With more people working longer hours and the decline of the traditional family unit, manufacturers fast caught on to the fact that consumers wanted quick, easy-to-use products that could slot conveniently into their hectic lifestyles. Now they’re part of everyday life. Haven’t got time to give the kitchen a good scrub and mop? Give it the once-over with multipurpose cleaning wipes. Need a quick caffeine fix? Grab a cup of instant coffee. Can’t be bothered to cook a meal for one? Pop a ready-meal in the microwave.

However, despite these products making life easier for consumers, consumers aren’t making life any easier for the suppliers. Brand competition, price wars, health concerns and diet fads are just some of the drivers in convenience products. And the packaging industry is being squeezed from both sides. Consumers want smaller and more disposable packaging but the marketers want more packaging for less money. They also want instantly eye- and wallet-catching designs that can incorporate free buying incentives such as toys, coupons and collectibles.

Put simply: “The end goal of any company is to sell more with more profits. The first, easiest and less creative way to do that is by lowering the prices of the packaging materials,” says Mauricio Herman, Director of Cartmont Packaging, the Mexican partner of the Global Packaging Alliance (GPA). The bad news is that, sooner or later, they find their competitors matching their products and prices, and see themselves exactly where they started – this time with less opportunity to reduce cost.”

Only then do companies finally see the need to differentiate by turning their attentions to delivering a better service and product. One way is through the introduction of new printing and packaging technologies and techniques, for example, to improve colour. While this could initially prove costly, as Herman points out, firms need to look at the bigger picture: “Our experience is that when its part of a well-designed strategy, the results are impressive for the short and the long term.” he adds.

Unfortunately, the enormous pressure to cut costs doesn’t stop at the finished goods – it is inextricably linked throughout the supply chain. Among the many contributing factors are globalization, which is starting to strip away product exclusivity and remove delivery borders; the Internet, which can offer goods faster and more cheaply; and, also, customers’ increasingly ability to track their goods from warehouse to mailbox, tightening the vice on delivery times.

“Margin pressure is the biggest burden on industry right now,” explains Alex Commins, Managing Director and CEO of Colorpak Packaging Group, GPA’s partner in Australia. “Buyers are more sophisticated – they have access to data at their fingertips via the Internet and they generally have more market power, and use that to lever better deals for their companies. The challenge for the industry is to be able to remain as efficient as possible to protect margin and market share.”

Technology is also doing its bit to ease the burden. At the front end is CIP, which allows ink profiles from digital artwork files to be electronically sent, direct to press, to calibrate ink flows specific to a job. Herman adds: “We have developed a system called Real VMI (vendor management inventory) where we supply against demand, eliminating the need for forecasts and, therefore, the unnecessary cost of warehouse, freights, obsolescence, time-to-market, re-labelling etc. Sometimes the benefits are double the amount of packaging material in a year. Unfortunately, large companies measure their executives in a local form, so implementing it must be the priority of the director of the company.”

He also points out that with goods traveling further to meet consumer demand, there is a need to come up with more durable packaging. For instance, in the past few years, microflute boxes have been replacing the traditional folding box, providing a smooth printing surface with characteristics close to carton board.

Apart from costs and quality, security is a major consideration to prevent tampering or product contamination. While experts have yet to come up with a technology that is completely infallible, Radio Frequency Identification (RFID) is proving an effective, although currently expensive deterrent. Similar to barcode scanning, information is stored on a tag, but one of the key differences is that the information can be read at greater distances. In addition, overt and covert inks and coatings are other methods by which customers are able to protect their goods from tampering, pilferage and counterfeiting.

So what’s next in store for the packaging industry? Consolidation, for one, believes Commins. “A certain critical mass is essential in an industry where higher degrees of uncertainty are a given against a backdrop of high capital expenditure requirements,” he says. “Only the lean and efficient, or those with a strong market niche, will survive.”

Herman adds: “We have seen many competitors trying to gain market only by reducing their prices. The result is never different; it is only a matter of time until they find themselves in big trouble. Globalization has changed the industry very fast and more changes are expected. Top players around the world, in every country, must be very smart as to where they take the industry or everybody is going to have a hard time making money.”

Leader of the Pack

In China, blister and strip packs are increasingly being used to package confectionery products in urban areas as a way to appeal to more sophisticated, higher income consumers. Their application in products areas such as pastilles, toffees and nougat led to a massive 93 percent growth between 1998 and 2002 alone.

