The packaging challenges facing us in 2020
In discussing the current trends, challenges and issues facing the world of packaging in 2020, I need to take you one step back – before we look forward – and begin by sharing my concern with you.
I suspect there is a current global challenge where producers of packaging are being so caught up with trying to keep up with the latest trends and expectations in the world of packaging that they are overlooking their customers’ real needs. And by customer, I do not refer to only the man-in-the-street, here, the entire supply chain is your customer.
Customer knowledge and needs are evolving faster than ever. Understanding your customer as thoroughly as possible has become more important than ever.
Two decades years ago you probably had only one agent who handled the movement of your product from collection to distribution. Today, there could be four or five companies involved in moving your goods from factory to their final point of distribution. Within such a supply chain there could be varied conditions, fluctuations of temperature and humidity. Are you fully aware of the route your product takes to the customer?
Are you familiar with the retailer’s needs? Have you caught up with, or are you staying up to date with, the fast changing etailer’s need? Etailers, such as Alibaba and Amazon are offering discount warehouse storage space for sellers to stock more product. Have you considered if your product for etailing should be packed differently from traditional retail?
Have you considered what your packaging should look like for the future unmanned stores? There will be no staff to answer questions. Your packaging will have to speaker louder than ever. The pack will have to sell itself.
Prepare for purchase power
Have you calculated the growth of the middle-class income earners in your region? Are you ready for their purchase power? Will they be buying your product in a physical store or online? Will your packaging be different for these two retail arenas? Online retailers will have an increasing influence on the grocery landscape – aside from the exponential growth of sales of all other commodities online.
We may become so caught up with issues of sustainability, biodegradability, automation, digital printing, extended shelf life, active and intelligent printing, but are we learning about the digitisation of retail? Particularly if you are in the food industry, will your product get to your customer’s home fresh enough for consumption after some hours of waiting at their front door?
Learn by example
Are you packing for your customer in a way that they will be inclined to re-use, recycle and re-purpose the packaging? Have you reduced the packaging in the first instance?
As an example - my wife and I subscribe to a food delivery service in Australia called Hello Fresh, my wife teaches full time, I work long hours. My wife does not like shopping – but I like to shop to learn about packaging. I check out the latest trends. I observe customer shopping habits, particularly around their interaction with the packaging. I take note of the shelf arrangement of products. And so, shopping may not be our favourite pass-time and we are busy. But we do like to eat. And this is where Hello Fresh has met our need.
The company deliver to our home each Monday a corrugated box with three brown paper bags. Each bag contains the ingredients, including the vegetables, for one recipe. The recipes for the week are also supplied. Hello Fresh has gone the extra step to ensure the recipes walk the ‘chef’ step by step through the cooking process, with pictures. Even I have begun cooking delicious meals! In the box is also an insulated bag with an ice pack for the meat and dairy items.
Now, I realise that such home deliveries are not possible in all countries or cities but I have used this example to illustrate a company that has spent time learning about customer need in great detail and has created a product that honours the environment to a large extent.
Data processor, IGD, recently issued a report on some factors affecting packaging. Items include –
Data management. Data about your product - its origin, its ingredients, its purpose, its location in the supply chain, its environmental footprint etc., will dictate the way forward. Does your packaging, through barcodes, reflect this required data?
Doing good is good business, in other words, doing the right thing by your packaging in its relationship with the environment, will ensure you are perceived as doing good business.
A trend in packaging is helping customers be healthy. In this rat race world – where we never switch off – we are now calling out for someone else to keep us healthy. We want the food to last longer on the shelf. We want the packaging to tell us if food is still fresh, we want the packaging to reduce the global carbon footprint, we want the packaging to cook our meal for us and offer us health drinks while we are on the run. We want the product anywhere anytime. And then we have the nerve to say packaging is the problem!
Here, I believe, is proof that packaging is the solution. It’s the customer driving the packaging demand to meet his or her need. Are you aware of your customer’s needs? Are you able to fulfil these needs while still respecting the planet’s needs?
The packaging industry receives so much negative publicity. We need to have the courage to know that we are in an industry that covers every single product. Where would our customers, in this modern world, be without our industry? The media in all its criticism, and the ranting customer who shouts about the negative impact of packaging, need to be gently reminded who is driving the packaging problem.
