The Brazilian Packaging Ink Industry is on the Rise

In spite of shaky economic conditions, the Brazilian printing market is robust. With a gross domestic product (GDP) of $1.775 trillion in 2015 and more than 200 million people, Brazil’s packaging industry has plenty of room to grow. According to ABRE – Brazilian Packaging Association, the total packaging market sales totaled 64.3 billion reals ($19.46 billion) in 2016, up 6.6% from 2015. Plastic packaging was the largest segment at 39.4%, with corrugated second at 19% and metalic at 17.55%, accordingto ABRE.

Not surprisingly, all of the leading packaging companies have set up shop in the country, and many are adding new operations. For example, in 2016, CCL Industries Inc. acquired the assets of Powerpress Rotulos & Etiquetas Adesivas LTDA, Brazil’s leading producer of expanded content labels for agricultural chemical and pharmaceutical customers, and Smurfit Kappa purchased two integrated paper-based packaging businesses, Industria de Embalagens Santana and Paema Embalagens.

In 2015, Sonoco acquired a majority interest in Graffo Paranaense de Embalagens S/A, a flexible packaging manufacturer in Pinhais, Curitiba, Brazil, and Amcor entered into an agreement to acquire Souza Cruz’s internal tobacco packaging operations located in Cachoeirinha, Rio Grande do Sul, Brazil.

The opportunity to expand into this potentially lucrative market drove the recent acquisition of Creative Industria e Comercio Ltda., Sao Paulo, a leading flexo and gravure ink manufacturer, by INX International Ink Co. One key to this acquisition and cooperation is the need to supply multinational brands globally.

“Our multinational customers are in Brazil,” Rick Clendenning, INX International Ink Co.’s president and CEO, said. “We had to add resources in Brazil to grow into the packaging market in the country, and Creative was a great answer for that.”

“We continually look for companies that fit with our style and approach to the ink business,” said Jonathan Ellaby, VP international operations for INX International Ink Co. “Creative is a great example of a family company that had a similar vision of the market and has similar values to INX International. It was a natural fit for us.”

“In the last five to seven years, the multinationals are growing a lot in Brazil,” said Jose Carlos Ribeiro Jr., commercial director for Creative. “The per capita consumption of packaging is developing in Brazil. There’s a lot of space to grow when the country grows. It is tougher to compete due to technology and raw material supply. We had to decide whether to expand or join a larger group.”

Brazil has suffered a decline in GDP over the last two years of more than 3.5% each year, although 2017 has started with a slight gain in GDP and a decrease in inflation, which averaged 8.77% last year.

“Economically, the region’s largest economies – Brazil, Mexico and Argentina – are the main drivers behind the Q1 improvement,” said Sergio Pera, director of Toyo Ink Brasil Ltda. “The one bright spot has been packaging, a sector that is relatively immune to recession. Consumers are going to eat, in good times or bad. As such, Toyo Ink continues to build up its portfolio of innovative packaging solutions that are manufactured in Brazil and customized to the needs of the region.”

Sun Chemical is among the ink industry leaders in Brazil, and the company. Fernando Tavara, president, Sun Chemical Latin America, said the company recently opened a color center in São Paulo, Brazil, and while Sun Chemical has seen positive growth in Latin America during the past year, there is currently a lot of uncertainty throughout the region.

“Latin America is a vast area with big differences between countries and economies,” Tavera continued. “Brazil, for example, which in the first quarter of 2017 had shown some initial signals of recovery after two years of heavy economic contraction, has been plagued by ongoing political challenges and may continue to languish in recession. It is hard to predict how Brazil will fare over the next year.”

“For Siegwerk, Brazil is recovering from a difficult 2016,” said Pablo Paduani, VP and BU head Flexible Packaging LATAM. He added that Siegwerk saw strong growth in the consumption of UV inks for short-runs, customized applications and high-end packaging which will further drive our business in the ink industry in the region.

Alex Garcia, director of business development for INX International Ink Co., reported that the Brazilian digital printing industry is growing. “As always, with digital printing Brazil leads the market in growth,” Garcia observed.

Ink manufacturers see strong opportunities ahead for Brazil and Latin America.

“Sun Chemical expects the Latin America market to continue to grow despite the uncertainty in the region, and as a company we’re well prepared to support the growing plans of our customers with local operations in each and every country of Latin America,” Tavera said.

“The long-term growth prospect for Latin and South America remains strong, marked by growing populations, expanding middle class and rising urbanization,” Pera said.

“For Siegwerk, the LATAM region is one of the company’s growth regions in which it is investing continuously to expand its local capacities and offerings,” said Paduani. “We will continue investing in infrastructure and development our local competencies in our facilities in Mexico, Brazil and the whole southern region.”