Polylactic Acid Market, 2012 – 2020

Report Code: MA1378

Polylactic Acid Market

(Packaging, Textile, Agriculture, Transportation, Bio-Medical, Electronics and Others) Global Industry Size, Company Share, Growth, Trends, Strategic Analysis and Forecast, 2012 - 2020 1

Sarah Clark Lead Analyst

5320 SW Macadam Avenue, Suite 100 Portland, OR 97239

Published: November 2013

Polylactic Acid Market, 2012 – 2020

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Polylactic Acid Market, 2012 – 2020

Analyst Credentials Sarah Clark has more than four years of experience in market intelligence, business and market research. She has experience in Chemicals domain with respect to organic, green, and specialty chemicals. She has frequently delivered research services that contain strategic recommendation and top business strategies to assist the market players to make beneficial strategies. Sarah has authored various market research deliverables in the specialty and green chemicals domain. She holds a degree in chemistry and an MBA degree in Marketing.

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Polylactic Acid Market, 2012 – 2020

Table of Contents

CHAPTER 1 INTRODUCTION ...... 13 1.1 Objectives of the market report ...... 13 1.2 Scope of the report ...... 13 1.3 Report description ...... 14 1.4 Research methodology ...... 15 CHAPTER 2 EXECUTIVE SUMMARY ...... 18 2.1 PLA vs. Polystyrene packaging – a comparison ...... 19 2.2 Why use PLA based packaging? ...... 19 CHAPTER 3 KEY FINDINGS: PLA MARKET STUDY ...... 20 3.1 PLA market definition and scope ...... 20 3.2 Ban on plastic bags: largely impacting factor ...... 22 3.3 Africa ...... 22 3.3.1 South Africa ...... 22 3.3.2 Others ...... 22 4 3.4 Asia Pacific ...... 22 3.4.1 Australia ...... 22 3.4.2 Bangladesh ...... 23 3.4.3 China ...... 23 3.4.4 India ...... 23 3.4.5 Hong Kong ...... 23 3.4.6 New Zealand ...... 23 3.4.7 Taiwan ...... 23 3.5 Europe and the Middle East ...... 24 3.5.1 Denmark ...... 24 3.5.2 France ...... 24 3.5.3 Germany ...... 24 3.5.4 United Kingdom ...... 24 3.6 The Americas ...... 24 3.6.1 Canada ...... 24 3.6.2 Mexico ...... 24 3.6.3 United States ...... 24 3.7 Top ten factors impacting the PLA market ...... 25

Polylactic Acid Market, 2012 – 2020

3.8 Top winning strategies in the PLA market ...... 27 3.9 Top investment pockets in the PLA market...... 28 3.10 Polylactic acid market dynamics ...... 29 3.10.1 Drivers...... 29 3.10.1.1 PLA - An effective alternative to conventional polymers ...... 29 3.10.1.1.1 SUSTAINABILITY ...... 29 3.10.1.1.2 INNOVATIVE APPLICATIONS ...... 29 3.10.1.1.3 BIODEGRADABILITY ...... 30 3.10.1.2 Low production cost increases production capacity of manufacturers ...... 30

3.10.1.2.1 CHEAP RAW MATERIALS ...... 30 3.10.1.2.2 ABUNDANCE OF RAW MATERIALS ...... 30 3.10.1.3 Raw materials availability ...... 30 3.10.1.3.1 HIGH PRODUCTION ...... 30 3.10.1.3.2 CHOICE OF RAW MATERIAL ...... 31 3.10.1.3.3 ADVANCEMENT IN AGRICULTURAL ENGINEERING ...... 31 3.10.1.4 Government Incentives ...... 31 3.10.1.5 Environment safety awareness ...... 32

3.10.1.5.1 GREENHOUSE GASES AND DEPLETING FOSSIL FUELS: ...... 32 5 3.10.1.5.2 DISPOSAL OF WASTE MATERIALS: ...... 32 3.10.1.6 Limited fossil fuel resources and rising petrochemical price ...... 32 3.10.2 Restraints ...... 33 3.10.2.1 Need of industrial composting ...... 33 3.10.2.1.1 NEED OF SPECIFIC TEMPERATURE AND ENVIRONMENT TO DEGRADE ...... 33 3.10.2.1.2 HARMFUL REMNANTS EVOLVING ON DECOMPOSITION ...... 33 3.10.2.1.3 NORMAL CONDITION DECOMPOSITION REQUIRES MANY YEARS ...... 33 3.10.2.2 Agricultural fiber alternatives ...... 33 3.10.3 Opportunities ...... 34 3.10.3.1 Genetic modification of corn ...... 34 3.10.3.2 Decrease in hazardous remnants and gases ...... 34 3.10.3.3 Reinforcement of PLA with other materials ...... 34 3.10.3.4 Better PLA features ...... 34 3.11 CASE STUDIES ...... 35 3.11.1 CASE STUDY 1: Development of Bioplastics for Electronic Equipment ...... 35 3.11.2 CASE STUDY 2: New PLA Foam Packaging Production Process to Improve Shelf-Life, Degradability and Thermal Sustainability ...... 36

