01.07.2019

As the COVID-19 crisis continues, the entire packaging supply chain has been forced to adapt to extraordinary new demands. Ducker examines how the industry has responded so far and considers the possible long-term implications.

Uncertainty is inherently stressful. If you work in an industry such as packaging, where foresight and constant planning is a necessity, it becomes untenable. For those working to ensure vital supply chains continue to run, the challenge has been extraordinary. Overall, the packaging industry has risen to this challenge.

Short-term Impacts

The short-term effects of this crisis made themselves apparent early on, with the growing volatility having a major impact on supply chains. For example, concerns have been raised over the lack of fiber to make carboard boxes due to some reductions in recycling facilities due to COVID-19.

Shifts in production patterns and increased remote work situations have also had a domino effect across many sectors. Working from home has produced an increased reliance on automation – a trend that is likely to continue once we have returned to ‘normal’.  During a time where we must practice social distancing, we have increased the focus on driving automation and doing more with less by investing and working smarter. Many companies are accelerating innovations to support a more digital world.

Again unsurprisingly, there has also been an acceleration of the e-commerce boom as physical stores are closed and people become more reliant on deliveries. There is an increased awareness of the vital role packaging plays in protecting and ensuring our food supplies.

The Need to be Agile

Many companies are discovering just how agile they can – or indeed must – be to meet the exceptional new demands COVID-19 has created. The COVID-19 crisis has of necessity been an impetus for innovation to some degree, as the industry is forced to respond to a new level of concern about packaging safety.

COVID-19 and Sustainability

COVID-19 has undoubtedly redefined sustainability. However, fundamentally, I find the scenario remains simple. Consumers’ current priorities are spending as little as possible and staying healthy. The real challenge for the packaging industry is to deliver sustainable packaging that can be cost effective and ‘safe’.

Initial evidence suggests that the pandemic has forced packaging companies to speed up decisions on sustainable solutions and bolster their green credentials. Sustainability and hygiene are by no means mutually exclusive; the bigger challenge for businesses will be controlling costs. Safety and sustainability are not always an easy match.

The fear is that a reactionary shift back to a more risk-averse mindset post-COVID might see more packaging, particularly plastic, with the excess meaning less sustainability and more resource consumption and waste.

Even with single-use solutions however, there are still ways to level up the safety and sustainability equation. For instance, optimizing use of recycled content.

“Companies that survive this challenging decade will manage to balance these elements sufficiently. Companies that want to excel will lead from a ‘sustainability-first’ perspective to have the greatest positive impact and odds of long-term success.”

 

What are the Packaging Implications to the Prominent Global Megatrends?

MEGATRENDS DESCRIPTORS & KEY ELEMENTS PACKAGING IMPLICATIONS                                                 
Comfort Nostalgia, authenticity, trust, safety, cocooning, simplification Glass, canning jars, apothecary feel, small-batch feel, tamper-evident packaging, decline of secondary packaging
Convenience Time pressure, on-the-go, multitasking Single serve, reseal-ability, all-in-one, ready-to-use, dose-control dispensing
Scrimp & Splurge Trade-up on some items (luxury, premium) while seeking discounts on others (private label, Dollar store, Sam’s Club) Club pack and bulk packaging, ergonomics of large packs; vs. high-deco and shelf appeal, small “splurge-size” packs
Richer & Bolder Experiences Touch and smell sensory, energy and mood alteration, hedonism, experimentation, novelty, rethinking the mundane Dosing caps, textural containers (e.g., soft touch, bumps), aroma accentuators (scratch & sniff, scent-infused packs), reactive labels and packs (temperature, sunlight, pH), gradient and bold colors, sheens, “unwrap” as an experience, trial size
Personalization Made-to-order, niche, self-reliance, time alone Affordable single-serve size, smaller but affordable batches, design-your-own labels
Health & Wellness Freshness, natural, additive-free, local, fitness, stress relief Portability, sport-closures, dosing caps, freshness dating, small-batch feel, “farmer’s market”
Rise of Boomers Aging population, expanding life expectancy, desire to stay independent Ergonomic, broad-ribbed closures, dosing caps, freshness dating, small-batch feel, “farmer’s market”
Connectivity Digital lifestyle, limitless information, pocket computers, global village Info-rich/scannable bar codes, labels linked to Facebook, RFID, design for online shopping (virtual shelf)
Community & Membership Brands that mirror what’s important to “me”, sustainability, community, charity Light-weight, biodegradable, close to nature, small carbon footprint, reuse and refill, label info on corporate values

 

The Immediate Future? Shape the next ‘normal’

Packaging companies have an opportunity to assess which shifts are getting under way in customer and consumer sentiment and which behaviors may stick after the crisis (hygiene requirements, e-commerce and resurgent concerns about sustainability). They can also consider rethinking their business portfolios so that they can ensure the stable cash flows and healthy balance sheets that can protect their companies. They can also extend to evaluating acquisition opportunities of assets in the market that could strengthen their business. Companies need to make a regular practice of the kind of awareness that served them well at the start of the crisis: thinking through the network implications for their sites and supply chains and the potential risks related to single sources of raw materials and packaging components.

Long-term Implications

What kind of long-term fallout can we expect for the industry? There have been suggestions that the increased recognition of the protective role packaging plays may go some way to easing off the ‘plastics backlash’ – however the environmental implications will not simply be forgotten. As we turn our attention to the COVID-19 Pandemic, the climate challenge is still very real and has not been put on hold.

In remarkable situations like the current one, perspectives, perceptions, and attitudes change. This also applies to the way we handle packaging. By way of example, multi-use is not always better than single-use and consumers are glad to have the choice.

Hygiene and environmental protection are two legitimate concerns that should not be played off against each other. COVID-19 has fundamentally changed the opinion of packaging. Its function is perceived and appreciated again.

Whether you are looking to understand market trends, get a granular analysis of competitor positioning, or profile and map opportunities in an adjacent segment or, technology, you can trust Ducker to be the credible partner you need. We are constantly connected to leaders on the ground and have access to key industry decision makers. Our ready wealth of knowledge can expedite your growth strategy and help you navigate the turbulent factors impacting your industry today. Contact a member of our industrial team today at info@ducker.com