Study: Packaging spending will continue to increase

Consumer packaged goods brands are spending more on their packaging, a trend that is expected to continue, a new study shows.

L.E.K. Consulting is out with data that shows CPG brand spending on packaging is expected to grow "well in excess of inflation" during the next two years.

This follows increased spending during the past two years, the consulting firm said.

Factors driving the increased spending include packaging changes to meet sustainability goals, the growing popularity of e-commerce and increased competition on store shelves. A growing number of new products also is helping drive spending, L.E.K. said.

"Packaging converters that can partner with brands to decrease packaging weight, design recyclable packaging and ensure a sufficient supply of sustainable packaging materials are expected to achieve a critical level of differentiation," said Jeff Cloetingh, a report coauthor and a managing director at L.E.K., in a statement.

Sustainability, most consumer brands taking part in the survey said, is the biggest change in packaging during the past two years. Some 74 percent of the brand owners surveyed have set 2025 sustainability goals, but many also report they are behind schedule to meet those marks.

"They report that, to date, they have achieved only 40 percent of their 2025 goals and expect to have met only 68 percent by 2025," L.E.K. reports.

Brand owners also see more trouble coming down the road as they look at recycling infrastructure currently in place. Three out of four surveyed said they have "some access to sustainable packaging materials today," L.E.K. said, but "the capacity of material recycling facilities [MRFs] is sufficient to meet demand — suggesting future imbalances for supply."

E-commerce has grown significantly thanks to COVID-19, and 56 percent of the respondents indicated they have increased spending to create specific packaging for that channel. This includes creating new formats, reducing size, increasing protection and redesigning for automation.

While the pandemic slowed the introduction of new products, brand owners now indicate that SKUs are expected to increase going forward to match growth rates before COVID-19, L.E.K. said.

The consulting firm reports that 56 percent of brand owners surveyed report higher packaging spending since 2019, and 65 percent expect spending to further increase in the next two years. Of the brands surveyed with at least $1 billion in annual sales, 78 percent indicated spending should increase. A third of those brands also said the jump will be more than 6 percent.

"Players in the packaging industry that are able to work with sustainable materials without sacrificing performance — or design packages that reduce weight but still provide robust product protection for e-commerce — will find themselves with a unique competitive advantage," said Thilo Henkes, co-author of the study and managing director at L.E.K.

The 2021 Brand Owner Packaging Study surveyed 425 brand managers and packaging employees, L.E.K. said.

source : https://www.plasticsnews.com/news/study-packaging-spending-will-continue-increasing

edit : handler