Polylactic Acid Market, 2012 – 2020

3.11.3 CASE STUDY 3: Introduction of extrusion-blown PLA bottle for the first time in Europe ...... 37 3.11.4 CASE STUDY 4: Use of Injectable Poly L lactic acid (PLLA) for acne scars ...... 37 3.11.5 Case study 5: PLA enhanced with better heat resistance ...... 38 CHAPTER 4 GLOBAL PLA MARKET BY APPLICATIONS ...... 39 4.1 PLA in packaging industries ...... 39 4.1.1 Increased shelf-life...... 40 4.1.2 Food hygiene awareness ...... 40 4.2 PLA in textile (woven & non-woven) industries ...... 41 4.2.1 Reasons for use of PLA in textile ...... 41 4.2.2 Environment friendliness ...... 42 4.2.3 Growing textile industry ...... 42 4.3 PLA in agricultural industries ...... 42 4.3.1 Growth prospects of agricultural industry ...... 43 4.3.2 Increase in per capita income ...... 43 4.4 PLA in bio-medical industries ...... 44 6 4.4.1 Bioresorbability ...... 44 4.4.2 Mechanical Strength ...... 44 4.4.3 Increasing Expenditure in Healthcare ...... 45 4.5 PLA IN ELECTRONICS INDUSTRY ...... 45 4.5.1 Versatile usability ...... 46 4.5.2 Growing electronic industry ...... 47 4.5.3 Growing Consumer market ...... 47 4.6 PLA in other industries ...... 48 CHAPTER 5 PLA PRODUCTION AND RAW MATERIALS ...... 49 5.1 CORN ...... 49 5.2 TAPIOCA ...... 50 5.3 Sugarcane ...... 51 5.4 OTHERS ...... 51 CHAPTER 6 PLA AND GEOGRAPHIC MARKETS ...... 52 6.1 NORTH AMERICA ...... 52 6.2 EUROPE ...... 54 6.3 ASIA-PACIFIC (APAC) ...... 56

Polylactic Acid Market, 2012 – 2020

6.4 REST OF THE WORLD (ROW) ...... 59 6.4.1 Latin America ...... 59 CHAPTER 7 COMPANY PROFILES ...... 61 7.1 NOVA CHEMICALS CORPORATION ...... 61 7.1.1 Company overview ...... 61 7.1.2 Company snapshot ...... 61 7.1.3 BUSINESS PERFORMANCE ...... 62 7.1.4 Strategic moves and developments ...... 63 7.1.4.1 Principal Strategies: Product Launch and Enhancement and Business Expansion ...... 64 7.1.4.2 Secondary Strategies: Collaborations, Joint Ventures ...... 64 7.1.5 SWOT analysis & strategic conclusions ...... 65 7.2 NATUREWORKS LLC ...... 66 7.2.1 Company overview ...... 66 7.2.2 Company snapshot ...... 66 7.2.3 Business performance ...... 66 7.2.4 Strategic moves and developments ...... 67 7 7.2.4.1 Principal Strategies: Collaborations, Technological Advancements, Product Advancement ...... 67 7.2.4.2 Secondary Strategies: Sales and Business Expansion Strategies ...... 68 7.2.5 SWOT analysis and strategic conclusions ...... 68 7.3 EXXONMOBIL CORPORATION ...... 69 7.3.1 Company overview ...... 69 7.3.2 Company snapshot ...... 69 7.3.3 Business performance ...... 70 7.3.4 Strategic moves and developments ...... 71 7.3.4.1 Principal Strategies: Growth and Expansion ...... 71 7.3.4.2 Secondary strategies: collaborations ...... 71 7.3.5 SWOT analysis & strategic conclusions ...... 72 7.4 EASTMAN CHEMICAL COMPANY ...... 73 7.4.1 Company overview ...... 73 7.4.2 Company snapshot ...... 73 7.4.3 Business performance ...... 74 7.4.4 Strategic moves and developments ...... 75 7.4.4.1 Principal Strategies: Product Enhancements and Business Growth ...... 75

Polylactic Acid Market, 2012 – 2020

7.4.4.2 Secondary strategies: Joint Venture and Collaborations ...... 76 7.4.4.3 Other Strategies: Acquisitions ...... 76 7.4.5 SWOT analysis & strategic conclusions ...... 77 7.5 DuPont Corporation ...... 78 7.5.1 Company overview ...... 78 7.5.2 Company snapshot ...... 78 7.5.3 Business performance ...... 78 7.5.4 Strategic moves and developments ...... 79 7.5.4.1 Principal Strategies: Technological Advancements in Products ...... 80 7.5.4.2 Secondary Strategies: Business Growth and Expansion ...... 80 7.5.4.3 Other Strategies: Collaborations ...... 80 7.5.5 SWOT analysis & strategic conclusions ...... 81 7.6 DOW CHEMICALS CORPORATION ...... 82 7.6.1 Company overview ...... 82 7.6.2 Business performance ...... 83 7.6.3 Strategic moves and developments ...... 84 7.6.3.1 Principal Strategies: Technological Advancements, Corporate Social 8 Responsibility, Product Launch and Enhancement ...... 85 7.6.3.2 Secondary Strategies: Collaborations, Growth and Expansion...... 85 7.6.4 SWOT analysis & strategic conclusions ...... 86 7.7 BAYER AG ...... 87 7.7.1 Company overview ...... 87 7.7.2 Company snapshot ...... 87 7.7.3 Business performance ...... 88 7.7.4 Strategic moves and developments ...... 88 7.7.4.1 Principal Strategies: Product Launch and Enhancements ...... 88 7.7.4.2 Secondary strategies: Business Expansion ...... 89 7.7.5 SWOT analysis & strategic conclusions ...... 89 7.8 China Petroleum & Chemical Corporation ...... 90 7.8.1 Company overview ...... 90 7.8.2 Company snapshot ...... 90 7.8.3 Business performance ...... 91 7.8.4 Strategic moves and developments ...... 91 7.8.4.1 Principal Strategies: Growth and Expansion ...... 92 7.8.4.2 Secondary strategies: Collaborations ...... 92

