/ By Karan Mudliar / Blog • Uncategorized/ • • • / 1 Comment

Paper & Paperboard Packaging Market – Trends & Forecast

Paper packaging has been around for very long time. From simple brown bag and cardboard box cartons to much sophisticated waterproof paperboard boxes for Chinese takeaway, paper packaging has come a long away. As eco friendly packaging has started gaining momentum, paper has come back in limelight due to its bio degradability. However that is not the only factor driving the increase in consumption of paper based packaging. Social changes and technical advancements are equally playing their role in determining the direction of the paper packaging industry. Let’s take a look at some of the key trends emerging in paperboard industry.

 

  1. Social changes in developing countries. Most of the educated population in developing countries is moving onto more qualified jobs leading to higher disposable incomes. They are replacing the traditional meals with more modern processed, frozen and packaged foods. As these economies continue to grow, this changed trend in eating habits will continue to grow. There is a trend to move from unpackaged goods to industrially packaged goods. Both of these will lead to increase in consumption of paperboard packaging material. The migration of rural population to urban areas continues to rise. With this the migrant’s consumption patterns also change to consume more packaged and processed food and industrialized goods. Overall, the social changes are leading to higher consumption of packaged goods in both the developing and developed countries. Paperboard being at fore front of retail packaging will continue to see rise in demand across the sectors.
  2. Food delivery on rise. Recent trends show that millennial generation prefers to order take-away instead of going out to dine, to avoid the hassle involved with going out (traffic, parking etc). A study showed that more than 30% of Americans order food deliveries twice a week. With new third party delivery options, even the dine-in restaurants have started providing home delivery options. Because of this the food packaging sales will increase in general. Another interesting factor that has come to forefront due to myriad options for food delivery is the packaging style. Instead of simple boxes, the ‘healthy fast food’ providers, the ‘gourmet food home delivery’ providers amongst others are using customized packaging in forms of tray style packaging with built in partitions for various side dishes for the convenience of the user. It is this customized packaging that will see the maximum rise in sales.
  3. Balance sustainability and productivity. In mature markets, the paperboard manufacturers and are struggling to extract every penny of productivity from their equipment. The improvements in process which they implement extract marginal gains at best. They are now investing in next generation machine that reduce waste and decrease change over times and consume less energy. These not only provide higher productivity, but also reduce the consumption of raw material and have reduced environmental impact as well. To meet the new tighter environmental regulations and changed consumer preference for environmental friendly packaging, the manufacturers are designing machines that use up to 30% less material to produce the packaging material of same strength. There is change from finding balance between the sustainability and productivity, to getting the synergies between the two. Less consumption of material and more effective use of material increase the dollar productivity for the manufacturer and are also more environmentally friendly. This synergy will redefine the way packaging industry works and does business.
  4. Recycled Vs Virgin paper issue.  There is a growing concern about disposal of the packaging after its use, especially in the food industry. There is talk of packaging material that has similar life cycle of that of the product it packs and then it degrades or decomposes. However, the issue of contamination of food product with packing remains in such cases. The package must preserve the health of the consumer at every stage. Self decomposing packaging solutions are not yet suitable to meet this requirement. Using recycled paper comes with own challenges. It has host of inks, glues, chemicals and other ingredients which cannot be ascertained unless confirmed by the original manufacturer of original paper product. In such scenario, one can never be sure about the contamination that recycled paper will add to the product. This means that with increasing consumption, the use of virgin paper in packaging will rise in comparison to recycled paper. The researched are working on barrier coating that will prevent moisture and odour from transferring and preserve freshness and aroma of the food. The new nano-materials, antimicrobial barrier coatings will see the limelight in packaging.
  5. Smaller, more practical packaging. As the social structure of the society is changing, the consumption patterns are also changing. Families are getting smaller and smaller. The nuclear families have become the norm. There are now a significant number of households with just one member. Moreover, people are getting more health conscious. They are conscious of the serving sizes and portions that they are consuming. The remaining food is resealed, needing a re-sealable packaging for larger portions. Consumption on the go is also on the rise. (Prime example being coffee and other beverages). This means that portion sizes not only need to be smaller, the packaging needs to be designed to facilitate and simplify eating on the go. Many consumers are willing to pay more for a single serving pack of food. This will give rise to single serving or multi unit packaging (where one unit can be severed from the rest without opening the product). This will lead to interesting controversy. On one side will be the green initiatives promoting less packaging, less waste, less use of material and on the other side the smaller, individual packaging which will require more material and generate more overall waste.
  6. Premium packaging. As consumer gets more sophisticated, the packaging for premium luxury brands require impeccable details, such as better colour and printing and embossing, better strength and texture of the material itself. These will require high grade of paperboard to be used for packaging. With increased spending capability, craft and gourmet food will have increased share in the market, requiring more premium packaging. There will be shorter runs, speciality coating to give superior impression of the product.

