Brazil Returnable Transport Packaging (RTP) Market - Growth, Trends and Forecast (2019 - 2024)

Market Overview

The Brazilian returnable transport packaging market is expected to register a CAGR of over 5.6% during the forecast period, 2019 – 2024. With this propelling packaging industry, the Brazilian government is also focusing on adopting reusable and recyclable strategies to avoid the wastage of this diverse and growing packaging industry. Wastage and disposal of packaging products can lead to environmental impacts, such as landfills.

The Brazilian Food and Beverage (F&B) industry is one of the most vibrant industries that has seen unprecedented growth in the recent past, and continues to expand rapidly. This can be attributed to the changing demographics, increase in disposable incomes, and urbanization, in the country. The Brazilian Supermarket Association (ABRAS) reported supermarket revenues at USD 353.2 billion in 2017, a 5.4% of the country’s GDP. This result represented an increase of 0.8% in real terms and 4.3% in nominal terms. The retail sector is made up of 89,368 stores, expanding in both size and number of stores, 0.9% and 0.4%, respectively.

Of the overall retail industry, food and grocery accounts for a significant share in revenue, in Brazil. The growth in the retail industry is due to the demands from the consumers that subsequently result in rise in production and supply. Thus, transport packaging comes into action in the food and beverage industry. Reusable plastic containers (RPCs) excel at both temperature control and product protection, delivering superior quality in the marketplace. Designed and built for transport, display, safety, and over a hundred uses each, RPCs protect quality, reduce cost, and eliminate waste; thus, propelling the food and beverage industry to generate significant opportunities for the RTP market in Brazil.

The initial costs of RTP are high. This is because initially durable and costly products, such as crates, pallets, containers, are purchased (as a higher volume needs to be purchased, and the more durable nature of the materials are used). As a result of this, many companies view returnable transport packaging as a capital investment.

The usage of RTP may also increase operational costs, including, for example, transportation, sophisticated equipment, and tracing and tracking. These may pose as barriers to the adoption and use of RTP. Furthermore, barriers to the usage of RTP could be maintenance, storage, and administration. Additionally, the management of RTP is also resource intensive.

Another disadvantage of returnable transport packaging is that there is a significantly greater upfront cost due to the materials used, as well as the requirement for additional inventory to ensure that there is sufficient for use in all parts of the supply chain. However, the frequency of return and reuse drives the return on investment. The more times a returnable package is used, the greater are the long-term savings. Over time, a returnable package may save a considerable amount of money, when compared to a one-time or limited-use package.

Scope of the Report

Brazil has been a promising country for the global and Latin American packaging companies that are looking to expand their market presence in the country. The Brazilian packaging market is the fifth-largest in the world, with Brazil being the seventh-largest economy in the world, by nominal GDP. Moreover, there has been a constant growth in the Brazilian packaging market, from 2011 to 2016, due to a combination of various factors, like rising urbanization, investments in the construction sector, and the expansion of the healthcare sector.

Key Market Trends

Barrels and Drums is Expected to Register a Significant Growth

Drums and barrels are cylindrical containers that are used for shipping bulk cargo. They are primarily used in the transportation of liquid chemicals and handlings, such as hazardous chemicals, oils, petroleum, gasoline, liquefied natural gas (LNG), and liquid nitrogen. Industries, such as food and beverage, chemicals, oil and gas, etc., are mainly focusing on strengthening their supply chain capabilities, in order to deal with the increasing demand.

The country’s oil production, particularly, is contributing to the growth of the market studied, as oil transport mostly uses barrels. The volume of liquid bulk cargo handled by ports in Brazil decreased from 598.95 million metric ton in 2014 to 99 million metric ton in 2016, and 89.91 million metric ton during first half of 2017, as reported by the Brazilian Ministry of Transport.

Thus, as the oil and gas industry has been facing challenges, in terms of revenue, due to recovery from an economic downturn, companies are adopting sustainable solutions to reduce maintenance and transportation costs. Metals and plastics are the predominant materials used for forming drums and barrels. For food, grains and grocery, food-grade drums are manufactured using the best grade material and modern machinery that adhere to international standards, at the vendors’ end.

These drums are extensively used by numerous industries, for exporting their products to other countries. While food-grade drums and barrels are for the use of long-term food packaging, food safety grade barrels are for recycled drums, such that they do not contain toxic or harmful chemicals. Plastic drums and barrels are used for food products, as they do not react with food content, unlike metal barrels.

