VIETNAM PAPER PACKAGING MARKET: average potential growth rate of 9.73%/year


VietNam paper packaging market is showing outstanding growth potential thanks to the sustainable development trend of brands to receive goodwill from customers and partners. In addition, the Vietnamese government also issued policies to promote environmental protection packaging.  Thereby, contributing to helping the paper packaging industry be predicted to become one of the promising business fields in the Vietnamese market.


The article below will provide the clearest and most complete overview of the paper packaging industry market, from overview to growth rate to factors that help promote and inhibit the development of the packaging industry market in Vietnam.


Overview of the paper packaging industry market in Vietnam


Vietnam is one of the markets with continuous growth in the paper packaging industry due to high domestic paper consumption. In recent years, strong development in the cosmetics, retail and electronic product export industries has boosted paper packaging output to serve these fields. In particular, food and beverage packaging output continues to hold a large market share with 43.5% in 2020, according to the Vietnam Report.


According to the Vietnam Packaging Association, sales of the packaging industry in general in 2021 reached 13.2 billion USD with about 14,000 operating businesses; In which, the paper packaging industry accounts for about 3.5 billion USD with about 4,500 businesses. Besides, the packaging industry is an industry with a fairly high and stable growth rate, with an average growth rate of 13.4%/year from 2015 to 2020. In particular, a report from the Research organization Market Research Mordor Intelligence Inc. shows that the scale of the paper packaging market in Vietnam will reach 4.14 billion USD by 2029, with an average annual growth rate (CAGR) of 9.73% in the period from 2024 to 2029.

Figure 1: Forecasting revenue and growth rate of the paper packaging industry in Vietnam, source: Mordor Intelligence

In short, more and more businesses in Vietnam are shifting towards sustainability and environmental friendliness. Therefore, the paper packaging market is expected to have a great attraction in the domestic market, thereby gradually replacing the plastic packaging market.

Factors driving the paper packaging industry market in Vietnam


The online shopping model is becoming increasingly popular


According to estimates by the Vietnamese Government, by 2025, more than half of the 100.3 million Vietnamese people will participate in online shopping. In addition, according to the survey’s VECOM, 23% of businesses will sell their products on e-commerce platforms by 2022. Besides, according to Metric Data Science Joint Stock Company, the total revenue of the top 4 e-commerce platforms along with Tik Tok Shop amounted to 141,000 billion VND.


Figure 2: Percentage of businesses participating in e-commerce platforms over the years, source: EBI 2023.


In the digital world, packaging is also considered an important factor in helping products attract consumers, so more and more businesses are using paper packaging to increase goodwill and support from customers. Therefore, paper packaging gradually becomes a value foundation that promotes interaction between brands and consumers.


The development of retail, cosmetics, and export activities of electronic products.


According to the General Statistics Office, in the first 5 months of 2023, total retail sales of consumer goods and services nationwide reached 2,527.1 trillion VND, an increase of 12.6% over the same period in 2022. Of which, thanks to the popularity of online sales strategies, has created great demand for packaging products, especially carton packaging.


Figure 3: Total retail sales of goods and consumer service revenue in the first 5 months of 2023 of some major cities.


Next,  VIRAC's 2022 cosmetics and personal care market report, the cosmetics market in Vietnam in 2021 achieved impressive revenue ( 2,290 million USD). In particular, this market is expected to have a growth rate of 6.2%/year from 2021 - 2025 thanks to factors such as Vietnamese consumer income in 2023 tending to return to normal levels after the pandemic and the explosion of social media platforms. Therefore, this growth will create an increasing demand for high-quality packaging to protect and display cosmetic products, especially paper packaging.


Figure 4: Cosmetic and personal care market size in Vietnam from 2016 to 2021, source VIRAC


Finally, the electronic products market is witnessing strong growth when, according to information from the Industrial Information Center, the growth rate of Vietnam's finished electronic products is 20%, surpassing Thailand, Philippines, Malaysia and only behind Korea in terms of exported assembled products in 2019 and 2020. In particular, the average growth rate of export activities of electronic products in Vietnam is the highest in the world at 13 .9% in the period 2016 - 2020. This leads to the increasing demand for carton packaging to package and protect these electronic products during the transportation and storage process.


