Has Coronavirus changed the packaging industry forever?
The pandemic has been felt across all industries on a global scale, however, packaging- an often overlooked essential industry, has taken twists and turns throughout phases over the last few months with such radical changes in demand for products. Now, as we start to gain more control and understanding of what the future may hold for the packaging industry, we take a look at the past, current and predicted changes in trends.
Phase 1: Shock
The initial shock from the pandemic was felt through numerous changes in supply and demand across the packaging industry.
Rise in demand for the healthcare sector
A steep rise in demand for healthcare and PPE products, with initial shortages caused by panic-buying, was soon met with an increase in supply of these products from some companies re-purposing their usual packaging and products, for example some alcohol, perfume and vape liquid companies reacted quickly by re-purposing their ingredients and bottles for hand sanitiser, most of which was initially donated for free as a form of aid to hospitals and care homes. Companies who were quick to jump on this include cosmetics giant LVMH, Kai’s Virgin Vapoury, Shine Distillery, Corsair Distillery, and BrewDog (read BrewDog’s story here).
Many other packaging companies, including ourselves, focused contribution through re-purposing 3D printers to produce face shields for the NHS.
More eCommerce and Necessity, less Luxury
Lockdown procedure resulted in instant rises in demand for eCommerce and grocery packaging, particularly in the first few weeks where consumers felt the need to stockpile household goods such as dry and tinned food, cleaning supplies and of course.. Toilet roll. This in turn saw a decline in demand for premium products and therefore premium packaging, as consumers became much more focused on saving money and spending only on necessities.
International Transport Halts
With less movement between borders, demand fell for industrial bulk transport packaging that would usually travel internationally.
Sustainable Vs Sterile
The now established long-term focus on sustainable packaging was set-back by demand for items packaged in plastic, as consumers changed their focus to products with more sterile and easy-to-clean/disposable packaging. There are however, arguments that being in lockdown has forced consumers to be more aware of their packaging waste at home, which will result in continued environmental awareness, even if this is not an immediate priority.
Phase 2: Control
As the industry started to gain control over the changes in trends by meeting demand with steady supply, the focus on sterile and hygienic packaging continued across the consumer markets.
Many packaging companies that had refocused to meet changes in demand have continued with this focus throughout this phase of the pandemic.
As this phase continues, there may be pressure to lower packaging prices, to in-turn lower the general retail price of products to consumers, who still seem to be focused on saving money due to continued uncertainty of job security.
How this phase ends will be dependent on each country’s government actions, for example in the UK we are now seeing physical retail stores re-open, however a large proportion of the workforce, especially those in hospitality, are still on furlough or have been made redundant. More of the workforce is set to return in July though, with the recent announcement from the Prime Minister stating plans to re-open pubs, restaurants and limited entertainment venues from July 4th.
According to PwC: “The number of employees covered by the government furlough scheme [in the UK] has reached around 8.4 million, as of 24th May” and “Claimant count data suggest a significant increase in unemployment (with claimants reaching 2.1 million as of April 2020). Unemployment is likely to reach above 10% later this year.”
However, data also suggests that some higher-earners still in work have had an increased cash-flow due to their salary remaining stable and the availability of luxury goods and services having decreased. [Ref1]
Phase 3: Rebound- What’s next?
Food Service Packaging
Although there is still looming uncertainty of how far “out of the woods” we are, packaging for food service is expected to rebound sharply as more food and beverage outlets reopen. The details of how this will manifest are still unknown, however we can expect there to be a continued focus on disposable food-service packaging to maintain optimum sterile conditions, as we have seen from coffee chains Starbucks and Costa, who in March announced they would suspend their refillable cup schemes in the UK. [Ref2]
The environmental damage brought on by this could still be mitigated though if companies opt for biodegradable options such as palm leaf or bagasse products (See our blog post: Six lesser-known Plastic Packaging Alternatives for more on this).
Slower Rebound Sectors
It is expected that other packaging sectors such as luxury, travel and niche hospitality will be slower to rebound, but this will also be dependent on lifted travel restrictions and household incomes.
Sustained High Demand for eCommerce
Demand for eCommerce and home-delivery is likely to continue to be high, though this has posed problems for some online retailers in terms of online returns, as they are now having to be conscious of quarantining returned products before allowing them for sale again. Companies may take this opportunity to review their returns policies if they expect that the majority of demand for their products will continue to come from online orders.
Demand for sanitary products such as hand sanitiser are also predicted to continue as a long term trend, with the hand sanitiser market expected to reach close to £4.43 billion by 2024, according to RadiantInsights.com.
Long term changes in trends expected at this stage:
- Maintained increase value of sterile packaging by consumers, but with an awareness of sustainability.
- Demand for increased education on recycling, as more people spending time in their homes leads them to be more aware of their own waste.
- Increased industrial automation for large packaging factories due to maintained social distancing- this will depend heavily on government actions in the rebound phase.
Want to know more about how you can navigate changes in the packaging industry as a result of the pandemic? Have any of these issues impacted you or your business?
Give us a call on 01527 31 30 40 or email us at [email protected].
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