The Future of Packaging Conference, co-hosted by L.E.K. Consulting and Smithers Pira, has been postponed until April 27, 2021. In lieu of this year’s conference, we are releasing four Executive Insights based on virtual interviews with conference panelists, which cover the following topics:
- Packaging M&A: Where Is It Headed?
- Meeting Sustainability Goals: How Are Brands’ Strategies Evolving?
- U.S. Recycling: How Are Converters Satisfying Brand Owner Sustainability Demands?
- Innovation in Packaging: Opportunities and Challenges
Innovation in Packaging: Opportunities and Challenges
Advances in packaging technology are reshaping how the packaging value chain operates, how packaging is produced and how the end consumer engages with branded products. The advent of COVID-19 has only served to increase the need for more innovation in packaging. For example, the pandemic has pushed consumers to increase their online ordering. This has prompted manufacturers to search for higher-performance ecommerce packaging solutions that can protect products from rigorous last-mile conditions.
Increased focus on food safety is another byproduct of the COVID-19 pandemic. The result may be new strides in anti-viral surface technology, innovative packaging for products that were previously unpackaged (e.g., self-serve vegetables and fruits) and safety-related packaging (e.g., tamper-proof seals).
Minimizing operational disruption and costs are key challenges for brands when considering packaging options. New packaging technologies must be able to demonstrate not only operational and cost-effectiveness, but also the ability to gain regulatory approval (where applicable), as well as the required support infrastructure.
Finally, connected and digitally printed packaging are expected to be important innovations over the next 10 years, given the unique marketing and customer experience opportunities they can create.
To sort through all of these innovative packaging advances, L.E.K. recently sat down for an in-depth conversation with the following four packaging executives as part of our virtual Future of Packaging Conference:
- Phil Bourgeois, Senior Vice President of Global Technology, Tekni-Plex
- Carl Joachim, Co-founder and Chief Marketing Officer, ePac
- Howard Manning, Vice President, Global Product Development & Launch, Rieke
- Paolo Ferrari, Director, Guala Closures
Our discussion ranged from packaging’s role in ensuring product safety and enhancing the customer experience to innovations in digital printing, sustainability and connected packaging.
L.E.K.: As ecommerce becomes more prevalent, we’ve been hearing quite a bit about the delivery challenges of the “last mile.” How can packaging innovations address some of those challenges and what do you see as up and coming?
Phil Bourgeois (Tekni-Plex): Innovative, higher-performance packaging is critical for ecommerce, especially as demand increases for grocery ecommerce. Packaging innovations that can enable grocery products to survive the last mile and arrive at a customer’s doorstep safely and fully intact are key.
I’m seeing an increasing number of sealed induction liners for packaged goods that transport liquids, as well as features to provide temperature assurance, such as strips to ensure a fresh protein product has not been above a certain temperature. Many of these value-added packaging features are currently used in select healthcare packaging segments to protect the product, and I believe there is runway for grocery ecommerce to adapt these value-added packaging features.
Howard Manning (Rieke): Ecommerce penetration is rising globally, and this trend is going to accelerate due to COVID-19. Shifts toward ecommerce are driving demand for packaging innovations to ensure that products do not break or leak while moving through more demanding shipping environments.
Companies want to ensure their products get to customers safely, and the last mile is going to be the biggest challenge as the last mile is a more rigorous environment. Companies can’t afford to have any brand damage from any issues, so packaging companies need to ensure packaging safety through rigorous testing and standards.
Brands need innovations for ecommerce packaging to prevent negative customer experiences, especially as ecommerce becomes more prevalent. Closures with higher opening torque for the head, rotational locking and sliding seals can all enable products to withstand the last mile. These innovations will help consumers get a product with safer, more functional packaging while maintaining brand and product consistency across channels.
L.E.K.: We’ve seen how digital technology can be used to enhance consumer brand loyalty. What’s the packaging angle?
Howard Manning (Rieke): Near-field communication packaging can really help improve marketing efforts because brands will be able to directly reach customers to gain retention and loyalty. Whether it be through an app or a membership program that customers sign up for and get connected to through a QR code on the package, brands can leverage these connected packaging capabilities to drive more effective marketing tools. In an age when everything is becoming increasingly digitized, brands can really leverage connected packaging to address gaps in their marketing efforts.
Paolo Ferrari (Guala Closures): Connected packaging can be a key tool for marketing, providing incremental customer data and marketing opportunities. We are getting very high engagement with our products since we have introduced more connected packaging. Having this opportunity to connect users online is driving brands to demand more connected packaging.
