Packaging Industry Post- COVID
A Trariti Consulting Group Study by Swapnil Roy
Global Market Overview
The COVID-19 pandemic has caused a significant shift in consumer behavior, with a move towards e-commerce and online purchases, particularly in countries such as India where lockdowns and restrictions are prevalent. As a result, the packaging industry is experiencing a surge in demand due to the increased need for safe and efficient packaging for delivery purposes.
According to Smithers Pira Organization, the global demand for packaging is expected to reach $1.05 trillion by 2024. Additionally, a report by Reportlinker estimates that the packaging industry will reach a total market size of $204 billion by 2025, with a significant compound annual growth rate (CAGR) of 26.5% between 2020 and 2025.
Flexible packaging for the food and beverage sector is predicted to experience significant growth due to the rise in demand for ready-to-eat and frozen foods. India and China are the biggest consumers of flexible packaging. Other types of packaging, such as bags, films, foils, corrugated rolls, and boxes, are also expected to experience growth. The pharmaceutical packaging sector is also set to expand, particularly due to the exponential growth in online shopping for healthcare products.
Sustainability in packaging is becoming increasingly important to consumers, and as a result, the industry is shifting towards more eco-friendly solutions. According to a survey by McKinsey & Company, 65% of consumers consider sustainability when making a purchase, and 60% are willing to pay more for sustainable products. Companies are responding by exploring options such as biodegradable materials and reducing packaging waste.
Packaging safety is another crucial consideration for consumers, particularly during the pandemic. Companies are making promises to ensure the safety of their packaging, including implementing hygienic practices and using materials that can withstand disinfection. Customers' perceptions of packaging safety can influence their purchasing decisions, so it is essential for companies to address these concerns.
The packaging industry is also seeing a rise in innovation and new technologies, such as smart packaging that can track and monitor products and interactive packaging that can engage customers. These developments are expected to drive growth and meet the increasing demand for efficient and sustainable packaging solutions.
In conclusion, the packaging industry is experiencing significant growth due to the shift towards e-commerce and online purchases, particularly during the COVID-19 pandemic. Sustainable and safe packaging solutions are becoming increasingly important to consumers, and companies are responding with new innovations and technologies. The industry is set to continue to grow and evolve, and it will be essential for companies to stay abreast of these changes and adapt accordingly.
Packaging material makers are scrambling to meet the huge spurt in demand. Some of them have not been able to meet the surge in demand due to non-availability of blue-collar workers who have left for their hometowns. Yet others are unable to procure raw materials, some of which were imported and dependent on the petrochemical industry.
Sustainability and Packaging
The COVID-19 pandemic has led to a significant increase in the demand for packaging, as more people rely on e-commerce and delivery services. However, this surge in demand has also highlighted the importance of sustainability in the packaging industry. Despite this, some companies have shifted their priorities away from sustainability in response to the pandemic, opting for single-use plastics and other non-recyclable materials to meet the increased demand for packaging. This has resulted in negative effects on the environment and public health, as more waste is generated and pollution levels increase.
According to a report by the Ellen MacArthur Foundation, the amount of plastic waste generated globally is set to increase from 260 million tons in 2016 to 460 million tons by 2030. Additionally, a study by McKinsey & Company found that the use of single-use plastics has increased by up to 250% in some countries during the pandemic. This shift away from sustainability could have long-term consequences, as it will take years for the environment to recover from the damage caused by non-recyclable materials. Therefore, it is crucial for the packaging industry to prioritize sustainability and find innovative solutions to meet the increased demand for packaging while minimizing its impact on the environment.
Promises On Safe Packaging
Food service providers and e-commerce sites were one of the first to promise safer packaging. Grocery delivery companies, which operated throughout the lockdown, were some of the first to communicate better safety checks. Daily delivery apps have started levying a small fee for the convenience of doorstep delivery. One innovative vendor in the business of food service also put up a sticker detailing the delivery professional’s temperature reading on the packaging.
