- Published on Wednesday, 15 August 2012 08:11
- Written by Stuart Hoggard
JAPAN – Stuart Hoggard checks on the health of Japan’s packaging industry more than a year after the country was hit by twin natural disasters.
It has been a terrible year for the Japanese; the horrendous loss of life and devastation of what has become known as the Great Eastern Japan Earthquake and Tsunami (or Tohoku) on March 11 last year.
The impact on the economy is only now being understood as the packaging industry reports statistical data following the close of their annual April-March accounting period. With the plastic packaging sector facing the combined effect of the disaster and the global economic crisis, it recorded a decline in production values of more than US$1.2 billion since 2008.
Facing the destruction of many production factories, the shutdown of much of the Chiba petrochemical facility, and the controlled power shortages following the shutdown of all of its nuclear power reactors, Japan’s packaging industry faced an monumental supply chain struggle to get products back into the supermarket shelves. But by January 2012, within the current April ‘10-March ’11 reporting period, virtually all capacity had been restored.
While it is true that Japan’s packaging sector has been experiencing a slow, steady contraction since the 2008 economic crisis, production data for the 2011 Japanese packaging sector shows a drop in both shipments of packaging materials and container volumes and values compared with the 2010 numbers.
Though not as dramatic as could have been expected, given the circumstances: Total shipment volumes dropped by 0.3% from 18.889 million tons to 18.883 million tons a reasonably insignificant loss in tonnage. However, not so insignificant was the loss in shipment values of packaging materials and containers: a staggering ¥53 billion – approximately US$ 665.5 million for the year.
With the near collapse of the petrochemical refining capacity and the shortage of materials in the supply chain, it was the plastic sector that suffered the biggest hit with volumes dropping by 2.89% - this represents a loss in production value of 3.08% or more than ¥52 billion – approximately US$663 million.
The 2011 disaster accelerated the plastic sector’s losses in what has been a steady decline in values since the economic crisis when shipment volumes of plastic materials and containers peaked at 3.83 million tons with a value of ¥1.7 trillion in 2008 to the current 2011 figure of ¥1.66 trillion – a loss over the three years of ¥96.5 billion, or US$1.2 billion.
The paper and paperboard product sector was the only real gainer in 2011, with volumes down by slightly less than 1%, but with an added value increasing by 1.14% to return a healthy gain of ¥27.6 billion or US$352.6 billion.
Consistent with the overall plastics decline, the country’s PET bottle production sector for 2011 showed a sharp year-on-year decline of 2.92% from the 600,550 tons of resin converted in 2010, according to separate data from the Japan Council for PET Recycling the volume of resin consumption.
The 2011 production figure contrasts with a steady, almost predictable, annual increase in PET consumption from the 1999 total of 370,486 tons to 600,550 tons in 2010, an increase of 38.31%.
Not surprisingly, over the years since 1999, PET’s biggest gain in market share has been in the soft drink sector rising by from 308,222 tons in ’99 to 521,657 tons in 2010 before dropping back to 511,412 tons in 2011 - an overall increase of 39.73%. This reflects the general global trend in soft drink consumption as beverage companies, particularly in Asia, introduce new products to the market, such as various tea flavours, soya milk and other non-CSD drinks.
Given that Japan still has a ban on beer in PET, the volume of PET consumption by the alcoholic beverage sector has increased by a massive 43.56% since 1999. In the past year alone (2010-2011) alcohol in PET gained an additional 31.30% production volume jumping from 13,972 tons to 20,339 tons. This could be a reflection of the aftermath of the disaster and the reduction in electricity supply to industry resulting in a shortage of glass production capacity.
Another interesting trend since 1999 is the move from other plastic materials into PET by the cosmetic sector - which now regards it as an acceptable packaging material for mid-to-high end consumer markets - with a 48.70% increase over the period from the 1999 level of 6,149 tons to the current 2011 consumption volume of 11,987 tons.
The biggest PET market loser for PET was in the detergent and shampoo sector which saw a decline of more than half of its production volume dropping from 9,630 tons in 1999 to 6,339 tons in 2011 – a clear indication of the impact of the Containers and Packaging Law which took effect in the same period driving household and personal care products towards lighter flexible pouches that attract lower recycling fees.