Market resaerch of the packaging industry in South Africa

University essay from Lunds universitet/Förpackningslogistik

Abstract: Summary - Nefab The purpose of this thesis is to find business opportunities in South Africa for Nefab's product NEFAB ExPak, The product is suitable for packaging of high-value products that are being exported to remote countries. Besides a general mapping of South Africa's export, we have also studied different companies within the vehicle supply industry, telecommunication industry as well as Swedish partners to Nefab in other markets. Export from South Africa amounted to 180 billion SEK in the first 10 months in 1996. Over the same period, mechanical appliances and electrical equipment - which are most suitable products for NEFAB ExPak - have enjoyed an export rate of more than 5 billion SEK outside of the African continent. By focusing on automotive supply industry and telecommunication industry, products worth over 9 billion SEK are exported from South Africa. Nefab's Swedish partners located in South Africa do not have a large export flow, but they are well aware of NEFAB ExPak and they have tried to duplicate the plywood box, without any success. If Nefab decide to enter the South African market, we have recommended 16 companies, that we believe are potential buyers of NEFAB ExPak. Despite the political instability and high crime rate, we believe that Nefab has great opportunities for making substantial profits within the South African market, and that the advantages outweigh the disadvantages. Summary - Perstorp Plastic Systems The main purpose of our thesis is to find business opportunities for Perstorp Plastic Systems? plastic crates in three sectors in the South African market. We have concentrated in the automotive industry, fruit industry as well as the food chain industry. ? In the automotive industry, it is obvious that plastic as a packaging solution is increasing. Automotive manufacturers are outsourcing the packaging solutions to companies that are experts. ? In the fruit industry many companies are replacing old wooden bins with the more modern plastic crates. If all companies with wooden bins would replace them with plastic crates, the annual need of plastic crates would amount to 187 000. ? The five largest companies in the food chain industry have an annual need of 31 500 plastic crates. The supplier base of plastic crates to South African companies are dominated by two large companies, namely Megapak and MCG Industries. There is also an increasing interest from foreign companies. Because of their good reputation, well developed network in the automotive as well as in the food chain industry, we believe HTK Rent-a-Tainer is the most suitable agent for Perstorp Plastic Systems? products. The plastic crates would also be a complement to HTK's steel cages. Summary - STORA The purpose of this thesis is to find business opportunities for STORA in South Africa. The product of interest is the cigarette carton for the tobacco industry and fluting for the fi-uit industry. The cigarette industry The cigarette industry is very concentrated within only three players:Rembrandt (83 %), United Tobacco Company (12%) and Mastermind (3%). The total number of cigarettes produced in South Africa during 1996 was 40 billion. Total volumes of carton material within the South African cigarette industry stand at 3 600 metric tons for the production of a total of 600 million hinge-lids, and 3 300 metric tons for the production of 135 million display cartons. All converting companies work in close co-operation with specific tobacco companies. Printpak Gravure supplies Rembrandt, CTP supplies UTC and Kohler supplies Master Mind. The competition amongst the suppliers of carton is not too strong, as there are no South African suppliers, and basically only foreigners such as Metsä-serlä and Westvaco supplying the entire market. Metsä-serlä having 60 % and Westvaco having 40 % of the total market. Through Peters Papers, STORA can become Printpaks main supplier, and possibly Rembrandts supplier, by making use of Peters Paper's network and via relation marketing. The fruit industry For the 3 863 000 tons of fruit produced in 1996, 169 million cartons were required. The fruit industry is very concentrated within only two companies, Unifruco and Outspan International, who packed 88.1 million cartons during 1996 and used 133 000 tons of liner and 56 000 tons of fluting. They are so large they are able to monopolise negotiations with fluting and liner suppliers, and select only those converting companies offering the best possible price. In South Africa the total annual use of linerboard is 386 000 tons and fluting 166 000 tons. The fruit industry is the biggest user of corrugated material in South Africa with an annual consumption of 133 000 tons of liner and 56 000 tons of fluting. Only Outspan International and Unifruco (together) purchase 109 000 tons of packaging material for their 88.1 million cardboard boxes of fruit they export annually. Sappi and Mondi are the main producers of paper and board, and the production amounts to 2 million tons, of which 22 % was exported in 1995 and the balance supplied to the domestic market. At the same time, the country imported paper and board totalling 326 000 tons, bringing apparent domestic consumption to about 1 913 000 tons. Only 6 000 tons of liner and 2 000 tons of fluting are imported, a mere 1.0 % of the total consumption. The only virgin fluting that exists in South Africa is the 100 000 tons produced by Mondi from sugarcane,

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