The ability to develop a “digital” connection between the brand and the consumer through connected packaging is the next big marketing opportunity. Given the amount of online research and shopping that consumers do, connected packaging is going to be a key driver in the future. Ecommerce is taking off right now, and as consumers increasingly use online channels to shop, having a package that can take the customers to online marketing channels will be incredibly effective.
Connected packaging can also improve the overall customer experience by helping customers learn more about the product that they just bought, and giving them more information on how to use it. Connected packaging can allow customers to use their smartphone to digitally engage with the physical packaging ― for example, via a QR code scan or a near-field communication chip embedded directly into the closure ― and be taken to the website to learn about the company and the product. These opportunities give brands a chance to engage with the customer to improve their product experience. Customers can learn more about the product and enjoy a better overall impression of the brand.
L.E.K.: What about digital printing? How is that technology delivering value to brands?
Carl Joachim (ePac): There is a lot of important innovation occurring in the digitally printed packaging space. These innovations have materially expanded the capabilities a packaging printer can bring to the brand owner.
The first major benefit is that digital printing can significantly reduce production times. It takes ePac around 10 to 15 business days to ship an order, while a customer sending an order overseas or to a conventional converter can wait six to eight weeks, or even longer.
Another advantage of digital printing is shortened run length minimums. Product minimums can be reduced because there is minimal time needed to reset the production lines between jobs. Another big advantage of digital is that it also is possible to concatenate various SKUs to print them sequentially in one run.
Sustainability is also a major benefit of digital printing. The printing platform itself is far more environmentally friendly than conventional flexo or rotogravure processes, using less energy with a smaller carbon footprint and no solvents. Another big factor is brands can order to demand so they get exactly as much as they need, reducing waste and eliminating storage needs on their end. ePac also offers recyclable and post-consumer recycled structures to a market that is seeing accelerated growth in its desire to use environmentally correct packaging.
Another reason that a lot of customers choose digital printing is the high image quality compared with other technologies. Our platform, the HP Indigo 20000, produces true high definition, photo-quality images, with colors that hit 97% of the Pantone gamut. This allows us to match conventionally printed packaging and provide an even finer level of detail and color fidelity.
The biggest differentiator of digital printing vs. conventional printing is the ability to print variable text and graphics. This allows for variation between every single piece of packaging that is produced, which has various benefits in terms of product differentiation and authenticity tracing. For example, we used HP’s Mosaic print technology for our customer Skratch Brands, to take a graphic file based on Team EF Education First’s cycling jerseys from the Tour de France, spin it around in a kaleidoscope, and create really impactful color visuals for a drink mix package based on the team’s jerseys. Skratch built an entire marketing campaign on this.
Paolo Ferrari (Guala Closures): Packaging innovation through personalization is key as consumers have become more demanding. They want to be pampered, and told that they are a “special customer” or given a “thank you.” Personalized packaging goes a long way to making customers feel unique and driving increased brand loyalty.
One example is a French wine company that sources from France and needs to indicate its French heritage for all consumers, but when they sell to a Chinese audience, it’s helpful for them to add in a Chinese touch through language on the label suggesting that the product is “designed for you” ― it is a nice detail to have. Customers can really develop a unique affinity for your product if you are able to give them a more personalized experience.
Personalized packaging can also engage customers digitally, as Coca-Cola’s specialized “Share a Coke” campaign showed. Customers would go online to input their name that will be printed onto a can. Coca-Cola replaced their iconic logo with the customer’s name, creating a unique experience for customers.
Coca-Cola’s campaign was very impressive. This is a company with many SKUs, so it was incredibly powerful for them to personalize customer names on each of their cans. This form of personalized packaging allows brands to build customer loyalty and drive customers to their online presence. This example demonstrated that personalized packaging could create significant value for a brand and also allowed Coca-Cola to build further out its digital presence.
Carl Joachim (ePac): I would say that adoption of digital printing for flexible packaging is likely less than 1% today, but it could grow to about 5% in the next 10 years if key barriers can be overcome. In looking at the flexible packaging industry today, and assuming for real growth to occur conventional converters would need to add digital to their capabilities, conventional business models are not aligned with the advantages digital provides, and I don’t see this changing very fast. Digital requires a whole new way to go to market, something today’s converters, in my opinion, will be slow to adopt. This is why we formed ePac as a greenfield by building new plants with new equipment.
L.E.K.: How can packaging innovation be used to convey security and product authentication to the consumer?
