Virus crisis and food packaging

The real effects on the packaging industry from the present virus crisis is hard to comprehend. But regarding food packaging in the short to medium term we will see online grocery shopping grow, more focus on hygiene and price without losing the grip of sustainable solutions.

The virus has arrived and not very much is what it should be. Uncertainty and close to standstill are for many the situation and the long-term consequences are hard to fathom. Likely short-term results appear to be a severe downturn in the overall economy with double digit declines of GDP’s and a sharp increase of unemployment. Some of the hardest hit industries, so far, seem to be the hotel/restaurant industry, the travel/event industries and retail.

When it comes to retail this is not a general decline, the grocery retailing is in a much better position than other in that industry. Right now, people are obviously staying put, cooking and eating at home and are using the internet for socializing. Going out is rarely an option and food and beverages are bought from stores rather than restaurants. Also, pharmacies are open for business selling medicines as well as personal care products.

Where is this possibly going then?

On the consumer side the pandemic is speeding up adoption of trending behaviors like remote working but also online grocery shopping. And in the retail industry the situation is possibly increasing demand for retail technologies. The effects of this pandemic for the retail industry could include an increased e-commerce business and cashier free self-checkouts and more.

And for food packaging?

Demand for food packaging as such will be up as people are cooking and eating more at home. Now when many restaurants and food-service outlets are closed this is obvious, but as the crisis creates new behavior patterns some of them will stay, like cooking. Also after the euphoria when things get a bit more normal. There might also be increased interest for stockpiling of essentials. A new normal can very well be to have more than a few days of preserved food in the larder. This also goes for personal care and healthcare products.

Grocery e-commerce has so far been developing at very different paces in Europe. The UK is still in the lead according to an article in Forbes, followed by the Czech Rep. and Estonia. As a result of the virus pandemic the habit of ordering online and receiving, or picking up, your shopping is fast developing and will get a boost from the extreme situation we now are experiencing. This is a clear, and unpredicted, step in consumer acceptance and adoption of the channel. A habit that most likely will stay also when we are back to a more normal world. This needs to be supported by new and better packaging solutions. This is a field where there still is room but new and creative packaging solutions are developed and innovative delivery methods are introduced.

I don’t think that sustainability will go away because of the shifted focus. The consumer demand is too strong, and the concept of sustainable packaging solutions has gotten so ingrained in product and company positioning. Demand might temporary go down but if so, it will surely rapidly bounce back. It could however mean a changed view on initiatives such as not using one-way cups, introduced at certain coffee chains. People are also probably less interested in the packaging-free shops where you fill loose product in a bag of your own.

Sustainability is also related to the expected increase in general focus on health and demand for food hygiene. Packaging might even become appreciated by the consumers. It is visibly protecting and guaranteeing the freshness of the product. This could also be supporting the introduction of track and trace systems to a broader use. Blockchain technology is available, among other solutions, and is implemented as a useful tool in the distribution chain. This crisis could be a catalyst for increased use of technology for tracking and to verify product origin and what it has experienced before consumption. An increased cost for this service is hard to get around and can, in particular now, be a disadvantage.

It will take a while for the world to get back on track and increased unemployment and uncertain employments will make the average consumer more price sensitive than usual. As a result comes as a shift towards consumers demanding more value-products and private labels will have a field day if they play the cards right. Converters and others in the packaging industry will not be spared the general requirements for lower prices.

The future is right now not bright, but it is not a dark abyss either. We will have to adopt and be as agile as we can to survive and succeed also in the new tomorrow.

Greener than thou

The Consumer Goods Forum is launching a Global Protocol on Packaging Sustainability (GPPS). Now this is really something. This is not just any old protocol, it’s meant to be THE protocol. The protocol, or the set of rules, for how to assess and compare the relative sustainability of packaging.

This is challenging the very way we look at our own converted material as the most environment efficient and sustainable. As it is proven in LCA’s and in other expensive ways.

The aim is to make available a tool or a common language that actually can help companies reduce the environmental impact of their packaging. This will without doubt rock the oil tanker and create some interesting debate in the near future.

