Vietnam Paper Packaging Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Vietnam Paper Packaging Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Vietnamese paper packaging market was valued at USD 2.06 billion in 2021, and it is expected to reach USD 3.11 billion by 2027, registering a CAGR of 7.50% during the forecast period (2022-2027). With the outbreak of COVID-19, paper packaging is witnessing significant traction in the healthcare sector of Vietnam.

Key Highlights

• Vietnam is one of the consistently growing markets where the packaging demand for paper in the country dominates the paper consumption in the country. According to the data published by the Vietnam Pulp and Paper Association (VPPA), the consumption of paper for packaging in the country in May 2021 was 404,711 metric tons, which was marginally decreased (4%) compared to the previous month.
• The market studied comprises various types of packaging, such as folding cartons, corrugated boxes, and others, with applications across industries, such as personal care, home care, healthcare, and retail. With the focus increasingly shifting toward sustainability and eco-friendliness in Vietnam, paper packaging is anticipated to get traction with the country, pushing for paper packaging products over plastic packaging.
• Furthermore, COVID-19 has positively impacted the market growth. As per VPPA, in the first five months of 2020, paper production was estimated at 1.85 million metric tons, up by 7.8 % over the same period in 2019.
• However, increasing the price of paper packaging materials may impact the Vietnam paper packaging market. For instance, according to statistics from the Vietnam Packaging Association, the price of domestic materials like bales was increased by 40% to 50%, and the price of imported paper was increased by 20% to 40% in the first six months of 2021.
• The growing trend of e-commerce and digital media are among the major drivers leading to strong growth in the packaging demand and are anticipated to promote the industry growth in the next five to ten years. Eco-friendly products that are made of paper have the growth potential in the food packaging industry to replace disposable plastic products, which was following the government's policies on environmental protection launched by Vietnam's Ministry of Natural Resources and Environment.

Key Market Trends

Increasing Demand for Carton Paper from the E-commerce Sector to Drive the Market

• Vietnam has the highest number of people shopping from e-commerce platforms in the Southeast Asia region, with nearly 49.3 million people, according to the E-commerce White Book 2021 published by the Vietnamese E-Commerce and Digital Economy Agency (IDEA).
• The country's electronic industry is one of the fastest-growing and crucial industries in Vietnam. It is dominated by multinational organizations and has significantly boosted the country's trade volume and contributed to its GDP in the past decade.
• As electronic products include a wide range of products that are fragile and require extra care while shipping, the packaging of these goods requires to have a protective feature. Window Cartons are the type of cartons generally utilized for packaging in the electronics industry. They have a transparent window which aids the customer get the idea of that product. Lamps, switches, and bulbs are some products that are usually packed in window cartons.
• Trends in the Vietnamese beauty industry include K-beauty and multi-step cleansing to address main skincare concerns, such as acne, large pores, and dark under eyes. Among skincare shoppers in Vietnam, the majority still preferred a one-step skincare routine, although it recently lost its appeal while two-step and three-step routines have gained popularity. Such a trend factor has been increasing the demand for carton packaging in the cosmetic sector.
• Vietnam is aiming for a double-digit annual growth rate in the turnover of e-commerce over the next five years. According to the Vietnam government's data on e-commerce development strategy, over half of Vietnam's 96 million people are set to shop online by 2025. Such projections would lead to higher demand for carton paper in the e-commerce sector.

Food and Beverages Vertical to Hold the Maximum Market Share

• The strong growth in the food packaging sector has resulted in the increased demand for paper packaging in the country. It is also forecast that eco-friendly products made from paper have the potential for growth in the food packaging industry to replace disposable plastic products.
• According to Tetra Pak, a food processing and packaging solutions company, the liquid food market in Vietnam has been growing at a healthy 6% compound annual growth rate for the last three years and is projected to grow at a similar pace during the next three years, as compared to 4% growth per annum in the Asia-Pacific region and 3% globally.
• With higher income and better nutritional awareness, Vietnamese people have sustainably increased their purchase of dairy products. All the stakeholders in the dairy supply chain have been actively changing and innovating. Distribution channels have also been improved, especially with the thriving of e-commerce.
• Moreover, the government strongly advocates dairy consumption, notably by implementing school milk programs. In October 2020, Vietnam Dairy Product JSC ("Vinamilk"), one of Vietnam's first advocates for the School Milk Program, marked its contribution toward the health and well-being of 3.3 million students on World Milk Day 2020.
• Vĩnh Long Province has built many programs to support the growth of children and invest in high-quality human resources for the locality in the future, which the "School milk for children in public preschools and primary schools in the period 2018-21" project aims at improving the nutritional status of preschool and primary students, thereby, helping them develop both physically and mentally. Such programs have been contributing to the growth of liquid paper cartons for milk.
• Although Vietnam is a lucrative market for alcoholic beverages, especially beer, a dynamic shift has occurred, showing that there is a growing market for healthy soft drinks. Moreover, naturally healthy beverages, such as tea and fruit or vegetable juices, have been gaining popularity.
• However, affordable, fresh fruit juice and fresh green tea are common in Vietnam, particularly in marketplaces in rural areas. This reduces demand for packaged beverages in these areas, meaning attention is better directed to urban areas.
• Increasing consumer demands for convenience in urban areas are among the major drivers for packaged naturally healthy beverages. Buying ready-to-consume juice is much easier and less time-consuming than making freshly squeezed or brewed beverages at home.

Competitive Landscape

The Vietnam Paper Packaging Market comprises a highly competitive operating environment, which is of much concern; hence, the attention is focused on the direction of climatic changes and additional ecological concerns. In all the paper-based applications, the market studied is completely fragmented due to the new innovations and expansions. Some of the major companies in the Vietnamese paper packaging market include Song Lam Trading & Packaging Production, Tetra Pak International SA, Hanh Packaging Co. Ltd, and Oji Interpack Vietnam Co. Ltd, and Khang Thanh Co. Ltd.

• March 2022 - Rengo Co. Ltd announced that it bought 100% of Nagai Tekko Co. Ltd's shares, converting Nagai Tekko into a Rengo subsidiary. Nagai Tekko is a machine company that designs and manufactures winders, rolls, and other paperboard mill equipment.
• September 2021 - Tetra Pak invested EUR 5 million in its EUR 120 million packaging material factory in southern Binh Duong province. The additional investment reaffirms its confidence in Vietnam’s economic rebound from the COVID-19 pandemic and its continuing commitment to support food and beverage producers in Vietnam.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support