Market Trends of GCC Paper Bags Industry
Retail Segment is Expected to Have a Significant Share
- Bags are commonly used in the retail and food industries. The packaging market is growing faster in retail than in other industries. The growing retail sector in the GCC region is expected to support market growth. According to Alpen Capital, retail sales in the United Arab Emirates reached approximately USD 74 billion in 2021 and are anticipated to reach USD 114 billion by 2026.
- Companies are developing paper bag barrier materials with various applications in all sectors. Printing technology is incorporated to produce ready-made bags that handle complex designs. Further, in June 2022, Abu Dhabi introduced a ban on single-use plastic bags in the Middle East. Alternatives to shoppers include paper bags and thicker traditional-look plastic bags, which can be used between four and ten times and can be recycled. Some outlets, such as Spinneys and Carrefour, have removed thicker traditional-type reusable plastic bags altogether, offering bag-for-life alternatives alone.
- Retail businesses such as hypermarkets and supermarkets are growing in the region with various expansions by the companies operating there. For instance, in June 2022, Lulu Group International is on track to invest USD 2.9 billion in its retail network, opening 91 hypermarkets between 2020 and 2023. Fifty of its stores have already opened during the Covid-19 pandemic. The supermarket chain has 235 hypermarkets, malls, and fulfillment centers in 12 countries, including GCC, India, and more. Such initiatives would further leverage paper bags in the retail industry.
- Oman's retail sector aligns with several key factors driving market dynamics in the country. Increased tourism activity, rising per capita income, and population growth contribute to the anticipated expansion. According to Alpen Capital, a regional investment banking advisory firm, the Sultanate's retail industry is transforming, increasing competition across offline and online channels and driving market dynamics. Alpen Capital's latest retail report projects that the GCC retail industry will surpass its pre-pandemic levels in 2022, registering 15.7% year-on-year growth.
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UAE is Anticipated to have a Significant Growth
- Paper is a flexible material that is utilized in many different goods. Depending on the needs of the final product, the paper can be used to make many packaging products, including bags. Due to the increasing demand for paper bags, players are investing in setting up regional plants. Also, since the ban on single-use plastic, the players are focusing on finding products that can be recycled and reused for packaging. The demand for biodegradable packaging papers will support market growth.
- Various paper manufacturers operating in the region are expanding their business to improve their revenues and production capacities. For instance, in December 2022, Star Paper Mill set up an AED 200 million (USD 54 million) recycled paper mill in Abu Dhabi. The development of a new plant to produce recycled Kraft Paper Jumbo reels was announced by Khalifa Economic Zones Abu Dhabi (KEZAD Group), broadening the company's product line to meet the UAE's rising need for paper packaging products.
- The United Arab Emirates is witnessing a significant demand for pharmaceutical products. The United Arab Emirates imports pharmaceutical products from 72 countries. International Quality and Value Institute Advisors (IQVIA) projected that pharmaceutical sales in the country might reach USD 51 billion by 2024. Moreover, increased awareness about the established benefits of secondary packaging for pharmaceutical products and healthcare facilities drives the market.
- Also, since the ban on single-use plastic, the players are focusing on finding products that can be recycled and reused for packaging. The demand for biodegradable packaging papers will support market growth. For instance, in December 2022, The development of a new plant to produce recycled Kraft Paper Jumbo reels was announced by Khalifa Economic Zones Abu Dhabi (KEZAD Group), broadening the company's product line to meet the UAE's rising need for biodegradable packaging materials.
- As per the agreement, Star Paper Mill will work with RC Paper Machines to increase its current production capabilities by investing AED 200 million (USD 54.45 million) at a site measuring 59,000 square meters in KEZAD. This will allow Star Paper Mill to produce recycled kraft paper jumbo reels to make corrugated cartons and in-demand, eco-friendly, biodegradable bag papers from recycled raw materials.
- Additionally, the United Arab Emirates (UAE), fast food restaurants had the most significant sales value in the United Arab Emirates (UAE) at around USD 3.6 billion in 2018, and the sales value reached USD 4.5 billion in 2022, followed by full-service restaurants at a sales value of about USD 2.34 billion.
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