As industry comes to terms with the worst recession since the 1920s delegates to the Starpack Summit 2009 – Creating Consumer and Business Confidence Through Innovation - were given a breakdown of the challenges faced by the supply chain.

High-level speakers* from all parts of the supply chain and the Government’s opposition, discussed the importance of the role of packaging in consumer markets,  the important issues surrounding sustainability and product wastage, sustainable product development, and managing recessionary economic influences.

Run as part of the Starpack Awards programme by The Packaging Society and sponsored by the Waste & Resources Action Programme (WRAP) it was the second in a series of high-level business conferences for the complete supply chain.

Rising oil prices, fewer resources and climatic change remain the foremost challenges for the packaging supply chain particularly for the food sector. Below you will find a series of synopses of most of the speakers’ presentations.

Food and drink - recession deepens

The Institute of Grocery Distribution’s chief economist James Walton, said that with the UK contraction deepening gross domestic production was set to fall by 4% this year. This meant that the food & drink sector was facing a crisis for which “there is no precedent”, despite the commonly held belief that the grocery market is relative recession resistant.

This year’s Summit is critical, said Walton: “It comes at a time when the international grocery market is experiencing powerful pressures. Grocery shoppers are proving to be highly responsive, actively defending themselves from economic change. And the businesses that serve them are seeing radical transformation as they race to keep up.”

Some of the issues the sector had to cope with were:
•    Climate change
•    Commodity price inflation
•    Financial breakdown
•    Recession
•    And, most recently,  Pandemic ‘flu

These were all consequences of the same mega-trend: globalisation -   erosion of barriers to trade through a series of political, technical and economic convergences.

The obvious link to increased food prices would have massive social implications with many families unable to feed their children properly, he stated.

“Despite the fact that globalisation had creating unprecedented commercial opportunities with explosive economic growth lifting many millions of people out of poverty, the current recession is set to move those who had moved to the right side of the poverty line back on to the wrong side,” explained Walton.

He pointed to a recent IGD survey of 99 grocery professionals, drawn from a range of supplier businesses. Of these only 14% had planned in advance for the economic downturn.

“This implies a serious failure of our forecasting systems! Being inexperienced is nobody’s fault - but being unprepared is unforgivable.”

The recession has impacted on consumers’ purse strings and consequently on their confidence.  “Food now accounts for about 40% of the inflation experienced by the average UK household but if you include beers, wines and spirits, and tobacco this rises to about 45%,” explained Walton.

The consequences, he added, were that the older consumer and the less well off who spend a higher proportion of income on groceries would be hit hardest.

There has already been a clear impact on purchasing patterns, said Walton. Among the significant changes are consumers searching out promotions, shopping around more and cooking from scratch.

Food price inflation was running at about 11% year-on-year and, despite the ferocious price competition and promotions, this added up to shoppers being “in for a real shock”.

And, he declared, “Food price inflation is probably here to stay!”

The current recession qualified as a “crisis” of which one consequence would be the acceleration of market development as shoppers continued to change their purchasing patterns.

For example, IGD consumer research showed that 57% of respondents claimed to have made changes to their grocery shopping to save money, while 91% of these said that their food experience was either unchanged or improved as a result.

“If shoppers are saving money and getting food which is as good or better than before, why would they go back?” asked Walton. “We must expect that new behaviours and shopping solutions will be retained even after the economy recovers.”

Interestingly, however, these moves have not diminished consumers’ interest in sustainability and other ethical issues. Walton concluded: “Economics, commerce and sustainability are now interlinked.

“Economic recovery will not be robust and long-lasting unless it also addresses sustainability. It is no longer optional - it is central to good business practice”.

Consumer anxiety

The effect of the recession on green consumerism was discussed by Henry Tucker, Director, The Futures Company. In his address, which was based on the company’s recent quantitative research The Reconstructed Consumer, he said that there appeared to be continued pressure on the perceived cost of ethical consumption.  

For example, 36% of respondents indicated that they were spending less on ethical products, with the top upward trends being:
Spending Wisely 60%
Trading Down 50%
Consuming Less 45%

There was a warning message for brand owners with 62% of respondents saying that they would be willing to drop big name brands, while 32% were prepared to sacrifice convenience.
Other interesting findings include:
•    Only 8% of consumers are willing to sacrifice food and drink products made with natural ingredients in order to save money.
•    61% would sacrifice organic produce
•    People won’t give up health benefits (60%) or superior taste and flavour (45%).