The Consumer Goods Forum is a very important and weighty organisation representing over 650 retailers, manufacturers, service providers and other stakeholders across 70 countries. The protocol was created by a group consisting of representatives from the
leading retailers and brand owners of the world. So the protocol will probably
prove to be of the more sustainable type.

Read all about it on http://globalpackaging.mycgforum.com/

And the future holds…….opportunities

Looking at the lists presented by numerous future packaging gazers I can summarise it all in one word, sustainable. That’s it.

Sustainable covers a wide range of initiatives, from reducing footprints by using less to a shift to alternative raw materials. The discussion is also about the need for reusable packaging to meet consumer demands and expectations. Purposeful is another trend together with packaging features adding real values that are making up the packaging wish list for 2011.

On the product side the talk is about functional foods and beverages, again. That is products that bring real benefits to our physiology. It can be about many thing but gut health, providing energy or weight control are the mainstream.

These are all opportunities for the packaging industry to support and underline all the above products features with fitting packaging solutions. This is not new but the actual products develop and consumer preferences change over time. New fibre rich products for gut health keep coming, the energy drink market is turning into shots and new weight management products are continuously invented.

Just to mention a few examples.

 

Bold move by P&G

Demands and initiatives from retailers and customers is putting pressure on the packaging suppliers. We now have to find ways to live up the new standards.

Leading FMCG producers are queuing up to declare that they, as a part of their sustainability goals, are going to reduce and change their use of packaging materials.

ConAgra recently followed the example of Hormel Foods and Mattel. ConAgra Foods sustainability packaging goals for 2015 are clear. They will reduce packaging by 10 percent per pound, compared to 2008, of product produced, increase the amount of packaging made of renewable resources from 45 percent to more than 50 percent, and increase the use of recycled content in packaging overall by 25 percent. http://bit.ly/cc9fK0

This week P&G announced that they are taking an even wider stride to get to the sustainability vision set out for 2020. Not only will they power their plants with renewable energy but the goal is to be “Using 100% renewable or recycled materials for all our products and packaging.” That will change P&G’s packaging needs and will lead to intense discussions with their present packaging suppliers and perhaps to a list of new ones.

Furthermore, the goals for 2020 include replacing 25%, compared to 2010, of the petroleum-based materials with sustainably sourced renewable materials. This is clearly something that will give hope to the bio plastics industry.

A packaging reduction of 20% is also on the list. I suppose that this can mean both 20% less weight and/or 20% less per product weight. Nevertheless this will lead to a wave of new innovations. http://bit.ly/c9pOX1

Sustainability – a matter for the CEO

Accenture has recently made a study together with the UN where they surveyed CEO’s from around the world. http://bit.ly/bPXoL9 The subject was sustainability and the view the CEO’s might have on this. The research team seem to have made quite an effort and they have got 766 responses from the survey and on top of that they have made 50 in-depth interviews. Impressive.

I must say that also the findings are in many ways impressive.

  • 93% of CEO’s believe that sustainability issues will be critical to the future success of their business.
  • 96% of CEO’s believe that sustainability issues should be fully integrated into the strategy and operations of a company (up from 72% in 2007).
  • 88% of CEO’s believe that they should be integrating sustainability through their supply chain. Only 54% believe that this has been achieved within their company. An almost identical performance gap is seen for subsidiaries.

Besides all the comments and remarks you can make, “how is sustainability defined”, “how many questionnaires were distributed”, “pc responses were expected” and “54 %(!) Believe that this has been achieved…….”, it’s great. It is great that sustainability is a recognised problem and/or opportunity.

Not long ago very few CEO’s would have had the intention to integrate sustainability in the strategy of their company. Strategic planning is still the process of building up a plan that will make the company survive and prosper in the near future. Now sustainability has made it to that level, that it is critical to a company’s survival.

This is great news and the journey to this point has been long and far from a straight line. We can now expect to see some policy changes across the board in the near future.

This also makes you think. After sustainability, what is going to be the next big issue….?