Trends in sustainable development of the packaging industry in Vietnam


Thanks to the “Race to Net Zero” campaign - net zero emissions throughout to 2050 approved and implemented by the Government of Vietnam in relation to the circular economy concept and product sustainability requirements, increasingly impacting operations packaging design initiatives. In particular, the field of environmentally friendly packaging production is gradually becoming important in the packaging process in the food and beverage industry. Therefore, this is also one of the key factors promoting the development of Vietnam's paper packaging industry.



Figure 5: Consumer survey in August 2023, conducted by Vietnam Report.


In addition, sustainable packaging is an important factor that helps brands increase goodwill and support from customers when they see the positive contributions of businesses to environmental protection activities and sustainable development commitment. Therefore, more and more businesses are implementing policies on ESG (Environment - Society - Governance) commitments. According to the latest survey from Vietnam Report, currently 33.8% of packaging manufacturing businesses have planned and partially implemented their ESG commitments; 43.8% of businesses are in the planning stage; the remaining 22.4% of businesses do not have a specific plan or have not set an ESG commitment.


Figure 6: Survey of packaging businesses implementing ESG strategies in August 2023, conducted by Vietnam Report


Factors inhibit the development of the paper packaging industry


Dependence and fluctuations in prices of imported raw materials.


According to the Vietnam Packaging Association , one of the characteristics of the packaging industry is that the import of 80-90% of input materials depends on world prices of oil, natural gas, and coal. Especially in the period from 2020 to present, the price of input materials has increased significantly because supply sources  gradually become scarce, causing many businesses to face many difficulties. In particular, paper packaging manufacturing enterprises are also affected. According to data from the Vietnam Packaging Association (VINPAS): the average price of domestic paper materials has risen by 40 - 50% , imported paper has also increased by 20 - 40% .


Besides, according to Mordor Intelligence 's Vietnam paper packaging market report, currently Vietnam does not have enough forest resources to meet domestic paper production needs .Therefore, most raw materials for paper production in Vietnam must be imported.


Specifically, the main raw materials for producing packaging paper in Vietnam are still mainly old carton boxes (OCC - old corrugated containers) and virgin pulp. Currently, about 85-90% of raw materials in the paper packaging industry still come from OCC, as this is a raw material source with a cost about 3 times lower than virgin pulp. The packaging paper industry's dependence on imported sources in Vietnam is very high, especially when the domestic supply of OCC raw materials can only meet about 52% of total domestic demand. For virgin pulp, Vietnam has to import up to 65% due to insufficient domestic supply, mainly due to wood chips being scattered and difficult to access, as well as investment costs for large factories. Particularly, there are only 2 pulp production enterprises in the country, but mainly to serve the internal paper production line, only a small part is sold to the outside market.

Figure 7: OCC consumption in Vietnam, source: VPPA

In short, if domestic enterprises depend too much on imported raw materials and the increase in raw material costs goes up production costs and affects the price competitiveness of domestic enterprises in the international market.

Fierce competition between businesses.


In Vietnam, the majority of packaging manufacturing enterprises are small and medium-sized , so they do not have a strong enough capital source and have difficulty accessing preferential capital from the government. This leads to these businesses not being able to invest in modern machinery, equipment and technology research. Since then, these businesses do not have many competitive advantages compared to large or foreign-invested businesses . 

In 2022, Vietdata also released a market report for the paper packaging industry in Vietnam showing that competition in this market is extremely intense. In particular, many new businesses have entered the industry, but not bring too big differences in products as well as the product life cycle is still short.

In conclusion 


To have a clearer view of the market picture of the paper industry in general and the paper packaging industry in particular, join the Paper Vietnam 2024 - The 11th International Exhibition and Conference on Paper and Pulp industry in Vietnam. This exhibition   will certainly become a powerful platform to promote and increase opportunities for cooperation and exchange of leading experts in the paper industry.

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