Howard Manning (Rieke): One of the leading types of innovative packaging today is connected packaging that uses chips for added product security and tracking/tracing purposes. For example, if a large global beverage brand is shipping five drums of their secret recipe to their franchisees, they want to make sure the correct product arrives safely. It is imperative for manufacturers to ensure that their product is secure, and connected packaging can help with track and trace.
On the consumer side, people are going to want to know where their packages come from. To address issues with counterfeiting, connected packaging can help consumers authenticate their products. People want to trust that their packages are secure, and connected packaging can help alleviate any concerns with counterfeiting that consumers have.
Paolo Ferrari (Guala Closures): Connected packaging can actually help address security issues for specific products. One great example that comes to mind is counterfeiting, a huge problem in spirits and wine. Consumers’ security and attention to the safety of the product they purchase is widely increasing, and connected packaging can help assuage many concerns that consumers have about product authenticity, as connected features are expensive and difficult for a counterfeiter to reproduce.
Top spirits and wine companies are experimenting with near-field communication, which allows customers to authenticate bottles and verify that they have not been opened before by scanning the bottle closures with their phones. Customers can ensure that they are getting a high-quality spirit or wine bottle that is authentic and verifiable. Customers know they are getting a real bottle, and feel more comfortable in trusting the brand. Recent introduction of blockchain-based platforms will enhance protection even more.
Carl Joachim (ePac): When it comes to product authentication, digital printing can be invaluable. One of its great advantages is being able to use variable data to serialize QR codes or other marking technologies to make every single piece of packaging distinct. Metadata for each code can be managed on an Internet of Things (IoT) or blockchain platform that can be leveraged for product traceability and authentication purposes.
This kind of technology has been used in the cannabis industry for authentication and brand policing purposes. Within the cannabis industry they have a big problem with black market products that attempt to mimic legitimate products. As a result, companies can use QR codes, together with marks that can only be produced on a digital device, on each package to police counterfeiting and to verify authenticity to consumers.
L.E.K.: What impact is COVID-19 likely to have on packaging innovation, and which technologies are best positioned to address new customer needs as a result of COVID-19?
Phil Bourgeois (Tekni-Plex): Prior to COVID-19, the first thing consumers used to do when they came home from the grocery store was put their groceries into their fridges and pantries. With COVID-19, the first thing that some consumers do now is disinfect and wipe down everything before they put it away. I think given the recent pandemic, the changing consumer behavior and focus on food safety is likely to indicate that people want, and may pay for, more food safety packaging.
There is anti-viral/anti-bacterial surface coating technology that is already being used in industries outside of food packaging right now. For example, I’ve heard of catheters that have a protective microbial coating on the outside. Manufacturers are likely to be more open to these additional packaging measures. There are going to be a lot of new ways of interaction between people, and this is going to have an impact on packaging.
Additionally, I think consumers are going to be more likely to pay for additional packaging with anti-viral technology on surfaces. I see that there could be a shift toward having safety functionalities on the packaging as a differentiator for the brand owners of packaged goods.
I think there are several ways in which this might be implemented. I could see it being a coating or surface layer, like on a lid. I think we will see a lot of technologies repurposed or engineered into the surface itself as additives, or onto the surface. For example, are there any additives that we can add to the foil seal of a yogurt lid to make it safer? Another option that might work is actually embedding the material into the substrate itself.
Howard Manning (Rieke): COVID-19 has increased consumers’ focus on food safety efforts. People are demanding additional precautions to help address safety and sanitary concerns. In this era of COVID-19, I think that people are going to have to adjust to new ways of interacting with products, and packaging can help drive this adjustment.
One innovation I’ve seen that is becoming more prevalent is tamper-proof seals and other safety-related packaging such as temperature strips for your meat. These innovations will help keep consumers more safe and ensure that products are sanitary. Packagers are really going to accelerate improvements in this technology over the next few years, given the increased emphasis on food safety.
L.E.K.: Packaging providers need to consider the impact packaging innovations have on downstream activities (e.g., filling, refrigeration infrastructure) to minimize brand owner switching barriers and ensure product packaging consistency across channels. From the perspective of the brand owner, what are some of the biggest challenges when adopting a new packaging innovation or technology?
Howard Manning (Rieke): Companies want customers to have a consistent purchasing experience across channels. When a customer goes online to purchase a shampoo bottle, they will be looking for the same bottle when they go to the store. So it’s imperative that there are no major differences in the appearance of the product or packaging and that products function the same no matter which channel they are purchased through. As a result, packaging innovations to make ecommerce products sturdier must be made without impacting fill lines and to maintain the same look that customers expect.
