South africa set for growth

South Africa's stronger Rand, its deep rooted tradition of buying European converting machinery, and a continuing thirst for state of the art technology makes the country an interesting market. It could also prove the jumping off point for those seeking to do business with other parts of sub Saharan Africa.

Held in Cape Town's impressive new International Convention Centre, Propak Cape 2005 drew record visitors in October (5,993 attended: 4,619 in 2002). More space is planned for 2008, said John Knocker, director of organizer Specialised Exhibitions. "The show also attracted increased global attention with companies from Australia, Britain, India, Italy, Kenya, Spain, Switzerland and UAE amongst the over 150 exhibitors." They included a large contingent of converting equipment producers. John Knocker also reported a surge in interest in the larger 2007 Propak Africa event to be held in Johannesburg from March 13-16. "Over 50 per cent is already sold and we will be opening halls for printing and plastics."

Managing director of Nampak Africa (South Africa's largest packaging converter with global interests) Neil Cumming said: "We have the manufacturing base here and what is good for outside investors is that non durable fmcg (fast moving consumer goods) are showing a 4.5 per cent growth. So there is a bigger demand for packaging.

"This demand for non durables is coming from the emerging black middle class. They have bought the house, the car and the fridge. Now they have gone back to fill it!"

With GDP growth at around 4.5 per cent and packaging overall fluctuating between two and three per cent perhaps the country is not top of the list for European exports of commodity materials. South Africa (SA) is already following Europe with imports of flexible packaging coming from the Middle East, China, India, Indonesia and Thailand. Folding cartons are also being imported. But established importers such as the UK's Innovia and those with niche materials fare better. According to Cumming large growth sectors include sleeves, self adhesive and wet strength labels as well as liquid cartons. In addition, paper, aluminium and plastics materials are all produced in SA. "Of course everywhere we are seeing price pressure," added Neil Cumming. Freight is costly. "It is another reason for technology exchange and joint ventures."

Choosing the right agent is critical. Beswick Machinery represents some leading European players such as Bobst and Artwork Systems. Associate director international sales at Artwork Systems Luc Buttiens said: "South Africa is very much like the European markets in terms of the way they do business, the quality they demand and the early adoption of new technology. We are doing very well with numerous installations. And we still see more potential."

Ian Beswick, founder of the agency said: "We have been close to Bobst since the '60s. We have sold four or five Lemanic presses and three of the new Masterflex machines. Considering there have been no Masterflex presses sold in Australia that's not too bad!" He can see no way that SA will support a machinery building business. "We have to import; the technology is so advanced. And we need that technology now."

Vivian Auer, general sales and marketing manager for The Hudson-Sharp Machine Co, Belgium, confirmed the importance of SA representation. "The machines need to be good, but you also need a good agent," he said. The bag and pouch making equipment specialist has seen real success in SA. "As well as being good at responding to technical problems, Advanced Packaging Technology are excellent at feeding back information from the market." Peter Saey, area manager for Comexi, also with Advanced, agreed. "We chose someone with a positive image in SA when we came back to this market in 2002. We've already sold a laminator."

Joe Foster, of Foster International imports, converted packaging from all over the world including a plant in China, the Middle East, the UK and Ireland. "It is by no means all commodity packaging. We frequently develop packaging with the customers in SA. It is really all about price. They want the Rolls Royce, but they want it cheaper here in SA."

Editor of Packaging Review South Africa, Gill Loubser said: "From many perspectives, South African society is remarkable. Barely kilometres apart people live in a range of circumstances - from the mansions of the affluent through to middle class suburbs; and from low cost housing to informal settlements - a situation that raises particular challenges for packaging professionals.

"Although SA's packaging industry accounts for only R22 billion, it's nevertheless regarded as 'first world' in terms of manufacturing facilities.

"However," she commented, "the fact that it has a comparatively low per capita consumption of packaging compared to more developed. countries (approximately $75) suggests that there's considerable potential for growth.

Packaging design is well advanced in SA. The Gold Pack Awards – organized by the Institute of Packaging (SA) – was held during Propak. The Gold Pack Trophy winner Tiger Brands, for its Jungle family of packs, illustrated that prowess. "From the easy open cartons of Jungle Oats to the stand-up pouches for Energy Crunch muesli; from the sleeved tubs of Oatso Easy to Energy Munch biscuits in their N flute display carton and the flexible wrappers for the Energy Munch biscuits – all are stunningly executed," said the judges.