 

 

Overall, the Paper packaging industry is set to grow. Be it the environmental concerns or consumption patterns or ease of production, paper is meeting expectation on every front. With the new methods to restrict the transfer of odour and aroma and anti microbial coating, it may well be on its way to replace plastic containers.

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Top 5 trends in Packaging Industry

Consumers today are more conscious and more aware. They care not only about the product they need, but also how using that product is made more convenient for them. And packaging plays a very important role in that. The primary reason of packaging always has been the protection of the product that is being delivered. But today packaging does a lot more than that. Packaging is used as a canvas where the brand communicates with the consumer. It not only attracts the customer, but based on the information that is printed, the material that is used for packaging and the shape and size of packaging; it conveys your brand values to the customer. It tell the customer what your brand stands for, creating a unique impression about your brand, even before your product has a chance to be seen by the customer. Needless to say, packaging in itself has become a key differentiator.  Here are some of the top trends in packaging industry.

  1. Sustainability: Consumers are becoming increasingly aware of environmental issues. They are changing their buying habits to be more environmental friendly. They are increasingly looking for signs on the packaging that manufacturer has a green conscience and increasingly wary of greenwashing. And expert white paper by PWC goes on to explain how sustainable practices have become essential to the perception and identity of the brand. A top sports company has also produced an environmental profit and loss statement highlighting the impact of their sustainable practices on environment, in dollar value. It has become imperative that brands continue to carry businesses based on sustainable practices and also communicate them to the consumer. Sustainability is no longer just an add on. It has become an essential part of the packaging industry. The complete story of where the product comes from, how it was made, is becoming an essential factor in buying decisions of the consumer.
  2. Healthy living: Just like environment, consumers are increasingly adopting healthy lifestyle and practices. They are more conscious of health quotient of the products they consume. In fact there is a whole segment dedicated to products that promote healthy consumptions habits. Packaging is not immune to this. In food and beverage industry, the ingredients’ were always listed as required by regulation. But that is no longer enough. The health benefits of the product also need to be communicated to the customer. Is it organic? It is low in sodium, does have daily dose of essential vitamins that will help to boost the performance while playing the sport? The packaging must focus on communicating the unique benefits of the product and offer transparency in the label. Innovative methods of preserving and displaying fresh food will become the key to long term success. The size of the product, the smaller servings for snacks, which reduce the  intake of sodium, fat and other things to just the required amount, while satisfying the hunger pangs of the consumer will become standard. After all when you are hungry you reach for the box says cookies even if it’s just 2 cookies inside.
  3. Convenience: The way the products are being used by the mobile consumer is very different than how it was consumed at home. The standard box packing of food is not longer suitable for on the go consumption. Be it a beverage, or a sandwich, more and more people are consuming these while walking, or while driving, or when they are simply sitting on the bench in the open park. The design of packaging makes it an important factor in a buying decision is such cases. The smaller, lighter and easily disposable packaging makes the consumption on the go, easier. For other product categories, the ease of transportation and ease of use becomes important factor. Innovations such as dispensers and no mess applicators eliminate the need for additional packaging and make disposal easy. In supermarkets, in food section, many product now coming in reseal able packs. Many producers are moving from plastic to paper based packaging for food items, which is more environment friendly and easier to dispose off. When the competing products are more or less similar, the convenient packing goes a long way in aiding the impulse purchase decision of the consumer.
  4. Cost –effectiveness: This one seems to be a no brainer. However, it has wider connotation than just base packing. Global economic uncertainty is increasing. Consumers don’t want to pay more than what they have to for their goods. And as consumers get savier, they are looking at all costs, the base packing of the product, the transportation, storage and disposal of the packing material. The paper based packaging may look good and meet initial ‘eco friendly’ criteria, but if the consumer needs additional packaging for its transportation and storage, then it’s no good for the consumer. If the packaging is strong and will last longer, much longer than the product itself, again it is of no good to the consumer, if it cannot be reused in some way at home. If consumer is getting his peas in reseal able bags, which he can use for storing other things, after consuming peas, then that’s a very good value proposition for the consumer. The complete cost effectiveness of packaging should be looked at from the point of view of the consumer. After all if he doesn’t purchase the product, the whole value chain is pointless.
  5. Authenticity and trust: There have been several scandals around food industry. Discovery of undesirable meat (eg. Meat of another animal in beef products), Pathogens and foreign elements and inorganic items being sold as organic etc. These deplete the consumer trust for not only the guilty producer, but also for industry as whole.  The origins of the product must be traceable to the source to re establish the trust. Advertising the place of origin on the packaging increases the perception of credibility and authenticity. Packaging should be used to reassure the customer of high quality and truthfulness about product and brand claims.

