‘Packaging is the only handshake that a product has with the consumer” is an industry saying that sums up the strong correlation between product preferences and packaging. This relationship is gradually becoming stronger in Asia with rapid economic growth, urbanisation and the surge in the number of middle-income people. This, of course, has been driving the modern trade retailing sector.
Consumer packaging not only has metamorphosed into an essential component of modern living but also is making a positive contribution toward a sustainable society by ensuring that goods reach the consumer in the state intended, preventing waste and spoilage.
In the realm of packaging, delivering supply chain excellence means creating differentiated value for each segment of packaging customers (such as the consumer goods, food and beverage sectors) and their respective consumers. To achieve that goal, greater visibility and transparency in packaging needs and of different customer segments is necessary to design and lead demand-driven supply chain planning and processes.
Let’s look at some of the megatrends that are influencing consumer packaging preferences and how goods manufacturers are responding to these needs in each sector:
- Demographic changes: Ageing populations, the rising number of working women and small family sizes are influencing new product development tailored to these groups. Older consumers want packaging that is portable, single-serve, easy to open, easy to grip, lightweight and clearly labelled. Working women and small families prefer packaging that offers longer shelf life, along with smaller portion sizes for convenience and time saving.
- Rapid urbanisation: A bigger middle-income group with greater spending power has led to a shift in consumer expenditure from basic needs to lifestyle products, cosmetics and convenience foods. This in turn has increased the demand for premium packaging.
- Health and wellbeing, safety and sustainability: As people’s disposable incomes rise, demand for low and light, fresh and safe, natural and organic as well as functional and fortified options will continue to grow. Wellbeing extends to product safety and security which calls for more packaging innovations that prevent contamination, degradation, tampering and counterfeiting. Consumers who shop for healthier products also are more likely to prefer packaging that is environmentally friendly and easy to recycle.
- Convenience and conspicuous consumption: Increases in the number of one-person households, dual-income families and working women have led to a shift in lifestyle toward eating out and a demand for convenience in pre-prepared foods, single-serving portions and multi-packs. This increases the consumption of packaging materials as small portions tend to use more packaging relative to their size. Portability is also seen as important in single-serving packaging to meet the rise of the on-the-go market.
Responding to the above trends requires packaging companies to strategise end-to-end, across a demand-driven value network. An integrative improvement system can profitably and reliably match the segmented demand side of packaging with supply and network reliability to innovate the products and services customers value.
On the demand side, the packaging industry may be classified by end-user: individual consumers, institutional and industrial users with the latter further divided by types of food, beverages, electronics and the like. Historically, food accounts for 50% of the global consumer packaging industry and if beverages are added, the total is around 69%.
On the supply side, packaging can be classified by form and type of material. As for form, packaging can either be flexible or rigid with the former fast gaining ground for its cost and flexibility advantages. Flexible packaging includes materials such as film, foil or paper sheeting. Rigid packaging includes glass, rigid metal, and wood.
By share of packaging material in the total market, paper (34%) tops the list, followed by rigid plastic (27%), metal (15%), glass (11%), flexible packaging (10%) and others (3%). Flexible packaging has high potential and is expected to grow by 3.2% annually over the next five years with food accounting for 75-80% of the demand.
Predicting future requirements is essential for the packaging industry. For example, Asia Pacific has the biggest share of the global market for ambient food (food that can be stored at room temperature) at 45%, due partly to the high consumption of noodles. As for the packaging mix for ambient food, the trends appear to be:
- Flexibles now account for 62% of the market and will continue to lead in the future.
- Rigid plastic food packaging (containers, jars, bottles and trays) at 10% will still be a preferred choice for greatest convenience in pack sizes, portability, microwaveability and cooking flexibility.
- Glass at 7% will gradually lose further market share to plastic and flexibles, driven largely by concerns over weight and breakability and lack of filling flexibility. However, glass will continue to appeal the niche and premium markets.
Finally, in response to ever-changing consumer patterns and demand volatility, packaging companies cannot rely on only one form of packaging expertise but will need to develop multiple “product capability mixes”.
Kanishka Ghosh is a supply chain professional and independent writer. The Link is coordinated by Barry Elliott and Chris Catto-Smith CMC of the Institute of Management Consultants Thailand. It is intended to be an interactive forum for industry professionals; we welcome all input, questions, feedback and news at: Barry.Elliott@inslo.com
cattoc@freshport.asia