7 ways COVID-19 is changing the packaging industry
Note: With the rapidly changing health crisis, this article will be continually updated to reflect the latest and most accurate information.
Packaging is essential, now more than ever.
During a time of global economic and health uncertainties, packaged products are a necessity. Whether it's hand sanitizer, pharmaceuticals, medical testing kits, or food products, packaging is an essential part of keeping the world safe and healthy.
Our packaging experts recently had a chat (with proper social distancing, of course) about the changes they're seeing in the industry as a result of COVID-19. Read on for their top 7:
1. More love for pre-packaged processed foods
During a time when consumers are encouraged (or ordered) to stay home for weeks at a time, foods that are processed to be shelf-stable for longer periods are seeing a resurgence. Concerned about possible quarantine and orders to stay home, consumers are stockpiling convenient pre-packaged processed foods.
This is a big change from previous longstanding market trends that strongly favored fresh, preservative-free foods.
“Consumers who have shunned canned and overly processed foods during the past few years are more comfortable justifying the purchase of these products as they are seen as ‘safe to eat.’” - Mintel
According to recent research from Mintel, “consumers who have shunned canned and overly processed foods during the past few years are more comfortable justifying the purchase of these products as they are seen as ‘safe to eat.’” Viewed as economical and safe, processed foods are seen as a smart choice when faced with the thought of being homebound for an extended period of time.
2. A need for on-demand equipment
During a health crisis, packaged items like food products, pharmaceuticals, and medical devices see increased demand. Contract packagers and manufacturers are finding they need to scale up their production...and fast.
The solution? On-demand packaging equipment from suppliers that keep machinery in-stock for quick delivery. We have seen unprecedented demand for in-stock packaging machines that can be shipped to the customer almost immediately.
3. Foodservice & retail packaging see huge shifts
Initially, in many places, restaurants either had to shut down or offer carry-out or delivery service only. Even after restaurants reopened in some areas, with many consumers out of work or concerned about future economic instability, visits to restaurants are still drastically reduced. At the same time, consumer stockpiling of food items means that grocery stores still struggle to keep shelves full.
A March 2020 survey by Packaging World summarized this shifting demand in numbers: 21% of CPG respondents reported their biggest challenge was keeping up with demand. Almost the same amount - 19% - of CPG respondents reported the opposite problem: Their biggest challenge was plummeting demand.
"21% of CPG companies reported their biggest challenge was keeping up with demand. Almost the same amount (19%) reported the opposite problem: Plummeting demand." - March 2020 Packaging World survey
The difference between these two groups? Retail vs. foodservice. The companies reporting skyrocketing demand for packaged food largely serve grocery stores, while CPGs reporting plummeting demand for packaged food largely serve restaurants.
CPG companies that serve both retail and foodservice markets still report struggles, mainly with supply chain interruptions and suppliers that are unable to keep up with changing demand. According to a recent survey by PMMI, "39% of...members consulted reported at least some level of disturbance in their sourcing processes." Product that was previously sold in bulk must now be re-portioned to accommodate consumer retail sizes, causing supply chain distruption.
4. Newfound appreciation for single-use packaging
For many years, there has been a push for sustainability and waste reduction in the packaging industry. While those concerns are still valid and remain important over the long-term, during a time of increased focus on hygiene, the value of single-use packaging is apparent.
During a health crisis like the COVID-19 outbreak, consumers want to know their product and its packaging has been handled by as few people as possible.
Lisa McTigue Pierce of Packaging Digest explains that “…single-use packaging, which has suffered from huge criticism in recent years because of its supposed wastefulness, might have an edge right now from a ‘sanitary’ point of view because of limited handling/access of the inner products."
5. Labor shortages increase interest in packaging automation
Even before the pandemic outbreak, manufacturers and contract packagers were experiencing a shortage of qualified workers. That shortage has since been compounded and made even more complex by a world uncertain of how to navigate a global health crisis and still run their business.
Some companies are having trouble getting their employees to come to work. Others are finding it hard to maintain social distancing on their manual packaging lines. And yet others are seeing demand skyrocket but are unable to fill the positions needed to keep up.
Packaging automation reduces reliance on the uncertainties of human labor when it's "business as usual" and becomes even more important during a global health crisis. Instead of multiple workers crammed into a small packaging area, a single operator can effectively run most packaging machines. Additionally, automating packaging processes mean less handling by humans, which increases efficiency, safety, and accuracy.
6. Business slowdowns create innovation opportunities
Companies that are slammed right now are just trying to keep up. They don't have the time or resources for large R&D projects or innovation initiatives right now. But well-positioned companies that are experiencing the opposite - a slowdown of business - have a unique opportunity to use this time to maximize their efficiencies, examine options for innovation, and emerge stronger than ever after this crisis.
"Well-positioned companies that are experiencing a slowdown of business have a unique opportunity to use this time to maximize their efficiencies, examine options for innovation, and emerge stronger than ever after this crisis."
Packaging World's Matt Reynolds explains: "Well-managed CPGs spell their slow times with equipment upgrades, new lines, plant improvements, and new innovations that will make them that much more efficient when the better days inevitably return."
7. A huge increase in demand for eCommerce
A market segment that has seen an increase in demand as a result of eCommerce skyrocketing: Coffee subscription services. CNN reports that consumers are signing up in droves for services that deliver artisan coffee to their door. Matthew Berk, Viking Masek client and owner of coffee subscription service Bean Box, spoke to CNN, saying that they've "gone from having hundreds of bags on hand to having an inventory in the thousands [of bags] with that lot turning over every couple of days,"
Also increasing in demand as eCommerce grows: Modified Atmopshere Packaging (MAP). During a health crisis, shopping trips are fewer and farther between and many consumers order their products online for shipment to their homes or businesses. As a result, products with longer shelf lives are in demand. How do manufacturers achieve this from a packaging standpoint? MAP, of course.
Modified Atmosphere Packaging technologies are added to the packaging process that decreases the amount of ambient oxygen inside a package, thereby decreasing the rate of oxidation of package contents and extending shelf life.
MAP can be active, like pumping nitrogen gas into a package before sealing to displace oxygen, or MAP can be passive, like using multi-layered impermeable packaging films that ensure maximum protection of package contents from oxygen. Often the solution is a combination of both.
MAP's effects are real: These technologies can increase the useful life of perishable products by weeks, sometimes months.
The bottom line
The world is changing as a result of the COVID-19 outbreak. Some changes will likely be temporary, but there will be far-reaching shifts that fundamentally change the way the packaging industry operates.
Some good news: This industry is in demand and resilient. Moody's reports that the packaging and food processing industries (among others) show low exposure to economic impacts as a result of COVID-19.
After weathering this storm together, we may never get back to how things used to be. We will have to get used to a "new normal".
Rest assured we will be here to support your business every step of the way.
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