The Global Packaging Industry Picture in 15 Minutes
The Global Packaging Picture
To get a better perspective on the current and future state of the packaging industry, IN spoke to five packaging experts from around the globe. In less than 15 minutes, each of our experts weigh in on the same themes – the state of the global packaging industry, future growth opportunities, and design trends in Africa, Latin America, Asia, Europe and the United States.
Marla DonahuePresident, Flexible Packing Association, North America
The Packaging Industry
We expect to see short-term growth of around five percent within the industry – a steady pace reflecting the continued, but slow improvement of the U.S. economy. Encouragingly, we are seeing a number of opportunities for growth as packaging formats continue to convert to flexible packaging from rigid packaging. And we expect to see growth opportunities to continue for the companies who embrace packaging innovation, sustainability, improved manufacturing technology and find ways to meet and exceed changing customer needs!
Cans and bottles are expected to be the next market segments to undergo the transition to flexible packaging. And the flexible packaging market looks strong, with 97 percent of brand owners who use flexible packaging intending to use the same amount or more in coming years. Brand owner and consumer studies have demonstrated that consumers are willing to pay significantly more for the performance attributes enhanced by flexible packaging.
Despite this growth potential, we cannot ignore the continued margin squeeze due to price pressure from global competition and volatile energy prices which is impacting converters’ resin and film costs. This presents a challenge in terms of passing along these higher costs to the end user. We work in a highly competitive market with pressure from offshore packaging and foreign competitors, specifically, from the Far East, Asia and China. Despite this, brand owners are predicting solid growth across a range of categories including: snacks, beverages, dairy products, frozen foods, personal care products and pet foods.
The industry will continue to evolve to provide additional value to the customer as converters utilize technical improvements in aseptic, retort, shelf stable and anti-counterfeit and child resistant packaging. Smart packaging will also evolve even further to address consumer concerns around product safety, tampering, freshness, nutrition and consumer health issues.
A variety of other trends are emerging. Many consumers are “passively green” and sustainable packaging can help to alleviate buyer guilt (buyers are increasingly drawing the obvious connection between packaging size and perceived environmental impact).
Style is important for the “Selfie Generation”, as is niche packaging, necessitating shorter run times with a focus on enhanced graphics. A growing urbanized population prefers easy to carry, transport and store packaging. Consumers are also increasingly looking for what are known as “simplify my life” products, meaning, products that are easy to hold, open and close again and flexible packaging supports a “simplified” life.
Executive Director, Plastics SA, Africa
The Packaging Industry
Africa must become more competitive against other world economies in the next 20 years. It’s estimated that more than 20 million jobs need to be created in Sub-Saharan Africa alone. Additionally, Africa’s population is growing substantially and could become a source for Europe’s shrinking workforce in the future. Urbanization is also increasing every year, expected to rise from 66 percent in 2020 to 77 percent in 2050.
Therefore, the demand for packaging is expected to rise,coupled with a real need to reduce food scarcity and wastage. Currently, in South Africa the plastics packaging sector accounts for 55 percent of the industry compared to 39 percent in Europe – a clear indication of already strong demand.
Globalization means more packaged products are being imported and exported, thus increasing the focus on product security. Counterfeiting is a mounting issue for the industry, in addition to dealing with littering and recycling. There is increasing pressure on the industry to focus on these demands, in addition to incorporating a cradle-to-cradle approach.
So, how can business leaders navigate (and remain competitive) in these changing times? First, focus on innovation, being more aware of consumer needs and adaptability. Second, companies must implement new energy efficient technology and develop environmentally friendly and sustainable materials to stay competitive. Finally, businesses must look at constantly improving their processes, becoming “better, faster and relevant”. The region must become quicker at identifying opportunities and in developing solutions to satisfy needs. Consumers are now much more environmentally savvy, using both their heart and head when making brand choices.
Several sectors have huge potential for growth including recyclable materials and products created from materials that can be easily separated; smart or intelligent packaging (for example, packaging with odor absorbers or physical damage indicators); and bioplastics (providing the crops are nothampering food production).
We will see a few design trends emerging, including: lightweighting (“doing more with less”), the use of more recyclable materials and the reuse of packaging components –specifically in food contact packaging and safety considerations (for example, tamper proof packaging).