Polylactic Acid Market, 2012 – 2020

7.8.5 SWOT analysis & strategic conclusions ...... 93 7.9 MITSUBISHI CHEMICAL CORPORATION ...... 94 7.9.1 Company overview ...... 94 7.9.2 Company snapshot ...... 94 7.9.3 Business performance ...... 95 7.9.4 Strategic moves and developments ...... 95 7.9.4.1 Principal Strategies: Acquisition & Joint Venture ...... 95 7.9.4.2 Secondary strategies: Growth and Expansion ...... 96 7.9.5 SWOT analysis & strategic conclusion ...... 96 7.10 BRASKEM ...... 97 7.10.1 Company overview ...... 97 7.10.2 Company snapshot ...... 97 7.10.3 Business performance ...... 98 7.10.4 Strategic moves and developments ...... 98 7.10.4.1 Principal Strategies: Partnerships and Collaborations ...... 99 7.10.4.2 Secondary Strategies: Growth and Expansion ...... 99 7.10.4.3 Other Strategies: Technological Improvements ...... 99 9 7.10.5 SWOT analysis & strategic conclusions ...... 100

Polylactic Acid Market, 2012 – 2020

List of Figures

FIG. 1 TYPES OF BIO-PLASTICS 20 FIG. 2 TOP TEN FACTORS IMPACTING PLA MARKET 26 FIG. 3 TOP INDUSTRY STRATEGIES IN PLA AND BIOPLASTICS MARKET (2010 TO 2012) 27 FIG. 4 TOP MARKETS IN PLA APPLICATIONS MARKET 28 FIG. 5 ELECTRONICS EQUIPMENT MANUFACTURING BY GEOGRAPHY 2012 46 FIG. 6 FINANCIAL REVENUES FROM CONTINUING OPERATIONS AS PER PERFORMANCE SEGMENTS 2010 – 2012 ($MILLION) 62 FIG. 7 PERCENTAGE OF SALES BY GEOGRAPHIC SEGMENT 2012 63 FIG. 8 SWOT ANALYSIS OF NOVA CHEMICALS CORPORATION 65 FIG. 9 SWOT ANALYSIS OF NATUREWORKS LLC 68 FIG. 10 PRIMARY SEGMENTS EARNINGS 2012 ($MILLION) 70 FIG. 11 SWOT ANALYSIS OF EXXONMOBIL CORPORATION 72 FIG. 12 FINANCIAL REVENUE BY MARKETS (2012) 74 FIG. 13 COMBINED SALES REVENUE BY GEOGRAPHY (2012) 75 10 FIG. 14 SWOT ANALYSIS OF EASTMAN CHEMICAL COMPANY 77 FIG. 15 NET SALES AS PER BUSINESS SEGMENT 2012 ($MILLION) 79 FIG. 16 SWOT ANALYSIS OF DUPONT 81 FIG. 17 PERCENT OF SALES AS PER GEOGRAPHY 2012 84 FIG. 18 SWOT ANALYSIS OF DOW CHEMICALS CORPORATION 86 FIG. 19 SALES AS PER SEGMENTS 4TH QUARTER 2012 (MILLION USD) 88 FIG. 20 SWOT ANALYSIS OF BAYER AG 89 FIG. 21 OPERATING PROFIT YEAR END 31 DEC. ($MILLION) 91 FIG. 22 SWOT ANALYSIS OF SINOPEC 93 FIG. 23 MITSUBISHI CHEMICAL CORPORATION TOTAL SALES 2010 - 2012 ($MILLION) 95 FIG. 24 SWOT ANALYSIS OF MITSUBISHI CHEMICAL CORPORATION 96 FIG. 25 BRASKEM NET REVENUE 2011 AND 2012 ($MILLION) 98 FIG. 26 SWOT ANALYSIS OF BRASKEM 100

