Five trends that will change the game
There are five trends that will change the game. And for all of them the bar will be much higher than we can imagine at the moment. The new game will require a far greater degree of agility and innovation to successfully navigate this massive change.
A special role will be played by digital trends. In all probability, the greatest pressure will come from e-commerce. The second wave will come from digitalization. Margin compression, changing consumer preferences and sustainability can already be felt in their effectiveness, but will continue to increase in strength and intensity.
All this requires packaging companies to take a completely different approach. They should be well prepared for the changes that lie ahead. Strategy must become the order of the day. A distinction must be made between “operational gap” and “strategic gap”. Operational gaps are often considered in the yield curve and often the strategic gap is completely overlooked. In such cases, the focus is on operations and the earnings situation is primarily based on continuous improvement measures and market growth. The closing of the operating gap is often also considered to be a red pencil. However, these are all measures which are life-sustaining in the short to perhaps medium term, but which by no means can close the strategic gap.
But as I said, the five disruptive developments will require a strategic orientation. They will come at different speeds and with different intensity.
The growth of the global packaging industry over the last decade will continue, but with more pressure and disruptive changes. So the question is, what are the converters facing until 2030?
Part 1 – Digitalization
In the next 10-15 years, consumers will interact with packaging in a very different way than they do today. Digital technologies will be integrated into the packaging substrates. In general, intelligence and increasing digitalisation in packaging offer a wide range of growth opportunities. The power of packaging will come into its own as it creates a platform for information and brand messaging.
More necessity than gimmick!
Various technologies are available for this purpose, such as QR codes, RFID and NFC. The interactions that will be made possible by these technologies should not be underestimated, as they will make a significant contribution to brand differentiation, become more consumer-oriented and, above all, reveal new segments with new needs. This is an absolutely necessary development, which will take into account the explosively increasing number of SKUs (Stock Keeping Units).
Change is happening faster than you think!
Although digitalisation in the packaging sector is still in its first stages at the moment and economies of scale still have to be achieved, the process will be very rapid in 1-2 years. This is because the increased margin compression on FMCG (Fast Moving Consumer Goods) manufacturers and retail and the additional development of e-commerce channels with increasing automation and AI will in turn accelerate the implementation of intelligent packaging.
Key driving factors in a nutshell
- Product recall, quality tracking, food safety. Summarized as Track-and-Trace.
- Integrated demand planning to optimize production runs and inventories
- Customer interaction, better customer approach, service and sales increase
- Development of new business fields
Packaging companies will have to deal with this field of digitalization, because the pressure triggered by retail via FMCG manufacturers will eventually end up at the converter sooner or later. And the sooner you strategically align your overall production to this, the better. Fitness for the future is the motto
Read next week: 5 MAJOR TRENDS WILL CHANGE THE GAME IN THE PACKAGING INDUSTRY: Part 2 – MARGIN COMPRESSION in FMCG & RETAIL