Tag Archive: consumer packaging

  1. CPG Roundup: Latest Printing Trends in the Consumer Packaged Goods Industry (Part 2)

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    In Part One of this look at the challenges facing the packaging for CPG industry and the opportunities that industrial inkjet provides, we looked at trends in consumer tastes and preferences as drivers of change.  In Part Two, we look at more macro, market-level forces driving change.

    Megatrends in Packaging: Is Digital the Answer?

    CPG and Retail Margin Compression

    Many CPGs are losing the battle for shelf space and margin growth, which is increasing pressure on suppliers such as packaging manufacturers to decrease cost. That is likely to continue, and will likely have consequences on the full value chain that’s selling into consumer packaged goods,” said Feber.

    inkjetted nescafe lid

    Inkjet printed consumer packaging can make your products stand out on the grocery store shelf.

    In addition, a shift is taking place in terms of which companies are gaining share in categories, with small and medium-sized brands growing dramatically over the larger brands in their categories. “It’s occurring everywhere, and it’s changing the way a lot of us are positioned, in terms of our companies and the assets and who we sell to and how we design product, and it’s putting a requirement on us to become a bit more agile,” said Feber. “The more agile players will likely be the ones that pick the right winners going forward.”

    He emphasized that these trends are putting downward pressure on margins. Store sales are decreasing, and that’s trickling all the way through to EBITA and return on investment capital within retail and within CPG. “It is a real challenge for the industry, which is why you see a lot of pivoting and a lot of diversification,” he said. “It’s going to continue to create a lot of pressure back on the channel on packaging, in terms of cost effectiveness, in terms of making sure packaging is really enabling a brands’ narrative and all the elements of that that are required.”

    What does this mean for packaging producers?  Quite simply, they are going to have to be more agile–they have to do more with their existing machinery by increasing throughput, perhaps through automated parts handling.  Or, they have to do more with their existing production-floor footprint, which tends to favor conversion to digital product-marking due to quick changeovers and the ability to run many skus on one machine.  Or perhaps they should opt to decrease unit costs, which again tends to favor industrial inkjet solutions since there are no clichés or negatives as there are with traditional contact forms of product marking, no wasted ink in inkcups at the end of the run with inkjet, and very little ink per part.

    Rapidly Changing Consumer and Customer Preference

    As discussed in greater detail in Part One, Feber identified rapidly-changing consumer tastes, preferences, and expectations as a trend driving change in the packaging industry.  “If you walk into a big-box retailer or Walmart or a big grocery store, you tend to see 10 to 15 different products on the shelf of a given category. When you go to Amazon, you can see up to 2,000 different products in a category. And it’s really feeding this consumer desire for variety and customization. What you’re seeing is that the world’s changing, and consumers are desiring more,” said Feber.

    Increased Pressure on Sustainability

    For the first time in a long time brands are making serious commitments to make a difference, said Feber, and the consumer perception in this area has grown almost exponentially in terms of how frequently sustainability is mentioned. As a result, Feber said, regulations have continued to grow fairly rapidly across the world.

    Over the past 12 to 15 months, public awareness of plastics leakage into environment has increased significantly to an all-time high. “This is one indicator of what’s really driving a lot of the sustainability sensitivity across the industry and across the world,” Feber said. “This is really going to create unprecedented change.”

    Inkjet printed cosmetics packaging.

    Notwithstanding the challenges facing the packaging for CPG industry, all is not gloomy, as another McKinsey report suggests, and as we feel also, given the exciting applications we are building in our facility.  Despite narrowing margins in the CPG industry, certain product categories are projected to grow at twice the rate of overall consumer spending, according to the report’s authors.   The authors singled out anti-aging creams and mineral water as particular standouts.

    Furthermore, the authors point out, a more granular perspective on geography yields micro-markets with aggressive growth forecasts, an environment that lends itself to digital inkjet product-marking solutions due to the ability to carry lean inventories, to produce just-in-time when and where needed, and to customize products at end-of-line stage, allowing for variation based on regional tastes and preferences.

    “Partnering with players down the channel is more important than ever. What it really means is finding the right partners within your customers’ businesses to partner with.”

    —David Feber, McKinsey & Company

    “Number one is the investment in R&D and innovation,” Feber said. “Some of these products change very fast, but most of them have a very slow adoption, given risk aversion to change and high volumes, and if you’re on the machine side, it’s painfully slow because all of those are magnified. So the time to start innovating is now and to push your companies to think about where you should be spending your innovation dollars.”

    Second, is to create more agile processes to adjust to SKU proliferation. A lot of packaging companies are set up for efficiency and high throughput, Feber notes, but the world is slowly changing to a lot more customization and SKU proliferation. So companies are going to need to be more agile and more flexibile to play in these spaces.

    We hope you enjoyed this brief look at digital inkjet and the packaging for CPG industry.

  2. CPG Roundup: Latest Printing Trends in the Consumer Packaged Goods Industry (Part 1)

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    CPG packaging

    Cosmetics containers are one example of CPG packaging.