Further, pharmaceutical, chemicals, and wine manufacturers are demanding cost-effective, lightweight, yet durable packaging solutions for all their bulk liquid packaging needs, thereby, contributing to the demand for barrels and drums.

Increase in the Number of Retail Establishments

The Brazilian consumer good industry is one of the fastest-growing applications for returnable transport packaging. A considerable increase in the number of retail establishments and average number of goods provided by the retailers is increasing the demand for RTP solutions, in both intra-logistics and transport applications. The Brazilian supermarket sector alone recorded a turnover of BRL 353.2 billion in 2017, thus, indicating a nominal growth of 4.3%, when compared to 2016. (Brazilian Association of Supermarkets (ABRAS)). This growth and increasing e-commerce activities create a significant potential for the growth of the market studied.

The e-commerce sector is one of the largest users of RTP solutions, in the country. With over 68% internet penetration and over 52 million online shoppers in the country, e-commerce is increasing, thus, becoming a popular channel for the sales of consumer goods. In addition, there is a considerable increase in the number of cross-border e-commerce activities, in the country. In 2017 alone, about 22.4 million customers (41% of total e-shoppers in Brazil) purchased cross-border goods online, indicating an increase of 6%, when compared to 2016.

When compared to regular purchases, cross-border purchases involve more logistics operations, thus, leading to an immense demand for returnable transport packaging solutions, in the Brazilian e-commerce and retail industry. Over the forecast period, the increasing number of online shoppers (87 million by 2020) and considerable economic growth in the country are expected to bolster the retail activity, and subsequently, the demand for RTP solutions.

The downside scenario of the market would include Brazil not showing significant recovery from its economic crisis suffered in 2013, due to which the GDP and spending power of consumers may further drop. Because of limited consumer spending, sales of smartphones and other high-end products could face a frugal demand. This will lead to limited e-commerce sales as well. In such a case, the CAGR for this sector may range between 2-2.7%.

Competitive Landscape

The Brazilian returnable transport packaging market 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 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 shares and profitability. The companies operating in the market are also acquiring start-ups working on Brazilian returnable transport packaging technologies, in order to strengthen their product capabilities. In January 2018, Packaging company, Crown Holdings Inc., acquired Signode Industrial Group Holdings Ltd from Carlyle Group LP, in a deal valued at USD 3.91 billion.

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1 INTRODUCTION

1.1 Study Deliverables

1.2 Study Assumptions

1.3 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS

4.1 Market Overview

4.2 Introduction to Market Drivers and Restraints

4.3 Market Drivers

4.3.1 Growing Food and Beverage Sector in Brazil to Propel Demand For RTP

4.3.2 Long-term Cost Benefits Associated With RTP

4.4 Market Restraints

4.4.1 Relatively Higher Initial Costs Remain a Concern in Some Parts of the Country

4.5 Value Chain / Supply Chain Analysis

4.6 Industry Attractiveness- Porter’s Five Forces Analysis

4.6.1 Threat of New Entrants

4.6.2 Bargaining Power of Buyers/Consumers

4.6.3 Bargaining Power of Suppliers

4.6.4 Threat of Substitute Products and Services

4.6.5 Intensity of Competitive Rivalry 

4.7 Technology Snapshot

4.7.1 Types of Circulation Systems

5 MARKET SEGMENTATION

5.1 By Material

5.1.1 Plastic

5.1.2 Metal

5.1.3 Wood

5.2 By Product

5.2.1 Containers

5.2.2 Pallets

5.2.3 Drums and Barrels

5.2.4 Other Products

5.3 By Application

5.3.1 Automotive

5.3.2 Food and Beverages

5.3.3 Consumer Goods

5.3.4 Other Applications

6 COMPETITIVE LANDSCAPE

6.1 Company Profiles

6.1.1 Kuehne-Nagel Servicos Logisticos

6.1.2 Polymer Logistics NV

6.1.3 Chep Brazil

6.1.4 Nefab Embalagens LTDA

6.1.5 Signode Brasileira LTDA

6.1.6 IFCO Systems do Brasil Packing Services LDA

6.1.7 Orbis Corporation

6.1.8 Mugele Do Brasil LTDA

6.1.9 SSI Schaefer LTDA

7 MARKET OPPORTUNITIES AND FUTURE TRENDS

8 INVESTMENT ANALYSIS

MARKET SEGMENTATION

By Material

Plastic

Metal

Wood

By Product

Containers

Pallets

Drums and Barrels

Other Products

By Application

Automotive

Food and Beverages

Consumer Goods

Other Applications