In-depth Research Report: How The Epidemic Will Forever Change The Present And Future Of Packaging (Part 1)

In-depth research report: How the epidemic will forever change the present and future of packaging (Part 1)

The SARS-CoV-2 virus, which was not scientifically identified before January 2020, has changed almost every aspect of our lives, including the way we interact, work, travel and communicate, especially the way we consume, which is critical to the production of consumer packaged goods The influence of commerce has only now become fully clear.

Like all other sectors of the global economy, the packaging industry has suffered setbacks during the COVID-19 pandemic. Overall, however, packaging has also benefited greatly from changes in consumption patterns as countries learn to deal with lockdowns and other restrictions to combat the spread of the disease.

Growing demand for products in many categories drives innovations that drive packaging variety, ease of use and safety. For example, consider smaller sized single-use packaging protected by seals and labels to ensure product safety. Although it is somewhat overshadowed by other priorities, sustainability has influenced the design and manufacture of packaging in important new ways. Throughout the pandemic, the explosive growth of e-commerce has expanded the market for nearly every type and variety of packaging.

These trends have changed across the board and are expected to remain so even after the pandemic is over. However, some areas saw growth, while others stagnated or declined. This suggests that in the post-pandemic world, consumers’ expectations and buying habits will be different from those before the pandemic upended their lives.

For example, consumers will be more demanding about the value, safety and hygiene of the products they buy, as they did at the height of the pandemic. Using e-commerce channels to shop, initially out of necessity, has become an everyday way of purchasing goods and services.

This white paper aims to identify the market changes driven by the pandemic that will most directly impact demand in the major consumer packaging categories. In addition, it discusses what these changes mean for each category, and highlights what packaging producers need to do in order to maintain leading position.

01

Back to the source

After surviving the pandemic, most people's attention has refocused on the basics, namely ensuring access to enough goods and supplies to maintain an acceptable quality of life. This focus will continue after the pandemic is over, and the outlook for packaging will continue to be affected by it.

At the peak of the 2020 lockdown, the top products consumers bought were household cleaners and soaps, vitamins and supplements, hair dye and coffee, according to data collected by JPMorgan research. Cosmetics and sunscreen products saw double-digit declines.

A JPMorgan analyst noted that the declining categories "will be very difficult in the near term. They should recover, but discretionary items that are more closely tied to the economic cycle will be hit harder as they are not usually a must-have. Taste."

Over the next 12-24 months, job losses will leave many consumers with less money in their pockets but more time at home, JPMorgan predicts. This may prompt some of them to look for more affordable options, although loyalty to well-known brands will still influence their purchases of lower-priced alternatives to some extent.

According to McKinsey & Company, the third phase of the global response to the outbreak (after the initial shock and subsequent response) should be a rebound, during which overall packaging demand will improve. While industries such as food service packaging should recover quickly, other industries, such as luxury goods, travel and hospitality, will take more time.

Like JPMorgan, McKinsey believes that some consumer buying behavior is likely to remain weak as businesses recover from the crisis and employment levels suffer. Brands and packaging service providers should also be aware that the habits consumers have formed in response to the pandemic may outlast the pandemic. Plug and Play, a business development consultancy, noted that seniors who are vulnerable to the virus and are often unable to leave their homes have seen e-commerce as the safest shopping option. But they tend to only buy what they need, and usually take more into account the price and value of the item.

All of this requires packaging strategists to study not only what has changed during the pandemic, but also what may remain the same once it's over. Essential commodities, hygiene and sanitation, e-commerce and sustainable development are not going away as catalysts for packaging development and will only increase in importance as the recovery unfolds in full force.

02

new priorities

Before the pandemic, most packaging existed to meet the requirements of traditional retail stores. Now, with many types of merchandise bypassing stores entirely through direct-to-consumer channels, there is a new set of priorities for packaging composition, design and performance. As home delivery gradually replaces store shelves, consumer product manufacturers must assume that every item they offer is available through e-commerce channels and should adjust their packaging accordingly.

In practice, this means ensuring that primary and secondary packaging are strong enough to withstand transport and handling across multiple distribution points, often over long distances. Preventing damage and protecting products goes without saying, but ensuring a high-quality consignee experience deserves equal attention from manufacturers of consumer packaged goods.

This is because consumers shopping online want their packaging to be hygienic, convenient, sustainable and visually appealing, just like they do in-store. Packaging that meets all of these criteria strengthens brand loyalty by inspiring confidence in the delivered product and implicitly praising the recipient for a smart choice.

E-commerce existed before the pandemic, but the explosive growth the channel has experienced during the pandemic has made it the default shopping choice for hundreds of millions of consumers. According to one estimate, in the eight weeks following the March 2020 lockdown, e-commerce penetration as a percentage of retail sales matched the increase over the past 10 years.

03

keep increasing

Moreover, the explosive growth shows no signs of abating. The U.S. Department of Commerce’s Census Bureau expects U.S. retail e-commerce sales to be a seasonally adjusted $437.5 billion in the first two quarters of 2021, with e-commerce accounting for 13.3% of all retail sales in the second quarter. In the second quarter of 2021, e-commerce sales increased by nearly 10% compared to the second quarter of 2020, and even as shoppers began to return to physical stores to spend, e-commerce sales continued to climb. This strongly suggests that the rise of e-commerce and its impact on packaging is here to stay.

