India's new plastic waste management (PWM) norms are likely to impact the FY25 revenues of consumer staple companies, including Britannia, Nestle and Colgate, as their packaging costs are set to rise, analysts at brokerage Kotak Institutional Equities wrote in a recent note.

Source: Business Standard

The new PWM norms, which govern the recycling and reuse of recycled content by producers, importers, and brand owners of plastic packaging material, will be implemented in a phased manner from FY25 onwards. India is the third-largest plastic waste generator globally.

Packaging costs to rise for consumer staple companies

In terms of handling the plastic waste menace, the new laws may put India ahead in the global league, but they will also increase the packaging costs of consumer staple companies, said the Kotak analysts.

Based on our estimates, the consumer staple companies spend, on average, 5-8 per cent of their revenues on the packaging and remain highly reliant on plastics. While companies so far have optimised most of their packaging costs by reducing the intensity of plastic usage ... little progress has been made by most of them in recycling or using the recycled content for packaging. This could result in higher costs going forward.

they wrote

Plastic recyclers will be the key beneficiaries of the rollout of the new PWM rules

Consumer companies are already working to reduce plastic packaging.

Packaging is one of the key focus areas. We have undertaken several measures on this front, including optimising current packaging by reducing size, initiating the use of recycled content in secondary packaging, and moving towards easy-to-recycle packaging material.

Nestle India spokesperson. The company has stopped using plastic for all promotional materials since 2020

Meanwhile, plastic recyclers such as Ganesha Ecosphere and innovative packaging companies such as EPL, Uflex, and ITC, which can provide solutions for making plastic recyclable, will be the key beneficiaries of the rollout of the new PWM rules.

analysts added