Increased levels of snacking, on-the-go consumption and convenience food in France, and a deterioration of family meals, has boosted a trend for smaller packaging and single-serve products. For example, the introduction of aluminium/plastic pouches in canned fish/seafood in 1999 led to a staggering 330 percent volume increase by 2002.

Germany remained the largest European market for consumer packaging in 2002, ahead of the UK and France – despite the least dynamic percentage volume growth of the three. Total demand increased by nearly six percent to reach sales of 143 billion units, with packaged food leading the way.

Consumers in Japan have become increasingly time-poor in recent years due to the pressures of work. As a result, there has been mounting demand placed on both products and packaging to provide simple, efficient functionality, with increased sales of multi-purpose cleaning and wipes products as well as microwaveable food.

The greatest growth in demand for packaging in Mexico is forecast to occur in packaged food by 2007, going up by 44 percent. Children are considered to be an important consumer group, with manufacturers turning more towards attractive packaging and free toys to try to influence purchasing decisions.

As Poland's economy opens up to Europe and other international markets, packaging is becoming key in staying ahead of new trends. Dairy products are expected to offer strong increases in demand for a range of pack types, with brick liquid cartons set to be the overall winners as future sales more than double by 2007.

The Russian packaging industry is quite young due to the fact that the notion of merchandising has only come about since its transition to the market economy in the early 1990s. Nowadays, approximately 6000 companies are engaged in local packaging manufacture, with flexible packaging dominating the market.

A dynamic performance in the alcoholic drinks sector between 1998 and 2002 was underpinned by flavored alcoholic beverages (FABs), or ‘alcopops’. Consumption jumped by a phenomenal 596 percent to reach volumes of 409 million units in 2002. FABs are still expected to deliver strong volumes of glass to reach 769 million units in 2007.

The U.S. is, by far, the largest market for consumer packaging in the world and set to stay strong, with overall volumes increasing to 515 billion units in 2007. Changes in demographics and consumer lifestyles are expected to impact future growth in the market, with an ageing population and more single-person households likely to hold the most sway.

India is among the countries which have seen some of the greatest changes in the packaging industry over the last few years. We look at a company with first-hand experience, GPA partner Kumar Printers.

How have consumer needs changed in the packaging and printing industry what’s been driving this?

In the last five years there has been a tremendous change in the types of substrates used for making the packaging. More and more packs (cartons) are being made in plastics/MET-PET and with speciality finishes. In India, the retail boom has started and this is the main driver behind this.

The packs have become smaller as consumers prefer to buy more frequently, since more and more families are becoming “nuclear families”. Also, there has been an increase in packs which target kids that may include games, tattoos or puzzles etc.

Is there demand for more environmentally-friendly products or other materials?

Most of the companies avoid plain film lamination to make the pack recyclable and environment friendly. But the Indian consumer is still too price-conscious to look for these refinements.

There is enormous pressure to cut costs in production and shipping as well as meeting demands for discounted goods. What technologies are helping the industry to meet these goals?

Most of the runs have roughly halved in the past 3-4 years, as the customers do not want to carry any excess inventory, to avoid obsolescence. To supply at the same cost, most of the processes have to be highly automated with some sort of job recall system to cut set-up time. This can be CIP4 for printing or matic systems for folder gluers. Small, indigenously-made gadgets also help in cutting costs.

Are goods traveling further to meet consumer demand?

Most of the customers prefer to make the secondary packaging i.e. the shipper stronger and keep the printed carton the same for all markets, with some change in text, if at all.

Security is another major issue at the moment. What new technologies are helping to keep goods safe?

More companies are looking for some sort of overt security feature on the packaging. This, however, works only for a small period and then the companies have to look for something different/extra. Educating the consumer is the biggest challenge and sometimes the desired result is not achieved due the lack of proper information.

Where do you see the packaging and printing industry going from here?

The packaging industry in India is in an unusual situation. There are many players who do minimum value addition but operate in the volume segment – they are the ones who are pulling the rates down. Only a handful have the equipment for value addition and services, and here the volumes are moderate. Lean companies which have a healthy mix of the two and/or operate in a niche segment will survive in the long run.

Originally published in the December 2005 issue of Extended Retail Solutions (ERS) magazine.

For more information about the Global Packaging Alliance, contact Dennis Bacchetta at (585) 334-8030 x229 or visit the website at www.global-packaging-alliance.com. For more information on Extended Retail Solutions (ERS), visit the website at www.extendedretail.com.