The IppStar survey on recovery – Is it relevant in late July?

How the pandemic is affecting Indian packaging

IppStar survey
The IppStar survey of Indian brand owners, printers, packaging converters and suppliers captures the challenges they face in the Covid-19 lockdown. Graphic IppStar 2020

25 July 2020. At this time, how relevant is the IppStar survey of brand owners, printers, converters, machine manufacturers, distributor-suppliers, importer-exporters, and logistics equipment and service suppliers conducted in the first half of May? Our research tried to ascertain the stakeholders’ views regarding when the lockdown would end and how quickly the economy and their industry sector would recover.

In the first half of May, it is probably fair to say many of us expected the total lockdown to end sometime in June. In the main, we found the more than 200 respondents resilient – a relatively high percentage, 23% across segments, were optimistic about the quick recovery of the economy and their business. A significant portion, 53% across sectors, felt there would be a slow recovery. The results of the survey with graphs and charts are available here.

Actually, with the lockdown decreased in phases, at the end of July, the restrictions on factories and retail establishments are few beyond masks, hygiene, and social distancing. However, public transport is only partially restored, and metro trains have not resumed.

Still, July 2020 has been a cruel month in India, with the new Covid-19 cases tripling from 18,000 cases a day to 55,000. The curve has not flattened, and though it may happen in the second half of August or in September, it is not clear if we will plateau at 60,000 or 70,000 new cases daily or even more. There is a decline of new cases in some metropolitan centers, such as Delhi, Mumbai, and even Thane. In contrast, others such as Pune, Bengaluru, and Hyderabad seem to be raging higher. The cases in smaller towns and the semi-rural and remote areas are also increasing.

What are the consequences for our industry?

The packaging and label industry in India has done better than many others, and within it, the food, pharma, personal hygiene, and eCommerce sectors have done quite well. There are reports of packaging plants running from 30% to 80% of their capacity.

Packaging film lines, presses and converting equipment ordered before February continue to be installed. Some large converters are even talking about meeting their pre-Covid-19 FY 20-21 targets, although the guideline we recommend is that the new normal will at best reach 90% of the old normal.

However, some converters are more affected by the pandemic and remain in containment zones. They are facing intense financial pressure and may have to close down. In contrast, the bigger plants in industrial areas restarted early and are running above 60% capacity. The major FMCG brand owners prefer the bigger converters – and are more comfortable with their hygiene and other compliances – big likes big!

Displaced human resource

An observation made by a webinar panelist in the early part of the pandemic was that the migrant workers who fled the major cities and industrial areas in end-March and April would come back easily and quickly. It has not happened, and even as we enter the fifth month of the pandemic, employees who went back to their villages are not yet keen to return to their factory jobs.

While some research exists on the employed workforce that is economically unable to settle with their families in the cities and industrial townships, there is no such research particular to the packaging sector or its brand owners. Some larger and even middle-size companies have set up housing or dormitories for single employees without their families. Perhaps converters will embrace automation and hire better-skilled operators who can earn more than just enough to survive and send money to their families in rural areas.

In many packaging plants, it is still seen as a mutual necessity to run ten or 12-hour shifts. Manufacturers, including packaging converters in India, nevertheless see themselves as uncompetitive because of low productivity. Since they cannot individually make up for the lack of affordable housing in the urban and industrial centers, the land and the urban infrastructure have to be fixed by the government, the banks, and the construction industry.

The last point stemming from our May survey is that the logistics sector was the most optimistic, with over 60% expecting a V-shaped recovery. At that time, countless trucks were stranded on the nation’s highways. The logistics sector’s optimistic expectations have proven to be unfounded, with more than 50,000 owners currently unable to pay the installments on their trucks.

This is a slightly edited version of the edit-blog published in the July 2020 print issue of Packaging South Asia.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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