 

The retail market is changing. Consumers are getting savvy, more eco friendly and more cost conscious than before. They are more demanding on all these fronts. They now understand that the overall cost of the product is not just retail purchase price they pay. Packaging plays an important role to clam the customer and reassure them that the product as a whole will meet their expectation.

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/ By Karan Mudliar / Blog • Uncategorized/ • • • • • / 14 Comments

Myths and Realities of Co-Packing

Co packing, or contract manufacturing in other terms, is generally looked with an inferior eye. It is generally misunderstood that co packing is just a back-end production grunt work with no interest in the business of that product. However, truth cannot be far from this. Co packing is a highly competitive, engaging business that provides a lot of value to its clients. Here are some of the common myths that surround the co packing business.

 

  1. Co packing increases costs: Co packers are focused on manufacturing process optimization. They employ best and latest technology and developments to optimize their processes and reduce the cost involved in their processes. This subsequently means lower costs for their clients.
  2. Co packers do not have expertise: Co packers focus only on Manufacturing and Production of a subclass of a product. (e.g. in food processing, one co packer would specialize in processing of fruit products and a separate one in meat products) All the resources of the co packer are focused towards optimizing their manufacturing processes, increasing efficiency and quality of output and reducing costs and process times. Co Packers usually have the best talent focused on the process.
  3. Co packers do not invest in business: On the contrary, co-packers always strive to have the latest and the best machinery. One of the key differentiator for the co-packers is their technical infrastructure. The more modern and efficient machinery they have, the higher product quality and throughput they can achieve. It is in their own interest to invest in improving their manufacturing processes and they regularly do so.
  4. Co packers do not provide additional services: There is a general impression that contract manufacturers simply manufacture in bulk and deliver the whole bulk. However, reality is that Contract manufacturers provide many value-added services and final packaging is one of them. They provide retail size packing, labelling and collaborate with shippers to transport directly from their premises to distributor and other intermediaries.
  5. Co packing requires management overhead: The management overhead requirement really depends upon the requirement of the client. A good packer would have processes set and optimized, not just for manufacturing, but also for receiving order, raw material procurement, production, packaging, dispatch amongst others (i.e. the management processes). They would have efficient reporting already in place for their management, which is also shared with the clients. Clients gain high visibility into processes related to their products, with these reports. There really is no requirement for any overhead unless you are not confident about copackers processes.
  6. Certifications are irrelevant: Authorities issue the certificates only if the co packers adheres to the stick rules and regulations set by the authority. Certifications such as HACCP, OSHA, ISO 22000 (in case of foods) etc. ensure that there is no hazardous element in the food when it is manufactured. Certifications such as Six Sigma, GMP, TQM etc. ensure that the manufacturing practices followed by the co packer adhere to the best in industry standards. The benefits of all these certifications, which result in safer food, higher product quality and higher consistency, reduced wastage are passed on to the client of the co-packer.
  7. Co packers do not focus on quality control: Co packers are in business of manufacturing. They operate in B2B environment, where the focus on product quality and value gained from the engagement is higher relative to the B2C engagement. This means that the cost and the quality become two key parameters to differentiate on. Needless to say, co packers actually pay extra attention to the quality, simply to stay competitive.
  8. Co packing is slow and time consuming: Co packers or contract manufacturing business is a capital-intensive business. They install expensive machinery which has high fixed cost and limited operating life. It is in the interest of the manufacturer to make the most of their infrastructure to earn profits. Thus, it is in their own interest to be fast and agile churning the products quickly.
  9. Co packing means giving up control of operations: This is probably a myth from days when IT was still evolving. Today with advanced systems and deep integration into systems, the clients can have as much visibility as they desire into their outsourced operations. The limit here is client’s own bandwidth required for the oversight.
  10. Vertical integration may be a problem: Vertical integration, which means seamless transfer of material from one process to another, used to be an issue when the raw material used to go from client’s premise to co packer and the finished product used to come back to client’s premises for further packing and onward delivery. Today, the raw material can be directly shipped and stored at co packer’s premises, processed, packed and shipped to the downstream supply chain point of the client. Co packers, suppliers and logistics providers can be quickly integrated to give a seamless view of the process flow of the client.
  11. Co packers cannot scale up: Co packers are into business of manufacturing. For them growth in scale is growth in business. They keep abreast of latest developments in the field of production. Provided there is a justification for investment, co packer can scale up faster than an in-house manufacturing unit.
  1. You need to manage multiple relationships (vendor, shipper) with co packers: Co packers are not just contract manufacturers. A good co packer will have existing relationships with various other service providers in the value chain, right from raw material supplier to end shipper. If you so choose, the co-packer can work with the suppliers of your choice, or provide you with the option of working with their suppliers so that you have single point of contact for all your end to end needs. The downstream relationships are managed by the co packer himself.
  2. Co packers are only interested in transaction business: Co packers invest heavily into machinery. They like to maintain focus on improving their manufacturing capability, spending less resources on business development. They value long term strategic relationships more than transaction oriented business. Strategic long term partnership is where they can provide best value.
  3. Co packers do not do any research and development: Anyone who needs to stay competitive in any business needs to improvise. R&D is one of the key areas where co packers invest not only to improve their processes, but also to improvise on the products, should their client choose to.
  4. Lowest cost co packer is best co packer: Cost in an important factor, but as any businessman knows, it is only one of the factors of a successful business. Efficiency, quality and consistency are equally and sometimes more important than cost. Low cost product does not necessarily mean the best the best value product.
  5. I and my competition cannot use same co packer: Most co packers work with multiple clients. This helps them increase their utilization, keep the costs low and absorb and evolve best practices in the industry. Co packers are professionals who maintain segregation of not only your product but also maintain the secrecy of your formula from your competitions. In fact, since same machine is used for both, you and our competition the cost actually goes down, if you and your competition use the same co packer.
  6. Large co packers are the cheapest co packers: The general perception that bigger is cheaper is hardly true. Large units need large piece of lands and are located at remote locations. The transportation cost alone can eat up any gains made due to large facility. Further, a large setup needs to have a large number of units made in a single production run, otherwise it is not economical. If your production runs are smaller, the large unit will actually turn out to be more expensive.
  7. Co packers don’t understand the Market: Co packers are heavily dependent on the market environment. They understand that if the market of their client goes down, their business goes down too. So, they keep a constant watch on the markets of their client and also recommend changes and future direction to their clients. It is in their own best interest to understand where the market is heading, to manufacture relevant products.
  8. There’s no need to consider the Co packer in your strategic growth plan: A good co packer, will work with you to define and refine the production process, best suited for your product. He will make investment in his plant to accommodate your growth needs. Sharing and including him in your growth plans, not only helps him to plan his growth, it also provides you the benefits of reliable partner and ongoing reduction in costs.
  9. They are just a co packer: They can be much more than just an outsourced manufacturer. They can take up both upstream and downstream activities in value chain. They can make investment to scale up, as your business grows. They can also provide research and development facilities right next to manufacturing facilities. This makes a lot of sense as R&D can have direct input from manufacturing and vice-verse. You can leave all of these to your co packer, while you focus your energies into your core skills. They can be your true business partner.