Challenges and opportunities
Some of our global challenges include increasing literacy. It’s ironic that increased literacy should be considered a challenge. But there is emerging a whole new population of literate customers who will require information on their packaging. Whereas this sector of the population may previously have been dependent purely on images, they now require simple words too. But this group, in their new-found literacy, are joining the already literate who have different needs. With greater literacy comes greater employability. With greater employability comes a dual income and increased purchasing power. Do you know your newly literate, employed customer’s needs?
According to IGD, Asia is the largest regional grocery market in the world, and it is expected to grow by a compound annual growth rate (CAGR) of 6.4% between 2018 and 2023. This Asian grocery market will be worth US$4,2bn by the end of this period, up from $3,1bn in 2018. Its share of global grocery spend in 2023 is set to be will be 37.2%.
The region will account for 44.2% of all additional grocery sales generated between 2018 and 2023. China, India and Indonesia will be the biggest contributors to the region’s top-line growth, accounting for 74.2% of new sales added.
According to a Smithers report The Future of Packaging - Long-Term Strategic Forecasts to 2028, data shows the challenges for the packaging industry include this economic and demographic growth where increased consumer income will strengthen demand on packaged goods. Similar to the IDG results, Smithers says the increasing population and the rate of urbanisation will continue to grow in areas such as China and India, with the organisation noting, ‘This translates into increased consumer incomes for spending on consumer goods, as well as exposure to modern retail channels and the aspiration among a strengthening middle class to engage with global brands and shopping habits’.
The rising life expectancy in key developed markets such as Japan, will lead to an aging population. With this trend comes an increase for pharmaceutical and healthcare products. The challenge here is openability for the elderly.
With increased literacy and employability comes increased independence. This has led to an increase in single-person households, which in turn, pushes the demand for goods packaged in smaller portions. This smaller serve portion demand was previously required mostly in developing countries where many consumers have no access to refrigeration and need to shop frequently to ensure food is fresh. High levels of unemployment in such developing areas also means consumers can only afford small portions of necessities at any one time – items such as toothpaste, soaps, toilet paper etc. which you and I may buy in bulk.
Increased travel, on the other hand, has seen an explosion in the demand for similarly small portions – for a very different reason. Travellers want toiletry portions less than 100ml each which can be shown at airport security. Do you know your customer’s needs?
Sustainability, and the concern over environmental impact, remain high on global agendas. In recent years the sustainability of packaging has received increased attention. Central and municipal government regulations, together with consumer attitudes and brand owner values are now all shouting for sustainable packaging. And rightfully so.
The EU has pioneered and is leading this area with its drive towards circular economy principles. There is a particular focus on plastic waste, and high-volume, single-use item plastic packaging (such as water bottles) has come under particular scrutiny. A number of strategies are advancing to address this, including substituting alternative materials, investing in the development of bio-based plastics, designing packs to make them easier to process in recycling, and improving recycling and processing of plastic waste.
There is no escaping the fact that consumers remain motivated by their demand for sustainable packaging and so brand owners demand packaging materials and designs that demonstrate commitment to the environment. Brand owners are our clients. Are we meeting their need for sustainable packaging?
One of my absolute passions, and certainly one of the main focuses for WPO, is the reduction of food waste in an attempt to reduce world poverty. There is no shortage of food in our world. Over 30% of the world’s food production goes to waste. This is enough to feed the entire planet’s starving population. We must support the wider use of intelligent packaging which can cut waste within the distribution chain and which can reassure consumers and retailers of the safety of packaged foods. We must begin to get serious about developing packaging that gets more food to more people who need it most.
As more and more consumers have access to the internet and smartphones, we can expect online purchasing to rise exponentially. As mentioned before, this demand will elevate the need for appropriate packaging solutions. I anticipate a spike in corrugated board formats which can ship goods around the globe through more complex distribution chains. With the growth of social media and the globalisation of our planet, consumers are increasingly demanding what they see others have around the world.
And, ironically, as life gets more hectic and impacts on our health, and we see the results on the ever-popular selfie, we demand the packaging of healthier foods, including gluten-free, organic, portion-controlled, flexible, sustainable packaged goods. And we say packaging is the problem?
By now you may be feeling a little overwhelmed by the picture I have painted with regard to the trends, challenges and issues. I am also here to reassure you that you do not need to face this future alone. The WPO feels very strongly that education is the key to coping with the current and future demands of the packaging industry. We can bring the necessary training and education to you and your country.
As your customers become increasingly demanding, the need for understanding these global trends and a knowledge of the science behind the package will become more and more important.