Out of necessity, consumers became more open to the idea of shopping through online channels during the height of the pandemic. As more of them source goods and services in this way, and there is no clear end date for the pandemic, their reliance on e-commerce will only grow.

The indecision of consumers has affected the advantages of e-commerce. Some studies show that more than three-quarters of consumers are looking for indicators beyond lifting restrictions before resuming outdoor activities: a wait-and-see attitude appears to be intentionally driving further online purchases. For example, McKinsey, in its report on how the packaging industry is responding to the Covid-19 pandemic, cites a study that claims consumers intend to double their spending in pure-play online stores.

Almost all consumer product categories are expected to show continued growth in online purchases, especially over-the-counter medicines, household goods, household goods and personal care products. Exhibit 2 shows data from McKinsey and Mesirow, and these packaging formats are expected to benefit the most, including corrugated shipping cartons, other forms of protective packaging, flexible films, rigid containers, plastic bottles and tubes, and metal aerosol cans and cans.

These forecasts are clear enough for CPG producers, but packaging service providers must pay close attention to post-pandemic consumer sentiment to take advantage of the opportunities represented by the rise of e-commerce. Overall, online shoppers are returning to the basics of convenience and value as they focus on essentials, everyday items they once had no choice but to go to a store to buy.

They are also embracing new behaviors and lifestyles that lead to corresponding changes in packaging, especially food. McKinsey believes some of these can reduce food preparation time; package ready-to-eat fresh foods; enable "dispensability," such as individual products sold in larger multi-serving packages; and improve portability through smaller packages.

04

Health care comes out on top

Another trend that needs to be taken seriously is the need for hygienic transparency, ensuring that the packaging will protect the contents and the end users of the contents from all kinds of contamination. Understandably, this mindset has gained considerable driving force due to the pandemic. In May 2020, a packaging industry magazine reported that two-thirds of Americans said they were at least somewhat concerned about contracting the virus through food packaging. Meanwhile, 44% said they were cleaning food packaging with sanitizer.

Concerns about packaging as a vector for virus transmission have receded since then, but hygiene and safety remain top priorities for packaging producers. Consumers will continue to prefer packaging that meets these standards, for example, through the use of substrates and surface treatments that minimize the spread of microorganisms and the diseases they cause.

Even if they don’t have to think about everything in the context of the pandemic, consumers are still mindful of what they want to spend their money on, and their benchmarks for products and packaging still include sustainability.

Before the pandemic, much progress had been made in making packaging reusable, recyclable and compostable. Consumers appreciate these qualities in packaging, but their attitudes changed once the pandemic hit. For example, questions arise about the hygiene and safety of reusable packaging. Increased demand for food delivery has driven a corresponding surge in single-use packaging. Plastics have long been the object of resistance from many environmentalists, but thanks to the hygienic protection offered by packaging made from plastics, this group of people is increasingly accepting the packaging material.

05

Don't underestimate sustainable development

Consultancy Kearney estimates that around 10 million tonnes of additional plastic waste related to the pandemic has been added in the best-case scenario, putting more pressure on an already overwhelmed recycling infrastructure.

That's why, according to Kearney, nearly half (48%) of consumers who responded to its Earth Day 2020 survey said the pandemic has made them more concerned about the environment. More than half (55%) said they were more likely to buy eco-friendly products because of their experience with the pandemic.

Other data points from the Earth Day survey highlighted the impact on packaging. Nearly two-thirds of respondents expect companies to clearly explain environmental benefits on their product labels or websites. More than three-quarters of respondents believe companies can do more to help them make decisions that improve environmental outcomes.

The pandemic may have slowed packaging progress towards sustainability and circularity, but the market forces behind these goals have not lost any underlying power. Going forward, packaging producers must ensure that their packaging is durable, safe, efficient and attractive, including providing them with the environmental credentials that consumers clearly want them to have.

06

Influence from other countries

Another thing to remember is that sustainable development doesn't just start at home, some good examples from other countries can also be brought into the United States. For example, in the absence of specific regulations for food packaging ink safety from the US Food and Drug Administration (FDA), many ink suppliers refer to the well-known "Swiss Regulations" and Nestlé's Guidance Notes on Packaging Inks to ensure food packaging safety .

Another wave of influence could come from France, where less than 25% of plastic packaging is recycled. While the government has pledged to recycle 100 percent of plastic by 2025, it is also tackling the problem in a different direction - by systematically eliminating packaging and other products that generate plastic waste from everyday life.

This was initiated by a 2020 law that bans plastic packaging of almost all fruits and vegetables from January 1, 2022. The limit is believed to prevent the use of more than 1 billion plastic packaging items each year. The ban on produce packaging is part of a comprehensive, multi-year campaign by the French government against all forms of single-use plastic.

France also phased out plastic plates, cups and cotton swabs in 2020, followed by a ban on plastic straws, cutlery and Styrofoam containers in 2021. Next on the list are tea bags that contain plastic, free toys at fast food restaurants, and disposable cutlery for fast food restaurants. The ultimate goal is to completely phase out all single-use plastics by 2040.

Other countries will not necessarily implement such sweeping bans. But as plastic waste is widely seen as a global problem, brands and packaging manufacturers should expect a series of initiatives overseas that will be implemented or promoted in their home markets in some way.

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