More sustainability, a rapid increase of new sub-brands, the expansion of price-pack architecture offerings, and shorter packaging runs are among the trends and shifts in packing demand, innovation, and spending, according to the 2018 Brand Owner Packaging Survey from L.E.K. Consulting.
80% of brand executives say packaging is crucial to their brand’s success, and 50% say they expect to increase packaging spending over the next year.
The global management consulting firm recently surveyed 200-plus brand managers and other packaging decision-makers at CPG companies and identified several key insights. These include:
- Packaging is an area of growing investment. The vast majority of the brand executives — 80% — say packaging is crucial to their brand’s success, and half (50%) say they expect to increase packaging spending over the next year. Nearly a quarter of that group (22%) say spend will go up by more than 10%.
- Brand owners are anticipating more demand for new packaging and new packaging formats, and expect proliferations of new “sub-brands.” Private-label brand owners each expect to offer an average of 38 total SKUs for their primary brand by 2023 and name-brand owners expect to have an average of 57 SKUs for their primary brand by 2023. That’s compared to 23 private-label and 46 name-brand SKUs today.
- New size formats will keep emerging. To combat pricing pressures, and to generate more excitement among consumers, nearly half of brand managers say that over the next five years, they’ll expand their “price-pack architecture” offerings — think 7.5-oz mini-cans of soft drinks, new refrigerator-friendly sizes of ketchup bottles and snack-size packages of certain foods. Not only do these items require new packaging, but customers are also willing to pay more for the novelty, convenience and unique features of the sizes and the packages.
- The sustainability trend strengthens. About 40% of brand owners say they’ve made changes toward sustainable packaging over the past two years, and the majority plan to move a portion of their packaging volume toward sustainable packaging options over the next five years.
- What material will much of the packaging innovation rely on? Brand owners say flexible plastic will outpace the growth of other packaging materials. Also, digital printing will engender innovations and changes in labeling and graphics.
“The packaging landscape is going through a transformation,” says Thilo Henkes, managing director at L.E.K. and co-author of the survey report. “Brand owners have confirmed for us some notable shifts — namely the increase in sustainable packaging, new formats for packaging because of novel new sizes and ‘price-packs’, and shorter and more profitable packaging runs, largely because of the proliferation of new sub-brands.”
Source: Retail Environments Magazine