Polylactic Acid Market, 2012 – 2020

List of Tables

TABLE 1 GLOBAL POLY LACTIC ACID MARKET REVENUES, 2013 – 2020 ($MILLION) 18 TABLE 2 GLOBAL POLY LACTIC ACID MARKET REVENUES BY APPLICATION SEGMENTS, 2013 – 2020 ($MILLION) 39 TABLE 3 GLOBAL POLY LACTIC ACID MARKET REVENUES IN PACKAGING, 2013 – 2020 ($MILLION) 40 TABLE 4 GLOBAL POLY LACTIC ACID MARKET REVENUES IN TEXTILES, 2013 – 2020 ($MILLION) 41 TABLE 5 GLOBAL POLY LACTIC ACID MARKET REVENUES IN AGRICULTURE, 2013 – 2020 ($MILLION) 42 TABLE 6 GLOBAL POLY LACTIC ACID MARKET REVENUES IN BIO-MEDICALS, 2013 – 2020 ($MILLION) 44 TABLE 7 GLOBAL POLY LACTIC ACID MARKET REVENUES IN ELECTRONICS, 2013 – 2020 ($MILLION) 45 TABLE 8 GLOBAL POLYLACTIC ACID MARKET REVENUES IN OTHER INDUSTRIES, 2013 – 2020 ($MILLION) 48 TABLE 9 NORTH AMERICAN POLYLACTIC ACID MARKET REVENUES BY 11 APPLICATION SEGMENTS, 2013 – 2020 ($MILLION) 52 TABLE 10 EUROPEAN POLYLACTIC ACID MARKET REVENUES BY APPLICATION SEGMENTS, 2013 – 2020 ($MILLION) 54 TABLE 11 ASIA-PACIFIC POLYLACTIC ACID MARKET REVENUES BY APPLICATION SEGMENTS, 2013 – 2020 ($MILLION) 56 TABLE 12 REST OF THE WORLD POLYLACTIC ACID MARKET REVENUES BY APPLICATION SEGMENTS, 2013 – 2020 ($MILLION) 59 TABLE 13 NOVA CHEMICALS BUSINESS SNAPSHOT 61 TABLE 14 NATUREWORKS BUSINESS SNAPSHOT 66 TABLE 15 EXXONMOBIL SNAPSHOT 69 TABLE 16 EASTMAN BUSINESS SNAPSHOT 73 TABLE 17 DUPONT CORPORATION BUSINESS SNAPSHOT 78 TABLE 18 DOW CHEMICALS CORPORATION BUSINESS SNAPSHOT 82 TABLE 19 DOW CHEMICALS CORPORATION SALES PER YEAR 2010 – 2012 ($MILLION) 83 TABLE 20 BAYER AG BUSINESS SNAPSHOT 87 TABLE 21 SINOPEC BUSINESS SNAPSHOT 90

Polylactic Acid Market, 2012 – 2020

TABLE 22 MITSUBISHI CHEMICAL SNAPSHOT 94 TABLE 23 BRASKEM BUSINESS SNAPSHOT 97

Polylactic Acid Market, 2012 – 2020

CHAPTER 1 INTRODUCTION 1.1 Objectives of the market report To identify and analyze significant market trends and factors that are impacting the revenues and market growth in Polylactic acid (PLA) market. The report aims at capturing key application areas and impacting trends that strongly influence the PLA market. Precise objectives of the report include: . To identify and analyze factors that accelerate the market growth of the PLA market such as government regulations, raw material availability etc. . To analyze 2012 market and forecast demand for PLA market through 2020 segmented by application areas and geographic segments. . To describe pockets of investment for the PLA manufacturers and other stakeholders . To study challenges that must be addressed and overcome in the PLA market to achieve fiscal success. . To identify product manufacturers that will drive the innovation in the PLA market.

13 1.2 Scope of the report Poly lactic acid (PLA) is thermoplastic polyester derived from renewable feedstock such as corn starch, sugarcane, wheat, tapioca roots. It is bio degradable polyester polymer of lactic acid. It has wide verity of application such as in Packaging, Textile, Agriculture, Transportation, Bio-Medical and Electronics industry. Due to environmental concerns and scarcity & volatility of prices of fossil fuels, many companies and government regulatory bodies are focusing to find substitute to oil-based products. Moreover, bio based plastics has huge potential to reduce the consumption and dependency on petroleum based feedstock and lessen negative impact on environment by reducing carbon footprints. Thus, it has emerged mainly as source of bio-degradable plastics available in the market in recent years. Furthermore, on-going research and technical development in the field of bio-based plastics have enhanced properties of bio-based plastics namely PLA resistance to heat and thus increasing scope of its application market. The global poly lactic acid market is presently facing supply crunch as few international manufacturers trying hard to meet rapidly rising demand for bio-based plastics. Thus, it is anticipated that the global poly lactic acid market will grow at a double digit growth rate.

Polylactic Acid Market, 2012 – 2020

The report analyses the global poly lactic acid market by geography namely North America (U.S.), Europe (Germany, U.K. France), Asia Pacific (China, Japan, and India), Latin America (Brazil and Mexico) and RoW. Asia Pacific region is expected to grow at a faster rate due to increasing demand from end user market supported by easily availability of naturally occurring raw material such as corn, sugarcane, wheat and tapioca. Thus, many manufacturers are installing poly lactic acid manufacturing plants in close proximity with such regions in order to get cost advantage. Also, in recent years, food and beverage and its export has increased in China thus it will enable growth of poly lactic acid market with high double digit growth rate during the forecast period. Moreover, in Japan higher growth is anticipated due growing attraction for bio-based plastics owing to its eco-friendly properties.

The report analyses the global poly lactic acid market by application namely packaging, textile, agriculture, transportation, bio-Medical, electronics and others. Packaging industry captures major share of the application market especially food packaging industry. Furthermore, it is preferred in food packaging industry due to increasing awareness about environmental concerns possess by the use of conventional plastics packaging. Moreover, bio-based plastics have lower carbon footprint as compared to fossil fuel plastics and hence is considered as a potential solution to prevent harmful impact on the environment caused by carbon footprints. Due to technological development and on- 14 going research on Poly lactic acid production process it is anticipated that PLA market will find new application with better performance property. The demand of PLA in textile, packaging, transportation will continue to grow due to increase in end user industries. Overall bioplastic and other markets (excluding PLA) are discussed only to provide a holistic view of the market and are not considered on totality.