The survey found significant interest in reducing the role of packaging with respondent interest increasing proportionately with age - 33% of 18-24 year olds vs. 56% of 55 year olds; while smaller households were more engaged in the issues.

Government actions

RISING oil prices, fewer resources and climatic change remain the foremost challenges for the packaging supply chain particularly for the food sector.

Setting the scene for British manufacturing and its current demise Mark Prisk MP, Shadow Minister for Business and Enterprise, said that the Government had failed to grasp that innovation in every element of business - research, design, development and production – was a continual process which cannot be separated into chunks.  

With an obvious reference to the Government’s newly created Department for Business, Innovation and Skills, formed from the merger of Department for Business, Enterprise & Regulatory Reform (BERR)  and Department for Innovation, Universities and Skills (DIUS) and designed to help Britain’s compete in the global economy,  Prisk inferred that this would not create the right environment for business, and training & education.  

“We need a clear policy that helps innovation without interfering in every tiny detail.”

Packaging a strong defence

Making a strong defence of the part packaging plays in British manufacturing, the vital role it plays in consumer lifestyles and its essential attribute of in preventing waste, Dick Searle, Chief Executive, The Packaging Federation, said: “The negative attention packaging continues to receive from the public, media and politicians is totally disproportionate to its net environmental impact.”

Born out of an ignorance of the facts he said this issue should be addressed by the whole packaging supply chain. “Particularly packers, fillers, brand owners and retailers whose very existence depends on modern packaging.

“Packaging is a service industry which is ready and able to respond to changes in society’s needs and is working to minimise the environmental impact of its products and is a major contributor to the way in which society functions.”  

He added that the energy content of one day’s packaging is equal to “one mile” driven in a car!

“The focus on packaging is trivialising the debate on carbon and the Government should address the real impacts such as car and air travel, and energy use in the home.”

Sustainability and the machinery sector

Discussing the impact of the demand for sustainable packaging developments from the packaging sector, Jacob van Kogelenberg Bosch Packaging Technology’s product manager for secondary packaging discussed some of the key pointers on how machinery manufacturers and their customers can meet the challenges of current and future regulations.  

He pointed to a series of contradictions between short and long-term aims that, on the one hand, call for competitive products which are attractive to the consumer and, on the other, have to meet legal requirements while also satisfying demands for low cost and ‘ecologically’ driven products.

One essential production need is to concentrate on the complete packaging process and not just one machine, he said. All partners must have the ability to produce samples of both primary and secondary packaging to enable full scale analysis of the environmental effects from production to shelf.

Among the technologies helping to meet environmental briefs was ultrasonic sealing to produce a reduction in material costs, protection of product quality, 100 per cent control and sealing parameters, and hence reduced energy, better sealing quality.

Critically manufacturers should “avoid being pushed in one direction” and machinery systems suppliers should be able to deliver an integrated solution. Cost savings, as well as environmental advantages, could be gained by automation of the packaging process. van Kogelenberg concluded:

“By combining fundamental processes with know how, sustainability regulations offer a real opportunity to improve the positioning of a product and MAKE MONEY.”

Brand owners and sustainable innovation

Designed to Innovate – Sustainably presented by Kirstie Hawkes, UK Sustainability Manager, Procter & Gamble discussed the two prongs of P & G’s sustainability policy – social and environmental responsibility.

Turning first to the role of packaging in helping to create sustainable product innovation Hawkes provided a series of examples from the laundry detergent market. For instance the company’s latest innovation – Ariel Excel Gel – not only used 30-40% less energy and 50-60% less water during manufacturing the innovative packaging was reduced by up to 45% versus previously available alternatives.  

“This adds up to a staggering half the number of trunks needed to transport the product,” she said.

Other examples included a 56% reduction in packaging weight for Pampers diapers and a saving of 800,000 lbs of plastic/year for the new Olay Pump design.  

Describing some of the efforts going into packaging reduction (without compromising integrity) Hawkes described the modelling & simulation tool - Bottle Optimal Weight System (BOWS) which is being applied to create lighter weight detergent packs and to producing new processes for bottle making.

Working with WRAP it has been possible to reduce the weight of a range of plastic bottles by 14%.

