the amount produced and consumed in Europe.
However as the retail sector develops alongside rapid urbanization in China, the food industry will require more sophisticated packaging, including rigid containers for trays.
"We've already seen beverage containers grow extremely strongly," said John Nash, analyst at UK firm AMI and author of a new report on China's polypropylene market.
"With the growth of organized retailing we will see new supply chains that require robust packaging. It's clear that we're going to see a lot more food packaged in rigid containers," he told AP-Foodtechnology.com.
Foods like yoghurts and bakery items have long been packed in rigid trays by European manufacturers but with both segments new to China's food industry, rigid packaging is only beginning to see demand.
But unlike film, which has become a commodity product, rigid containers are typically made locally, says Nash, and China is therefore expected to see huge investment in the production of rigid packaging in the coming years.
"So far foreigners barely participate in this market but that will change as they recognize what is happening in retail," he said.
"While BOPP is difficult to differentiate, service is a strong point of differentiation in rigid packaging and this is what Western producers have learnt to do well," continued Nash.
He expects to see international makers of rigid packaging enter the Chinese market within the coming year, attracted by a growth rate of around 16-17 per cent compared with 3 per cent in Europe.
"The big multinationals are looking for quality and reliable sources of supply. This suggests that there is demand for Western packaging suppliers here," says Nash.
About 1 million tonnes of rigid packaging was consumed by China last year, not yet at the level of Europe (1.4 million). But given the growth rate of food retailing, the market is expected to far surpass European demand.
The report, Polypropylene markets in China, can be obtained from Applied Market Information www.amiplastics.com .