1.3 Report description Raw materials such as corn, genetically modified corn, sugarcane etc. is easily available in Asia Pacific region mainly China thus manufacturers can take advantage of this in availing cost benefit. Moreover distribution channel also plays a vital role in the life cycle management of PLA due to presence of wide range of end user application. Various value added in each stage is explained in detailed in the report which will enable the stakeholders to analyze various levels involved in manufacturing the product. Market attractiveness analysis, compares various application markets such as packaging, textile, agriculture, transportation, bio-Medical, electronics and other application market along with factors responsible for the most attractive application market.

Various economic factors which are significant in determining market trend, buying decisions and market attractiveness had been analyzed for market estimation and forecasting. Detailed elaboration of drivers, restraints and opportunities in the report will enable in strategic decision making with perceptive to identify potential market. In

Polylactic Acid Market, 2012 – 2020

addition to this, the study also discusses various environmental and regulatory factors critical for the market growth. Thus, estimation of market numbers, with due consideration to all these factors has helped in enhancing the scope of the report. This analysis will support stakeholders such as manufacturers and distributors of poly lactic acid in identifying and capturing markets with high potential. Historical data is provided for 2011, 2012 whereas forecast is available through 2018 in terms of both volume (Kilo tons) as well as revenue (million) for each and every segment.

Company profiled in this report include Nova Chemicals Corporation, Dow Chemical, Eastman Chemical, DuPont Corporation, Bayer AG, Exxon Mobil Chemical, Chemson Group, Mitsubishi Chemical Corporation (MCC), China Petroleum & Chemical Corporation (Sinopec), Nova Chemicals Corporation and Braskem S.A. including others. The market is also analyzed on the basis of major market players in the global poly lactic acid market. This analysis is done on the basis of their business strategies and recent organic and inorganic development. Company profiles of top worldwide market players included in this report covers their business strategies, financial overview, SWOT analysis and recent development. This inclusion will enhance the strategic business decision making of the stakeholders.

1.4 Research methodology 15 With collective industry experience of about 100 years of its analysts and experts, Allied Market Research (AMR) encompasses most infallible research methodology for its market intelligence and industry analysis. We do not only engrave the deepest levels of markets but also sneak through its slimmest details for the purpose of our market estimates and forecasts. Our approach helps in building greater market consensus view for size, shape and industry trends within each industry segment. We carefully factor in industry trends and real developments for identifying key growth factors and future course of the market. Our research proceeds are the resultant of high quality data, expert views and analysis and high value independent opinions. Our research process is designed to deliver balanced view of the global markets and allow stakeholders to make informed decisions to attain their highest growth objectives.

We offer our clients exhaustive research and analysis based on wide variety of factual inputs which largely include interviews with industry participants, reliable statistics and regional intelligence. Our in-house industry experts play instrumental role in designing analytic tools and models, tailored to the requirements of particular industry segment. These analytical tools and models sanitize the data & statistics and enhance the accuracy of our recommendations and advice. With AMR’s calibrated research process and 360 degree data evaluation methodology our clients are assured of receiving:

Polylactic Acid Market, 2012 – 2020

. Consistent, valuable, robust and actionable data & analysis that can easily be referenced for strategic business planning . Technologically sophisticated and reliable insights through well audited and veracious research methodology . Sovereign research proceeds that present a tangible depiction of marketplace

With a strong methodology we are, therefore, confident that our research and analysis are most reliable and guarantees sound business planning.

For this research report we conducted over 75 hours of interviews and discussion with wide range of stakeholders including upstream and downstream participants. Primary research typically is bulk of our research efforts; however, coherently supported by extensive secondary research. We reviewed over 7000 product literatures, industry releases, annual reports and other such documents of key industry participants for better market understanding and competitive intelligence. Additionally, authentic industry journals, trade associations’ releases and government websites have also been reviewed for generating high value industry insights.

Secondary research 16 We refer a broad array of industry sources for our secondary which typically include; however, not limited to: . Company SEC filings, annual reports, company websites, broker & financial reports and investor presentations for competitive scenario and shape of the industry . Patent and regulatory databases for understanding of technical & legal developments . Scientific and technical writings for product information and related preemptions . Regional government and statistical databases for macro analysis . Authentic new articles, web-casts and other related releases for market evaluation . Internal and external proprietary databases, key market indicators and relevant press releases for market estimates and forecast

Polylactic Acid Market, 2012 – 2020

Primary research Our primary research efforts include reaching out participants through mail, tele- conversations, referrals, professional networks and face-to-face interactions. We are also in professional corporate relations with various companies that allow us greater flexibility for reaching out industry participants and commentators for interviews and discussions, fulfilling following functions: . Validates and improves the data quality and strengthens research proceeds . Further develops analyst team’s market understanding and expertise . Supplies authentic information about market size, share, growth and forecasts

Our primary research interview and discussion panels are typically composed of most experienced industry members. These participants include; however, not limited to: . Chief executives and VPs of leading corporations specific to industry . Product and sales managers or country heads; channel partners and top level distributors; banking, investments and valuation experts . Key opinion leaders (KOLs)

Analyst tools and models 17 AMR has developed set of analyst tools and data models to supplement and expedite the analysis process. Corresponding to markets, where there is significant lack of information and estimates, AMR’s team of experts and analyst develop specific analyst tools and industry models to translate qualitative and quantitative industry indicators into exact industry estimates. These models also allow analysts to examine the prospects and opportunities prevailing in the market to accurately forecast the course of the market.