This equated to a material and waste reduction of about 400 tonnes a year across Western Europe.

P& G’s packaging strategy revolved around: Reduce material usage by driving material efficiency
•    Re-use to extend the life of packaging via refills and re-usable
•    Remove  packaging by complying with legal and regulatory requirements
•    Replacing oil based non-renewable materials where it makes sense.

The Tesco perspective

Tesco’s gave a retailer’s view on Sustainable Innovation through the eyes of Steve Pizer, Packaging Technology Manager.

The first important message underlined the findings of the IGD research referred to by James Walton (above) that despite the recession consumers “still care about the environment”.

Recent research among Tesco’s shoppers found that when choosing where to shop acting in an environmentally friendly way was the 4th most important driver behind issues such as price and convenience.

Essentially, explained Pizer, the challenges are common across the supply chain: technical difficulty, cost, complex supply chains and the impact on retail operations. “To make packaging in the supply chain work cooperation and partnership is the key.”

Describing the benefits of these partnerships, he said that so far Tesco had worked with 300 suppliers on 3,000 partnerships

This had resulted in an “absolute reduction of over 80,000 tonnes of packaging including a 34% reduction in produce packaging”.

WRAPping it up

Closing the Summit Haulwen Nicholas WRAP’s senior packaging technologist, outlined the programme’s waste targets for 2008 – 2011 which called for 8 million tonnes less waste to landfill, saving 5 million tonnes of CO2 emissions, and creating economic benefits of £1.1bn.

Outlining packaging’s role in the sustainability debate Nicholas said the critical principles of packaging optimisation were: elimination some materials; reduce the amount of packaging; reuse, recycle, recover through composting or energy from waste; and disposal – incineration or landfill.   

Nicholas illustrated her talk with a series of pack examples including simplification, reducing components, lightweighting, simplification, format changes and the adoption of new technologies.

New technologies referred to included Integrity Seal jaws on bagging lines which had led to savings including: 10% less material; considerable less energy usage; a guaranteed hermitic seal; improved shelf life; improved line speeds, easier openability; and a low capital expenditure resulting in a good return on investment (ROI). www.wrap.org

Research, conducted by Lincoln University found that a potential 480,000 tonnes of food waste could be generated through unsound seals on food packaging.

Discussing how this process could be helped by the design fraternity Nicholas said, “Designers should be looking at eliminating materials usage in packaging.”

She added: “Labelling, pack size range, storage advice and packaging designed to keep food fresher for longer can all help to prevent household food waste.”

*This report of the Starpack Summit 2009 provides an overview of some of the presentations. The full speaker programme:
What happens to Green Consumerism in a Recession?
Henry Tucker, Director, The Futures Company
Packaging Supply – A Major Wealth Creator
Dick Searle, Chief Executive, The Packaging Federation
Creating Sustainable Innovation for Flexible Packaging
Gerard Blatrix, Vice-Chairman, Flexible Packaging Europe
Meeting the Sustainability Challenge – A Machinery Producer’s Perspective
Jacob van Kogelenberg, Product Manager, Secondary Packaging, Bosch Packaging Technology
The Role of the Design Community
Ian Webb, Managing Partner, Webb Scarlett deVlam
International Packaging Technology Study from WRAP
Richard Inns, Director, PEC Partnership
Recessionary Impacts on the Food Supply Chain
James Walton, Chief Economist, IGD
The Brand Owner’s Perspective – Procter & Gamble
Kirstie Hawkes, UK Sustainability Manager, Procter & Gamble
The Retailer’s Perspective – Tesco
Steve Pizer, Packaging Technical Manager, Tesco
Sustainable Packaging Innovation – WRAP
Haulwen Nicholas, Senior Packaging Technologist, Waste & Resources Action Programme

Contacts:
The Packaging Society
Rachel Brooks
Awards and Starpack Manager
T:  01476 513885
E: rachel.brooks@iom3.org
www.starpack.uk.com

WRAP:
Reberkah Cairns or Haulwen Nicholas
T: 01295 819900
Haulwen.nicholas@wrap.org.uk
www.wrap.org.uk

PR and the speaker programme was organised by
Mary Murphy
MAJIC LIMITED
T: +44 (0)1424 777783
E: majic.mary@tiscali.co.uk