Manufacturers know that when designing a new packaging, they need to work within existing designs and production so you don’t impact or affect the filling lines. Brands don’t want to have to change other parts of their systems, so innovations must be developed with the goal of keeping the look and feel of products the same but improving on their safety.
These changes will also improve on traditional brick-and-mortar channel packaging while keeping product consistent across channels. There is value added from having ecommerce packaging that can withstand being thrown around in the grocery cart or a bag, or jostled in a car. I remember three or four years ago, companies would have layers of packaging, forcing a customer to open up several layers to reach the product, negatively impacting the customer experience. By making new packaging that is rigorous enough for ecommerce, even traditional brick-and-mortar channel packaging now looks better and can prevent the customer from having that negative experience, but these changes need to be made without completely overhauling the entire package.
L.E.K.: What about factors like cost dynamics and regulatory approval? Are these proving to be issues for brands?
Carl Joachim (ePac): For small and medium-size brands, working with a digital partner like ePac is a no-brainer. They go to market faster, are able to rapidly make changes inexpensively and order what they need when they need it. ePac currently has 15 plants in operation serving local communities and the companies that reside there. So our customers are like family.
For large CPGs, they will need to find the applications that best leverage the unique capabilities of digital, such as personalization, running targeted campaigns and test marketing. Looking at it another way, acquiring conventional packaging is generally a procurement responsibility, while digital packaging is a discussion with marketing.
Phil Bourgeois (Tekni-Plex): In the past, many foodservice operators have disregarded packaging surface technology due to the higher cost and lack of perceived benefit. But now that consumers are going to be more likely to demand this type of packaging, companies are going to be more interested in packaging surface technology and packagers will have to demonstrate that they have an effective technology.
The success of specific packaging surface technologies (e.g., anti-microbial food packaging) is likely to depend on what you can claim and show with evidence. What is the log kill rate of the pathogens? How many types of pathogens can the surface technology kill?
There are other factors that matter too, like some of these technologies might require additional regulatory approval or be too cost prohibitive to appeal to the broader market. It’s going to be very interesting to see how food surface technology works over the next 10 years as customers trade up and pay for something that can protect their health and safety.
L.E.K.: Thanks everyone. You have given us a lot to think about. Clearly, technological advances are transforming the nature of packaging. It sounds like some that were already in the works are being adopted more rapidly in response to COVID-19 and the rise in direct-to-consumer delivery ― not to mention the myriad safety concerns resulting from the pandemic. It will be exciting to watch as packaging’s growing contribution to brand strength unfolds.
Phil Bourgeois, Ph.D., joined Tekni-Plex in 2010 as the Senior Vice President of Global Technology and Regulatory Affairs. In this role, he oversees new product technology platform development for the healthcare, specialty and food packaging business units of Tekni-Plex and leads global regulatory compliance. Phil has established and manages Tekni-Plex’s Global Technology Center in Holland, Ohio. Prior to joining Tekni-Plex, he served as Vice President of Research and Development for Rexam Plc’s Plastics Group, where he was responsible for material, closure and container development for high-barrier food, beverage, pharmaceutical and prescription product groups.
Carl Joachim is Co-founder and Chief Marketing Officer of ePac, an all-digital manufacturer of flexible packaging. Carl has over 25 years of executive management experience with Xerox, Ocè and Ricoh, developing markets for production digital printing technologies used by data centers, commercial printers and in-plant print centers across the U.S. In 2013 he turned his focus to the packaging industry, and in 2016 he, along with two business partners, created ePac as the first all-digital flexible packaging company in North America.
Howard Manning is the Vice President of Global Product Development & Launch at Rieke, a global leader in closures, dispensing and packaging systems. Howard has over 30 years of experience in new product development, engineering, manufacturing and operations management. During his seven years with Rieke, Howard has held senior executive positions in centrifugal pumps, industrial chemical pumping systems, architectural lighting, and packaging in China and the U.K. Howard holds a BEng (Hons) in manufacturing systems engineering.
Paolo Ferrari has been Chief Marketing Officer and Director of M&A for Guala Closures Group since 2010. He joined the group in 1981 and from 2002 to 2010 he was in charge of the Commercial and Marketing division, which included purview over research and product development. From 1992 to 2002, he managed the group’s international business development activities as International Business Director. He holds a degree in mechanical engineering.