    The Consumer Packaged Goods industry provides a good illustration of the challenges and rewards associated with converting from analog to digital product decoration and marking.  Over the course of a two-part series, we plan to look at the challenges companies face in the marketplace and some of the solutions that digital inkjet adoption can provide through its ability to provide quick changeovers, short production runs, mass customization,  and lean inventories.  Part 1 will look at consumer trends that favor digital inkjet adoption, and Part 2 will look at supply-side challenges that drive adoption of inkjet product-decoration and -marking solutions.

    But first, a few definitions.

    What are Consumer Packaged Goods?

    Consumer Packaged Goods (CPG) is an industry term for merchandise that customers use up and replace on a frequent basis. Examples of consumer packaged goods include food, beverages, cosmetics and cleaning products.

    Imagine, if you will, that over the next decade the world will gain an additional 81 Procter & Gambles or 458 equivalents of Kellogg’s. This is the sort of growth that will happen in the global consumer-packaged-goods (CPG) sector, which will nearly double in size—to $14 trillion—by 2025, from $8 trillion in 2014.

    — McKinsey & Co.

    According to McKinsey & Company, the Consumer Package Goods Industry is poised to nearly double in size by 2025.  This has tremendous implications for the direct-to-shape industrial product-marking industry, and this blogpost will look at some of these implications.

    Already, digital inkjet is making its mark in the CPG industry, though not to the same degree in each sector.  For example, the cosmetics industry has seen digital adoption only in fits and starts, according to Cindy Cooperman, VP of Brand Global Strategic Accounts at X-Rite, a manufacturer of color measurement and management products and frequent consultant to the cosmetics industry. 

    cosmetics container

    Another example of CPG packaging

    According to Cooperman, early attempts to harness the power of digital inkjet printing for packaging focused on personalization, but did not heed what consumers were clamoring for.  Early examples of packaging personalization centered on marking products with the end-user’s name, but In Danaher Product Identification’s latest study, Packaging and the Digital Shopper: Expectations in Health and Beauty 62 percent of shoppers did not see a value in health, beauty, and personal care items personalized with their names.  However, according to the survey, respondents did see value for products specifically customized for their skin or body type with personalized instructions; 22 percent of shoppers said they are highly likely to purchase or would like to see more customized products.  Cooperman cited mis-aligned consumer expectations regarding speed-to-market as a major stumbling block to wider adoption of digital inkjet for packaging. For instance, consumers expect packaging changes to take a mere 24 hours, but brands take 198 days to implement them (Source: Keypoint Intelligence).

    “The premium personal care segment, which makes up 26% of the category, is growing at 8% while the total category is growing at 2%. On the beverage side, we continue to see growth from the premium beer category, as well as consumers trading up from mass beers to higher dollar wine, spirits and flavored malt beverages.”

    —Michael Mapes

    Forbes magazine looked at broad consumer trends and how the CPG industry can take advantage of them by converting to digital inkjet solutions.  In an interview with Michael Mapes, the CEO of EXAL Corporation, the largest manufacturer of aluminum containers in the Americas, Forbes contributor Jeff Fromm discussed three major trends currently shaping the CPG industry. First, says Mapes, consumers are choosing premium products across product categories, but particularly in the personal care and beverage spaces. Industrial inkjet product-marking solutions provide the premium experience with vivid package designs that are also “greener” since they use fewer raw materials—including energy—further enhancing the perception of premium value.

    “The data supports that not only are consumers looking for sustainability claims, they are also voting with their wallets,” says Mapes. “Sustainable products grew at four times the rate of products without a commitment to sustainability. A McKinsey study showed that 55 percent of consumers are willing to pay 15 percent more for sustainable packaging, and Nielsen reports that 66 percent of all consumers are willing to pay more for sustainable brands. Consumers are inspecting product labels for sustainability claims and supporting the brands that are sustainability focused–even if it costs them more.” In short, it can be a “win-win” for packaging producers: cut costs and command a higher price for goods sold.

    The third trend that Mapes identified in the cosmetics industry is convenience, developments such as recloseable packaging, thin-film packaging, and sprays.

    In sum, these three consumer-driven trends—the demand for premium quality, sustainability, and convenience—can all be addressed by converting from more traditional forms of packaging-decoration to digital inkjet.  And these three trends are most pronounced among the Millenials, already the largest consumer group in history. According to Nielsen, Millennials are the most willing cohort to pay more for sustainability, at 75% vs. 66% of total population. “Brands that are successful with Millennials today truly understand that the package should be considered part of the marketing spend,” says Mapes.  “Packaging is the first thing the consumer sees when they pick up the product off the shelf. No other marketing spend can impact a buyer at the moment of truth in the store and throughout the life of a product. According to Nielsen, approximately 60% of decision making happens at the shelf.”

    We hope you enjoyed this look at consumer trends driving change in the packaging for CPG industry.  Be sure to read Part Two of this series, which will look at microeconomic trends within the CPG industry, the challenges packaging producers face in light of declining margins and increased competition for shelf space.