Insight into innovation: Canadean market research23 March 2012
Looking ahead, Canadean shares the results of its latest research: ‘Global Packaging Industry Survey 2012: Trends and Opportunities in Packaging, Budget Allocation, Procurement and NPD’.
In 2012, suppliers will assign more importance to customised packaging, tracking and trading requirements, and new labelling and coding technology, while buyers will focus on consumer convenience and new packaging materials. The cost of material is considered the most significant factor driving the development of innovative packaging solutions. This is the summary of Canadean's findings in its 'Global Packaging Industry Survey 2012: Trends and Opportunities in Packaging, Budget Allocation, Procurement and NPD'.
A C-level executive from a packaged goods manufacturer category states: "My company focuses on adopting sustainable NPD practices to help reduce our overall production expenditure, including the cost of the materials procured." In line with this this trend, consumer goods company Unilever devised a new policy for sourcing paper and board in 2010, and has made plans to procure 75% of paper and board either from certified sustainably managed forests or recycled materials by 2015.
According to packaging manufacturers, the most sustainable packaging materials are degradable plastics (such as oxo-biodegradable plastics), glass, and paper and board; converters also agree that these packaging types are the most eco-friendly. Many organisations are actively seeking investment in paper and board materials, either through an increase in capacity or acquisition. For instance, in April 2011, A&R Carton, a Swedish carton manufacture, increased its stake by 34% in food and retail packaging supplier SP Containers.
New packaging: the advantages
For manufacturers, the top three advantages of new packaging are reduced manufacturing costs, minimised material use, and environmental and regulatory compliance, while converters consider compliance, minimising material use and increasing product shelf-life to be key.
In terms of new packaging solutions, manufacturers' main aim is to reduce costs. This can be achieved through reducing the weight of bottles and boxes, decreasing the thickness of materials and lessening the size of containers. For example, in February 2011, Kraft Foods reduced the size of its Cadbury Dairy Milk chocolate bars from 140g to 120g in the US and the UK.
Suppliers assign more importance to the influence of consumers and the government on their organisations' sustainability efforts than buyers, who reference companies, clients and trade bodies as their key drivers. Companies are becoming more consumer-centric and are actively investing in developing products in line with market research. In September 2011, Sainsbury's changed the packaging of its peanut butter range from glass to plastic jars, an initiative that helped the company to cut packaging material volumes by 83% - 882,000kg.
What's stopping innovation?
Key barriers faced by manufacturers looking to design innovative packaging solutions include cost, regulations and technology - suppliers second this. In contrast, cost, technology and patents are considered to be the highest hurdles by converters.
Cost, however, is deemed the largest barrier to innovation by all respondents.
Popular packaging techniques
Overall, 67% of packaging manufacturers have either implemented or are planning to implement tamper-evident packaging during 2011-2012 to ensure safety, followed by high-barrier plastic structures and reclosure technologies. These and modified atmospheric packaging (MAP) are considered most necessary by converters.
Packaging companies are developing innovative and tamper-proof packaging to gain consumer confidence, reduce costs and comply with regulatory norms. In September 2011, Tesco stores introduced an innovative Reseal-it packaging system for its strawberry packs, developed by Macfarlane Labels and Sampak, which is tamper-proof, resealable and easy to use.
Top customised packaging methods
Overall, 51% of respondents from manufacturing companies project a growth in demand for corrugated boards in 2012, followed by uncoated and coated kraft papers, and stretch wraps solutions.
Corrugated boards are biodegradable materials with a low carbon footprint. Many packaging companies are investing in this material, either by expanding their product range or acquiring companies specialising in making corrugated boards. Interstate Container, for instance, released its eco-friendly, GREENCOAT wax-replacement corrugated boxes in December 2011.
Many converters are focused on investing in stretch-wrap facilities to up their operational efficiency - in August 2011, Inpac introduced hand and machine pallet wrap stretch films in black, white and blue.
Procurement budgets: on the up
Most packaging manufacturers expect to allocate 12% of their annual revenue to product development over the next 12 months, while converters are projected to allocate 9% of their revenue towards packaging R&D. In total, 31% of manufacturing respondents expect a revenue contribution of 6-10% for NPD.
Many supplier companies are looking to develop innovative materials and solutions to reduce packaging costs, providing buyers with a cost advantage. In May 2011, packaging supplier Eaton introduced a customised packaging machine equipped with SmartWire-DT and HMI/PLC technology for developing lean automation solutions, which helps organisations speed up their production processes.
Some companies also choose to focus on changing the look of their existing packaging so they can market products in a fresh new way. Vaseline, a skincare company that is part of Unilever, relaunched its core lotions in new packages designed by Blue Marlin in December 2011.
Overall, 54% and 48% of manufacturing and converting companies, respectively, project less than 10% of their procurement budgets will be allocated to new packaging solutions. Considering the weak economic conditions, such allocation may be deemed as substantial. Interestingly, 18% of manufacturers and 27% of converters project budget allocation to exceed 11% of their total procurement budgets.
Key drivers of NPD
The analysis of responses from packaged goods manufacturers reveals that 66% of respondents cited ease of use as the most prominent factor driving the development of new products, followed by low price and protective features. Consumers prefer user-friendly products so packaging companies have started to bear this in mind when designing packages. VTT Technical Research Centre, a Finnish research institute, announced plans to unveil senior-friendly food packs in December 2011, which will be easy to open with product information in more readable bold type.
Product development: what's in store for 2012
The overall analysis of buyer responses reveals intentions to develop innovative new products, followed by improving existing products. Linpac Packaging introduced its new Rfresh MB range of sustainable trays for meat and fish products in December 2011, preceded in August 2011 by Ampac, which introduced a retortable, zippered, stand-up pouch packaging that is lightweight and portable in nature.
Improving existing products is a key focus area for packaging converters, as indicated by 59% of respondents. Stora Enso has developed a speciality paper known as InnoMould, which is expected to reduce the share of non-renewable materials needed to develop packaging through injection-moulding processes.
What are manufacturers and converters developing right now?
23% of packaging manufacturers are in the concept development and testing phase. Faced with the challenge of lowering costs and simultaneously providing value for money, their focus is on the design of innovative packaging solutions that optimise processes and cut operational costs.
For example, Michigan Molecular Institute (MMI) formed a joint venture with ECO Research Institute - under the name of Eco Bio Plastics Midland - in September 2011. This new venture will focus on combining shredded paper with standard commodity plastics to create a plastic composite for packaging items in the foodservice industry.
A total of 88% and 75% of manufacturing and converting respondents, respectively, expressed that they are either 'extremely likely' or 'somewhat likely' to bring brand new products to the market by 2012.
This article was first published in our sister publication Packaging & Converting Intelligence.