Polylactic Acid Market, 2012 – 2020

CHAPTER 2 EXECUTIVE SUMMARY

Reducing the environmental footprint of the packaging materials have become an important concern for plastic packaging manufacturers. Thinking from the business point of view, they also need to keep the production cost under control. Use of polylactic acid packaging technology has evolved as the best option for them as it serves both the purposes. Traditionally, polystyrene was used in packaging industry but it has been under lot of criticism for its environmental issues.

TABLE 1 GLOBAL POLY LACTIC ACID MARKET REVENUES, 2013 – 2020 ($MILLION) CAGR % Region 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) North America 1,362.3 18.8 Europe Asia Pacific Row 943.2 Total 5,240.0 19.5

Source: AMR analysis, Primary Research and Company Publications *Numbers.in.the.table.is.deliberately.removed. 18 The global PLA market is expected to reach market size of $5.2 billion by 2020 growing at a CAGR of 19.5% during 2013 to 2020. Europe contributed highest to the revenue share for 2012 with revenues of $442 million. Stringent packaging regulations in the Europe have enabled significant application of PLA in the packaging industry. Europe has significant domestic demand and also has a significant production base. However, highest growing market is APAC with an expected CAGR of 21.6% (2013 to 2020).

Governments, common men and other bodies are getting aware about environmental concerns and various policies are being formulated under this concern. Thus, the companies trying hands into PLA based products would most probably have a demanding market ahead and experience opportunities for growth. From the company’s perspective, this would also be a cost effective venture. Due to its biodegradability feature, PLA products are expected to stay safe from falling prey to any legal legislation. Therefore, sooner the concerned companies take note of this and build its base in this evolving market, better will they get rooted into the market. It is advisable to the polystyrene m anufacturers to shift to PLA based packaging as early as they can.

Polylactic Acid Market, 2012 – 2020

2.1 PLA vs. Polystyrene packaging – a comparison Not many years ago, traditional packaging used polystyrene for most of the types of packaging. They were basically injection-molded. It served all the purposes as a packaging material but the environment concerns gradually woke-up the government, certain NGO’s, industrial bodies as well as common men. Today, the awareness has reached a state where consumers attempt to ignore non-biodegradable products and choose the alternative just for the reason that it can be biodegradable. Traditional packaging materials were petroleum based but the non-degradability and fluctuating price of petroleum based raw materials led to continuous instability in its market. The rising price of petroleum products if continued will further bring impact on polystyrene and the low cost feature of these packaging will fade off gradually.

As a consumer and concerning the environmental effects, polystyrene is non- biodegradable and either needs to be disposed-off in landfills or broken down through expensive process. Polystyrene byproducts are toxic and these waste products are increasing day by day causing negative impact on the environment. These toxic materials can endanger animals as well as contaminate the water supplies. This has been the primary reason why government in most of the countries have taken strict steps and has passed regulations regarding disposal and degradation of polystyrene and other petroleum based packaging products. 19 2.2 Why use PLA based packaging? As far as comparison with polystyrene is concerned, PLA has lot many reasons to be used as a replacement for polystyrene packaging. The most important aspect is that PLA is prepared from agriculture based raw material such as starch derived from byproducts of corn, tapioca and sugarcane. This keeps it safe from price fluctuations as in the case of petroleum based products. Moreover, the availability of large farm lands, the expansion of PLA based packaging industry would not be a tough task.

With respect to the environmental concerns, PLA is a safer product that brings least pollution. These products can be bio-degraded and can also be easily composted at composting setups. Thus, it brings no danger to animals or the water sources near the landfills or to the water table. PLA can also be recycled and can be reused for manufacturing of sustainable packaging products, further reducing the need for manufacturing a completely new polymer. Unlike petroleum based polymers, PLA emits no greenhouse gases like CO2 and is safer during use as well after use.

Polylactic Acid Market, 2012 – 2020

CHAPTER 3 KEY FINDINGS: PLA MARKET STUDY 3.1 PLA market definition and scope Polylactic acid (PLA) is thermoplastic polyester derived through various renewable sources such as corn starch, sugarcane, tapioca roots etc. They remain a significant market segment within the bio plastic with respect to their applications in various areas such as packaging, electronics, textiles and fiber etc. Bioplastics have found varied applications in recent years and have become very much popular among companies as well as consumers. The primary reason for this instant and fast growth of bio plastics market is the environment friendly nature of these polymers. Moreover, the light weight factor, versatility in applications and durability of the goods prepared by bio plastics further add up to its positive aspects.

FIG. 1 TYPES OF BIO-PLASTICS PLA, PHA, Biodegradable Starch based Bio-based

Types of Bio-PE, Bio-PET, PBAT, PBS, PCL Bio-plastics PTT

PE, PP, PET & Fossil-based conventional Non Biodegradable Plastics

Source: AMR analysis, Primary Research and Company Publications

Bio-polyethylene (bio-PE), biodegradable starch blends, polylactic acid (PLA), polyhydroxy- alkanoate (PHA) and biodegradable polyester are primary types to experience growth and increase in demand due to its applicability in various industries. Companies are

Polylactic Acid Market, 2012 – 2020

concentrating on various factors of bioplastic manufacturing. From the raw material point of view, companies are focusing on methods to manufacture it from cheap feedstock and building blocks for the final product while others are deep into manufacturing methods that would increase the features like sustainability to physical pressure and temperature.

