Is it really the case that COVID-19 and the pandemic are changing the packaging market? Or is it not the case that the situation puts consumers in a position where they change or have to change their behavior. In other words, adapt to the circumstances. And isn’t the future of packaging then an imperative of the consumer and his ecosystem?
The bottom line: it’s that the packaging market will continue to undergo proliferation. Omnichannels will increase. And this poses a major challenge to FMCG companies and, at the same time, to the upstream packaging and printing industries. The latter require a high level of agility and very good technical equipment. And above all, digitization on many levels. As great as these challenges may be, they offer a wide range of opportunities and even growth potential. The future is not that cloudy!
Changing/adapting behavior patterns
For the packaging industry, changing consumer behaviors and mindsets during the pandemic have created an unequaled opportunity to develop solutions that provide a safe, sustainable and stress-free shopping experience. With e-commerce now firmly anchored in consumers’ shopping habits, the need for packaging designed to be misuse-resistant and product-integer to enhance safety and hygiene is on the rise. For consumers – especially seniors and others with physical limitations – this packaging should be easy to open. It must also allow for shipping in its own container (SIOC), eliminating the cost, bulk and waste of additional packaging.
For example, e-commerce in Mexico was already on a solid upward trend prior to COVID-19, and has recently experienced one of the highest e-commerce growth rates in the world. By the third quarter of 2020, the winner by e-commerce penetration is Mercado Libre with a 49% share, followed by Amazon with 22%, 12% for Walmart’s online channel, 10% for Coppel’s and 7% for Liverpool’s online site, according to Barclays.
A look from Mexico over the wall to America shows a similar development. If you look at the U.S. Census Bureau data, you can see the disproportionate growth rates – or shifts
E-commerce’s share of the North American retail market was 11.3% in 2020. By the end of the second quarter, its share had risen nearly to more than 16.1%, a 42.4% jump in just six months.
According to the IFC, consumers bought 42% more packaged food as recently as April at the start of the global lockdowns than they did in March, and that trend continues. After all, it was still 36% in May.
A push for private labels
Budget constraints have pushed consumers to consider trying private label products, while panic buying and the need to reduce the number of store visits have accelerated bulk buying of food and personal care products. In Latin America, for example, preference for bulk packaging increased and small supermarkets gained market share.
For many private labels, the topic of packaging had not been a focus. But based on the realities, that will change significantly in the future. As consumers experience firsthand that private label products can be just as good or even better than well-known brands, they will demand an equivalent packaging experience to maintain their loyalty.
However, there are also other retailers who do private label exceptionally well, such as Migros/Switzerland. When it comes to private labels, Swiss consumers are the frontrunners. Switzerland represents one of the very largest private label markets in the world. Retailers like Migros are mindful of their consumers’ preferences, lifestyles and food preferences.
In 2018 only, this Swiss supermarket launched 750 new private label products and successfully incorporated private label into its strategy to increase sales, improve customer relationships, and maintain a competitive edge. Migros is focusing on launching private labels, especially in fresh food, and reducing its range of branded products.
Yes, private labels are on the rise and offer opportunities – but even within Europe at different paces
Higher growth rates than conventional brands in the United States
Influence of changing food preferences on packaging – especially rigid and flexible packaging
The trend to exchange meat products for meat alternatives is simply accelerated by COVID-19. The fear of zoonoses is too great. On the other hand, others see the switch as part of a healthier lifestyle. According to Mintel, about 40% of U.S. consumers cited concerns for their switch to plant-based proteins.
This, in turn, fundamentally changes the requirements for packaging. Because here we are dealing with a plant-based protein. And the requirements for the barrier properties of the packaging substrate (oxygen and vapor permeability) differ significantly from those for animal proteins. Added to this is the change in logistics. Plant proteins are packaged in the factory and not cut up and shrink-wrapped in the supermarket, like meat. This results in new and great potentials for the packaging industry to offer tailor-made solutions for producers here.
And in general. For packaging printers, it is worth keeping an eye on these developments. After all, it’s the content that determines the packaging. And these new products place completely different demands on packaging. Especially since, as I said, logistical shifts in the market are favoring packaging printing and the packaging industry.
Sustainability will become THE real imperative of the packaging industry
The issue of sustainability is here to stay and it will not be a trend but an essential part of everything we do and cheating through and greenwashing will no longer help here. The packaging industry will be reordered by this issue and will have to position itself well.
The issue has not only arrived on the fringes of society, but already in the middle. Most people are aware that the pandemic is a result of our own actions. The depletion of our environment. The invasion of habitats and the successive destruction of biodiversity.
Let’s put it very simply so that it is understood: If one wants to survive, one must work in a sustainable manner.
Accordingly, consumers are sensitized and brand companies and producers are alarmed. And we should not do one thing: Think that this only affects Europe.
No, this issue is omnipresent.
The new regulations are currently spreading on several fronts: They are no longer limited to just a few countries or regions. Today, sustainability regulation is much more of a global phenomenon, even if the degree of regulation varies from country to country. According to a McKinsey Packaging Survey, people have major concerns when it comes to packaging sustainability.
As omnipresent as the topic of sustainability is, consumer perceptions on the various continents also differ as far as substrates are concerned. For example, consumers globally are not united in their subjective perception of what the most environmentally friendly substrates are. However, they do all agree on one thing, which is definitely not sustainable. This is the conclusion of a study by McKinsey.
While paper-based containers and glass containers are considered sustainable in the U.S. and Europe, these two types of containers are valued lower in China, Brazil and Indonesia. On the other hand, compostable films are perceived as sustainable globally.
Here, too, it is clear that generalization is not appropriate and that we need to take a closer look at the markets and products through a burning glass. One size fits all does not exist in sustainability either.
Nevertheless, it is an issue – remains an issue and will shape the market.
These developments were all already on the way. However, at different speeds and with different weighting. The Covid 19 pandemic dramatically accelerates some developments and also shifts the weight of the respective issues. This poses extreme challenges, if not threats, to those who do not act. Business as usual has become obsolete as a model. Because these challenges due to the increase in speed and shifts hold a lot of potential for the packaging industry and thus for packaging printing. Even if it sounds like a commonplace, you have to think outside the box. That means really looking at the social realities and the developments in the market, with the consumer. Not to lose sight of resource efficiency. And above all, to be well positioned technically and digitally if you have your eye on the future.