Maria del Pilar Noriega
Ph.D., Director General, Instituto de Capacitación e Invetigación del Plástico y del Caucho, Latin America
The Packaging Industry
A variety of innovative technologies will drive the packaging industry in Latin America over the next five years, including: polymers for additive manufacturing (3D printing and bioprinting); the internet of things; human-friendly robotics for repetitive and dangerous tasks in polymer processing and converting operations; and, safety elements (including tamper-evident technologies). This is in addition to the renewed focus on recycling – contributing to development of sustainable materials and products – that we are seeing both from industry and consumers.
These technologies are expected to positively impact the industry, rapidly increasing productivity, innovation, flexibility and progress. This progress will, in turn, transform both the lives of consumers as well as the industry as a whole.
In order to evolve into a future growth state, business leaders will have to form strategic partnerships to achieve early successes in new materials, processes, designs and functionality of products. Also crucial will be the implementation of pilot projects for the development of sector skills as well as developing academic and industry collaborations to drive innovation.
We can see the potential for growth in a number of areas. First, sustainable packaging will see a big boost as brand owners look to reduce the environmental impact of packaging. Second, the flexible packaging market will expand as it continues to replace rigid packaging for convenience products. Finally, growth in niche packaging applications will reduce direct competition for packaged food, pharmaceuticals, nutraceuticals and cosmetics.
Sustainable packaging will be a key area – consumers are now seeking simpler and more environmentally friendly packaging, embracing the ethos that “less is more”. There is also an increasing focus on original “artistic” packaging, created by qualified artisans with a unique geographic focus. In addition, product safety will remain a focus, driving the need for product designs which provide packaging authentication solutions.
Managing Director, National Packaging Confederation Russia, Europe
The Packaging Industry
We expect to see a number of core emerging trends over the coming years, namely: reduced consumer spending power; a changing market structure; and, tighter, environmental standards.
These trends will have a substantial impact on the packaging industry. First, growth of the packaging industry is predicted to shrink which will drive competition within the industry (both internally within Russia and externally within the wider global market). Second, these changes will see a consolidation of packaging material manufacturers.
The changes mentioned above will require business leaders to update existing business models to stay relevant. Management and leadership development will be critical to growth, as well as ensuring specialists are fully equipped with necessary skills via training programs. In addition, businesses will have to find a way to reduce production costs in order to stay afloat in an increasingly competitive market.
Examples of areas for substantial growth: cardboard and paper packaging; packaging with high barrier properties; and, the production of “proactive” packaging.
There is huge potential for more sustainable and environmentally friendly packaging. The importance of the environment in packaging decisions is now at the forefront of everyone’s minds – from consumers to brand owners. In addition, packaging designers increasingly have to consider logistics requirements in their packaging design development.
Vice President, China Packaging Federation, Asia
The Packaging Industry
China currently has more than 250,000 packaging companies with a workforce of nearly 10 million and in 2014 the total output value was more than 1.4 trillion Yuan. China is now the second largest packaging industry after the US.
A number of trends are expected to emerge over the coming years, including: strengthening international cooperation (attracting more international companies to invest in China, driving the development of the industry in conjunction with local businesses); the growth of green packaging and recycling technologies; and, smart and secure packaging to battle counterfeiting, all driving international competitiveness of products.
We expect these trends to impact the industry in a variety of ways. Consequently, businesses will have to explore ways to adjust their production methods and work on developing innovative products.
There are certain considerations for businesses to keep in mind. Moving forward, strategy should be based on the current international and domestic situation as well as national industrial policies. Businesses must keep a close eye on the end-market demand and strengthen new product innovation accordingly. Strengthening corporate brand building will be critical as will establishing a group of key brands in core technologies with independent intellectual property rights. These factors will enhance and strengthen business development and international capabilities.
A few sectors are predicted to see substantial growth. Perhaps not surprisingly, high-end packaging is a huge growth market, as is the market for smart packaging manufacturing equipment like robotic systems. Printing is another area for innovation, including solventless lamination, hot stamping and energy saving technologies, as well as eco-friendly printing technologies such as HD Flexo printing and high-speed jet printing.
The number of packaging design specialists is growing. The talent base is ever expanding and they are increasingly basing their projects on eco-friendly and high-tech designs that truly meet the need of the consumer. The rapid growth of China’s economy and a rising middle class is driving high performance requirements for packaging which will have a positive impact on design. The sector will have to develop much quicker and at a higher level.