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    Columns

    Packaging and the pandemic

    ...

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    Steve Katz11.12.20
    By definition, a megatrend is a major trend, pattern or movement that emerges and is likely to have a significant impact on products and consumer behavior.

    According to Zeev Efrat of Frost and Sullivan, who takes the definition further, megatrends are “global sustained and macro economic forces of development that impact business, economy, society, cultures and personal lives, thereby defining our future world and its increasing pace of change.”

    Prior to the onset of the COVID-19 pandemic, there were certain megatrends in place in the world of packaging, among them sustainability and e-commerce, to name just two. But now that we’re smack in the thick of this global pandemic, experts and analysts are looking at how the coronavirus is actually reshaping packaging megatrends reflecting shifts in packaging design and areas of focus.

    ‘The Next Normal’
    McKinsey & Company is a packaging consultancy comprised of a diverse range of medical professionals, engineers, scientists, business managers, designers, entrepreneurs and others. Recently, the firm identified how COVID-19 is changing the megatrends that were in place prior to the pandemic and calling these changes “the next normal of packaging.”

    Among the packaging industry’s next normal, McKinsey & Company reports that sustainability is being “reemphasized and redefined, with hygiene concerns addressed.” The firm states, “Packaging-sustainability goals have not been abandoned by leading fast-moving consumer goods (FMCG) companies and retailers, which remain committed to achieving high recyclability across their packaging portfolio over the long term. However, given the strong emergence of the new hygiene megatrend – one likely to become a key element of the next normal in packaging – companies will have to rethink the materials and design requirements of sustainable packaging.”

    E-commerce is another area McKinsey & Company points to as a pandemic-affected megatrend. While stay-at-home orders have played a large role in consumers’ uptick in buying products online, online grocery shopping in particular has surged. “Some industry forecasts predict that penetration will reach 10% in 2020, compared with 2-3% before the crisis. This will have significant implications for packaging design. Understandably, most of today’s packaging has been optimized for traditional brick-and-mortar requirements, not online shipments,” McKinsey & Company says.

    The pandemic has driven other shifts in consumer behavior, as well.  For example, according to McKinsey & Company, “In packaging’s next normal, we expect consumers to go on being price sensitive, to further accelerate their online shopping across all categories, and to focus even more on health and hygiene. These changing consumer preferences will make it necessary to rethink the product mix at FMCG and retail customers. Inevitably, there will be implications for packaging design.”

    “Before the COVID-19 crisis, FMCG companies and retailers facing significant margin compression passed these pressures up the line to converters. This issue has already affected packaging design in multiple ways: for example, the substitution of different packaging materials, ‘light-weighting,’ redesigned formats to increase filling efficiency and volume density, smaller pack sizes, and shelf-ready packaging. Given the crisis, we expect such cost pressures to continue, and this could amplify the existing need to use packaging design to reduce costs,” the firm reports.

    McKinsey & Company also emphasizes the megatrend that us in the label industry have long recognized, observed and participated in – the digitalization of the value chain. “Another expected outcome of the pandemic is increased digitalization of the value chain through automation and the more widespread use of AI – not only for cost efficiency and productivity, but also to make supply more resilient and transparent through real-time tracking,” the firm predicts, adding, “The result could be a greater need to integrate technology – radio-frequency identification (RFID) tags and near-field communications (NFC) – into packaging. Innovative packaging designs will play an important enabling role. Packaging companies will need to reassess their strategies in light of these evolving megatrends.”

    Supply chains and sustainability
    UK-based packaging company Duo UK recently conducted research analyzing the initial impact of COVID-19 and how changing consumer behavior and market trends are driving brands to rethink their packaging strategies.

    The research findings revealed that half of future packaging strategies are being driven by the increase in online shopping. Duo notes that most retailers have had to shift to e-commerce, while e-commerce retailers have had to meet new challenges brought on by increased site traffic. In some cases, Duo says, this increase has exceeded demand only seen during Black Friday sales and is expected to increase further as more retailers develop their e-commerce strategies in response to COVID-19. 