Customer Insights: Learnings Post-COVID For The Packaging Industry
We conducted a representative sample survey to assess the situation. Our survey conducted among consumers from across the country indicates that over 50% of consumers are unclear what changes have been carried out in packaging during COVID. While there is increased awareness about the need for washing fresh foods, and not touching other deliveries for 6 hours, there is a
significant feeling that suppliers have not changed
their packaging in any way. One customer summed
it up succinctly, “I don't believe there could be
" a virus free packing". It's all a technique to make
extra money. I will avoid such suppliers.”
The fact that more than 50% of the consumers
surveyed did not know whether they were being
charged more for packaging presents an excellent
opportunity for communication. Brands which
communicate this clearly are more likely to win the
loyalty and trust of customers.
However, customers are savvy about price increases and would be discerning in paying a reasonable price for better and safer packaging.
Over 60% of consumers are quite satisfied with current packaging, and believe it is hygienic and safe. This is significant, and on further probing, consumers suggested that an increased use of packaging materials had been noticed, especially cardboard and plastic.
Consumers welcome communication about packaging changes that will significantly enhance safety, or reduce the chances of the virus surviving on it. Industries that innovate in this area are likely to see a surge in interest from the investing community. Government regulations and standardization in this area are also welcomed by consumers.
The need of the hour is communication, focused on modes of new packaging, the additional measures to reduce multiple touchpoints in the supply chain, and reinforcing the customer’s perceptions of safety.
Companies which enhance communications about extra safe packaging are likely to command a premium. Milkbasket, a grocery delivery start-up based in the NCR region, makes a solid and forthright plea on its app for additional charges brought about due to the COVID situation. It levies a nominal Rs.7 per delivery on nondairy items, justifying it as “Super Safety Packaging & Handling (SSPH)” charges, with an opt-out option.
Some customers are willing to pay the charge, as they understand the extra costs incurred in keeping the
2020 items safe, and also protecting the employees. “I am willing to pay my child’s school fees in the thousands,
even though my child is not going to school anymore. I am more than willing to support a homegrown business with a few hundred rupees, if it will help them stay safe, and enable them to deliver extra-safe products to me every day”, says one customer.
Consumers also pleaded for less plastic, and the optimization of cardboard packaging size to the actual size of the product.
Given the extreme anxiety about the virus, goods which come with original packaging, and cardboard, seem to have gained the consumer’s trust.
The packaging industry is currently experiencing phenomenal growth, driven largely by the significant shift to e-commerce and online purchases during the COVID-19 pandemic. According to a report by Smithers Pira Organization, the total global demand for packaging is expected to reach $1.05 trillion by 2024, with a projected CAGR of 3.6% from 2019 to 2024. The report also indicates that flexible packaging for the food and beverage sector is expected to grow substantially, with a projected CAGR of 4.8% from 2019 to 2024. However, as the demand for packaging continues to increase, manufacturers must also prioritize supply chain management and worker safety to ensure long-term success.
In order to meet the growing demand for packaging, manufacturers should focus on innovative solutions that prioritize sustainability and cost-effectiveness. While some consumers have suggested vacuum-sealed packaging as a potential solution, this would require the use of plastic and may not be a viable long-term option. Instead, e-commerce players should focus on well-designed cardboard packaging, which is seen as more environmentally-friendly and safe to use and discard. According to a report by the Ellen MacArthur Foundation, only 14% of global plastic packaging is collected for recycling, highlighting the urgent need for more sustainable packaging solutions.
.Consumers also play a critical role in reducing the environmental impact of packaging. By following best practices such as allowing 24 hours to pass before handling non-essential packages, and washing items if immediate use is unavoidable, consumers can help minimize the spread of COVID-19 while also reducing waste.
E-commerce companies should also print instructions for proper disposal in local languages to promote responsible waste management. In conclusion, while packaging innovations are necessary to meet the growing demand, manufacturers must prioritize sustainability, safety, and cost-effectiveness to ensure long-term success.