Governments of major countries have issued legislations that ban use of plastic bags and this has compelled companies to shift to manufacturing of polymers that comply with the rules passed by the government. As in 2010, total bioplastic market was approx. 1% of the total global plastic usage. Global bioplastics production annually was 798,070 tons in 2010 and is expected to reach 1.90 million tons by 2015.

Consumers today are shifting towards biodegradable products. Awareness for a healthier lifestyle and environment safety has reached even the common man. Various non- government agencies such as NGO’s too are working to encourage avoidance the use of biodegradable plastics. Bioplastic market shows huge growth prospects in future as the demand for eco-friendly products keep on rising. Apart from the packaging industry bioplastic are used in manufacturing of automobile parts, medical sutures, transportation container, etc.

Though bioplastics have huge potential to grow in future, there are certain challenges that 21 it might face. The terms used by manufacturers for biodegradable product materials are confusing for common men. They are unable to understand if it can be degraded naturally or needs a composting set-up. Most of the bioplastics do not degrade in natural environment and they need to be composted through proper composting process. There is a lack of infrastructure and such setup required for industrial composting all around the world and these bioplastics might be left as landfills finally, ruining the purpose of its manufacturing. There is a lack of funding from state and federal agencies in US as well as in other countries.

Polylactic Acid Market, 2012 – 2020

3.9 Top investment pockets in the PLA market PLA finds more than xx% of its application revenues in packaging industry. PLA is an active packaging material that addressed significant problems of conventional packaging, example: increasing shelf life of the packaged product. PLA Companies are working in partnership with the end users to enhance the applications of bio-plastics and PLA in packaging industries, which has resulted in advancement with respect to high heat applications. However, niche applications such as electronics, textiles and biomedical are promising.

FIG. 4 TOP MARKETS IN PLA APPLICATIONS MARKET

High Electronics

TOP 3 FUTURE MARKETS Textiles Increasing application areas expected to enhance future revenues. Bio-medicals

28 Others Agriculture

Packaging CAGR 2013 to 2020 2013 to CAGR

Increasing application in short- life span products

Low

High Current Revenues Low

Source: AMR analysis, Primary Research and Company Publications

Polylactic Acid Market, 2012 – 2020

CHAPTER 4 GLOBAL PLA MARKET BY APPLICATIONS

The top application for PLA market is packaging accounting to above xx % of its revenues. Packaging remains a key and established market. The PLA packaging market is expected to reach about $xx billion by the end of 2020 growing at a CAGR of xx% from 2013 to 2020. However, the greatest potential market is the electronics segment due to purchase trends of consumer electronics and allied benefits offered by PLA in this segment especially in small electronic devices which have high purchase volumes. The PLA market in electronics is expected to reach $xx million by the end of 2020 growing at a CAGR of xx% from 2013 to 2020.

TABLE 2 GLOBAL POLY LACTIC ACID MARKET REVENUES BY APPLICATION SEGMENTS, 2013 – 2020 ($MILLION) CAGR % Segment 2012 2013 2014 2015 2016 2017 2018 2019 2020 (2013 - 2020) Packaging Agriculture Electronics Textiles Bio-Medical 209.1 302.5 39 Others 241.6 500.2 Total 1,300.0 2,960.0 5240.0 19.5

Source: AMR analysis, Primary Research and Company Publications *Numbers.in.the.table.has.been.deliberately.removed

4.1 PLA in packaging industries Above xx% of the worldwide PLA production finds its application in the packaging industry. The great advantage of PLA lies in its versatility. It can be used in food and beverage packaging, high heat packaging, fibers, textile, automotive and consumer goods. It offers great potential for short-lifespan packaging such as yoghurt pots and fruit and vegetable trays. It finds application in packaging materials prepared through cast, injection molding, spinning or any other procedure. In the form of a film, it shrinks on heating and thus it finds application in shrink tunnels. It is used in preparation of loose- fill packaging, compost bags, food packaging and disposable tableware. PLA is also used in production of disposable garments, awnings, feminine hygiene products and diapers. By further increasing the heat tolerance, PLA can be used as containers and in packaging of hot food and beverages. The need to protect our environment against unnecessary pollution and to use sustainable resources to fulfill the needs of the customers has been one of the primary role players in the increase of PLA based packaging materials demand.

Polylactic Acid Market, 2012 – 2020

7.2 NATUREWORKS LLC NatureWorks LLC 15305 Minnetonka Boulevard Minnetonka, MN 55345USA Website: www.natureworksllc.com

7.2.1 Company overview Nature Works LLC is a leading manufacturer of bioplastics and deals primarily in this sector. The company manufactures bio-plastics that are entirely derived from annually renewable plant resources. It replaces the use of petroleum based plastics used in packaging, consumer goods and fiber products. NatureWorks extensively deals into polylactic acid (PLA). PLA is manufactured by the company from plant starch sources and is marketed under the brand name Ingeo. NatureWorks is operated by two leading chemical companies namely Cargill and PTT Global Chemical. Both of these companies hold 50% share in NatureWorks. Initially, it was a wholly owned subsidiary of Cargill. NatureWorks LLC produces its proprietary polylactic acid based biopolymer at a facility in Nebraska and is marketed globally under the Ingeo brand.