    Due to the uptick, challenges abound, with nearly one in four businesses Duo surveyed citing “managing stock availability” and “increase in e-commerce traffic” as the biggest supply chain challenges resulting from the pandemic. 

    The pandemic has played a role in packaging perceptions. According to market research firm FMCG Gurus, due to the pandemic, 40% of consumers globally now have a more positive perception of plastic packaging. The shift illustrates how consumers are prioritizing hygienically-wrapped products over environmental concerns when it comes to packaging. However, Duo’s research also found that 45% of companies surveyed believed ‘”type of packaging material” to be the most important factor influencing packaging strategies, and that number increases to 57% when considering strategies over the next decade. In addition, over half (53%) of respondents participating in Duo’s research believe that “reducing environmental impact” remains the most important factor defining packaging strategies in the next 10 years, indicating that change is on the horizon.

    “It is our collective responsibility to respond to changing consumer behavior, to drive change and build a better future,” says Anthony Brimelow, commercial director at Duo UK. “Our latest research considers the increase in e-commerce demand and how a lifecycle-led approach to packaging strategies will deliver benefits to businesses across their supply chains, to people and the planet. We believe businesses have the power to drive change. COVID has provided an opportunity to create a new normal. It’s time to harness these opportunities and accelerate change to find a sustainable way forward for packaging.”

    Personal care packaging expected to soar
    The global personal care packaging market is projected to reach around $36 billion by the end of 2027, in terms of revenue, growing at CAGR of 4.3% during the forecast period (2020-2027), as highlighted in a report published by Coherent Market Insights.

    Growing demand for personal care products around the globe, coupled with improvements in overall packaging systems, are expected to propel the market growth of personal care packaging. Packaging helps in attracting consumer attention and creating brand awareness among consumers. Moreover, the packaging also helps in preventing contamination and damages to the products. Thus, packaging is expected to be an important part of branding and protection against damages. This is expected to drive the market growth of personal care packaging.

    The advent of bio plastics as an advanced packaging solution with improved functional properties, such as durability and shelf-life, is expected to provide lucrative opportunities to the market of personal care packaging. Growing demand for hair care and skin care products is fueling demand for bottle packaging. Moreover, increasing young populations are expected to augment the market growth over the forecast period.

    Strict rules and regulations regarding the production of personal care products are expected to hinder the market growth. For example, the US Food, Drug, and Cosmetic Act have imposed strict rules on the production of personal care products for maintaining consumer safety. The law mandates that every personal care product and its ingredients have to undergo testing before the commercialization of the product.

    On the basis of product type, the flexible packaging segment dominated the global personal care packaging market in 2019 with a 42.9% of market share in terms of value, followed by rigid plastics and paper, respectively. Increasing demand for lightweight and aesthetically appealing packaging is expected to drive demand for flexible packaging over the forecast period.

    According to the Coherent Market Insights research, based on application, the skin care segment dominated the global personal care packaging market in 2019 with 38.3% of market share in terms of value, followed by hair care and bath and shower, respectively. The rising prevalence of skin diseases is driving demand for skin care products globally.

    The rising trend of lightweight and durable packaging materials for personal care products is expected to accelerate the market growth of personal care packaging. Increasing consumption of gel, hair serum and lotions among male consumers is expected to foster the market growth over the forecast period. Rising adoption of healthy lifestyle habits among consumers and improving the manufacturing of personal care packaging products is further expected to propel the market growth.

    The coronavirus outbreak has led to sharp declines in demand for certain types of packaging, which has affected the personal care packaging industry. According to Coherent Market Insights, demand for luxury packaging is expected to decline, owing to decreased consumer spending on such products. However, increasing demand for essential products, such as hand wash and sanitizers, is expected to drive demand for personal care packaging products. As crude oil prices have fallen, owing to  the pandemic’s effect on demand, the cost of oil-based raw materials, such as plastic resins, is expected to fall.


    Steve Katz is the former editor of Label & Narrow Web and is now a regular contributor. He is focused on helping companies in the label industry share their news and tell their stories. Follow him on twitter @LabelSteve.
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