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Europe: Rising imports, foreign investments to boost Chile’s packaging market

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The future looks bright for the Chilean economy, which in recent years has benefited from rising exports and foreign investments.

This new optimism has had a positive effect on the country’s packaging market, reveals new report from Canadean.

Foreign direct investment boosts retail market

Foreign Direct Investment (FDI) rose by 63% in 2012 and this growth in the Chilean economy has helped to drive the consumer packaged goods (CPG) market.

Chile is the eleventh largest recipient of FDI and is one of the most advanced and sophisticated retail markets in Latin America.

“The country’s leading supermarket, Walmart Chile, has been very successful and this shows a great opportunity for the global retail market to enter Chile, and for the expansion of existing brands,” says senior analyst Catherine O’Connor.

The improved quality of organized retail outlets will result in high competition for the packaging market, as local manufacturers will be expected to meet the same packaging standards.

“Local manufacturers will have the chance to sell their products to the international CPG manufacturers that enter the Chilean market,” says O’Connor.

“Meanwhile, international players can make local procurements that will save on transportation costs and help local companies gain exposure in the market.”

Growing exports to create demand for packaging

Exports have contributed significantly to economic growth in Chile and food is the largest export product, currently valued at US$13,781 million.

These food exports will also help boost the need for packaged food options; this in turn will increase the need for both primary and secondary packaging materials, offering new opportunities for packaging suppliers.

For example, demand for paper and board packaging, of which corrugated and folding cartons hold the largest share, will increase due to a greater number of exports.

Chile is one of the main suppliers of the raw materials – pulp and paper – used to produce paper and board packaging for the global market.

Although paper and board will see a slight decrease in demand due to cigarette usage because of the country’s smoking ban, it will continue to witness high demand from the food and non-alcoholic drinks markets.

Paper and board is forecast to reach 2690 million packs by 2016 and cartons will register a compound annual growth rate of 6.3%, which will be the fastest growing category up to 2016.