7.2.2 Company snapshot 66 TABLE 14 NATUREWORKS BUSINESS SNAPSHOT Snapshot Description Year of Inception 1989 Primary Business Manufacturing bio-plastics and bio-polymers Secondary Business N/A Geographic Presence North America, Europe, Japan and Asia Pacific PLA based products in Packaging, hygiene and medical, agriculture, PLA Product Portfolio electronics, automotive , apparels, etc. Key Strategic Move Collaborations, Product Enhancements, Business Expansion Overall Financial Status 2012 Revenue (million THB) 1,349 PLA Production 150 Thousand Tons per year

Source: Nature Works

7.2.3 Business performance NatureWorks generated revenue of 1,349 million THB in 2012. NatureWorks manufacturing facility at Blair, Nebraska, USA, has a capacity of 300 million pounds which is 140,000 metric tons of Ingeo biopolymer. In 2003, the company had the world’s largest facility producing lactic acid. The lactic acid manufactured was to feed the polymer plant of the company. NatureWorks has its business expanded to countries of North

Polylactic Acid Market, 2012 – 2020

America, Europe, Japan and Asia Pacific. The company deals with brand owners, converters and retailers all around the world to manufacture eco-friendly bio-polymers based Ingeo plastics and fibers.

7.2.4 Strategic moves and developments In the year 2010, NatureWorks LLC introduced its second generation Ingeo bio resin solution targeted primarily at injection molding of semi-durable consumer products. This high heat application of the bioresin can be used in high heat thermoforms, films, and gift and transactional cards. It allows the production of injection molded parts with thermal dimensional stability up to 120 degree Celsius. It showed better strength and modulus. In 2013, NatureWorks announced its first regional headquarter in Bangkok for the Asia Pacific Region. It expanded its team of senior commercial, managerial and technical personnel so as to provide better service to the Ingeo customers in this region and finally expand its business throughout the area. It collaborated with BioAmber, a next generation chemicals company and a market leader in the commercialization of biosuccinic acid, and moved ahead with a joint venture named AmberWorks, to manufacture a new generation bio-based polymer.

7.2.4.1 PRINCIPAL STRATEGIES: COLLABORATIONS, TECHNOLOGICAL 67 ADVANCEMENTS, PRODUCT ADVANCEMENT NatureWorks collaborated with many firms so as to enhance its product quality as well as to expand its business in various areas. It came up with a joint venture with BioAmber that was named AmberWorks and it led to manufacturing of a next generation bio-based polymer. The NatureWorks biopolymers are very much suited to the environment safety concerns of the government and the technology used by it was proved when it was observed that the biopolymer was stable in landfills and no significant amount of methane was released out of it. Ingeo products received the sustainability certifications in Germany for its quality. NatureWorks partnered with Plasticity RIO ’12 in 2012, to include bioplastics on the UN agenda. It went through a joint venture with BioAmber in the same year. Together, they announced creation of AmberWorks, a joint venture to bring new performance bio-based polymer compositions.

Analysis of the landfills proved that NatureWorks cold cups made with bioplastics had lower carbon footprint compared to polypropylene or polyethylene terephthalate. In 2010, the company partnered with Climate Action to decrease the carbon footprints of the landfills of bio-polymers. These two companies had a view to together develop more sustainable products for everyday use. The company keeps on developing its product quality and Ingeo polymer received the “OK bio-based” rating from the European certification organization Vincotte of Vilvoorde, Belgium. It was the first polymer to earn four-star certification from this organization.

Polylactic Acid Market, 2012 – 2020

7.2.4.2 SECONDARY STRATEGIES: SALES AND BUSINESS EXPANSION STRATEGIES NatureWorks LLC planned a new sales strategy in Taiwan, in 2011. According to the strategy, it planned to sell Ingeo packaging resin grades directly to the customers in Taiwan. This strategy was applied to complete commercial transition of the company as all other Ingeo grades have already been in sale directly to the customers in this region. In order to drive the bio-polymer market, in the year 2010, NatureWorks publically released the formulation and compounding procedure of the high-heat, high-impact bioresin, Ingeo 3801X. The company did this with view to widen the arena of its use by the firms buying it. It also released the details about impact modifiers, crystallization accelerant and agents for reinforcement and nucleation so that other firms buying it can use it in manufacturing of better products and enhance the features as per their requirements.

7.2.5 SWOT analysis and strategic conclusions NatureWorks is a leading manufacturer of PLA based polymers and other bio-plastics. It has a global reach and its business is widespread throughout the world. Economic crisis is one of the threats that might affect the business of the company. PLA products have strong opportunities in future as the awareness for environment safety in increasing and PLA has versatile application.

68 FIG. 9 SWOT ANALYSIS OF NATUREWORKS LLC Strengths: Weakness: Feasible products Less control over price due to price Deals purely in bio based plastic and volatility polymers Leading company in manufacturing of PLA Global reach

Threats: Opportunities: Increasing environment safety Economic crisis awareness Fluctuations in cost of raw materials Increasing versatility of PLA Economic instability might lead to application decrease in sales

Source: NatureWorks & other references

Polylactic Acid Market, 2012 – 2020

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