 

Co packers add value when a business wants to focus its energies in its core competitive skills and delegate the product manufacturing operations to the experts. In fact, that is how many of the successful businesses operate today. Can you imagine, how Nike would operate if there was no co packing?

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/ By Karan Mudliar / Blog • Uncategorized/ • • • / 10 Comments

Essentials of Packaging Design

You have created a superb product. No doubt it will serve the needs of the customer well but it still needs to reach the customer and it must reach him/her in top condition until it is time to use it. This is the primary function of packaging: To keep the product safe and intact until it is time for the customer to use it. However, it is just one of the functions that packaging serves. An effective packing should do a lot more than just keep the product safe. It plays the following roles to name a few.

 

Function – Packaging should be able to protect your product and keep it safe right from the point of manufacturing, throughout the transit, to your customer’s premises until he is ready to use the product.

Attraction – Packaging should be able to attract your potential customers into purchasing your product. The customer should be enticed to pick your product amongst the available options.

Promotion – The packaging should tell what is being offered and exactly what’s inside. Any information that will help the customer to make his purchase decision should be displayed clearly on the packaging.

Differentiation – The packaging should be unique amongst the comparable or similar products. It should be easily differentiable from the other competitive products.

 

Let’s look at some key points to bear in mind while designing the packaging.

 

Keep it Simple: The packaging should make the decision-making process of the customer easier and simple. The customer should be able to identify your product quickly and easily. If you are launching a new product, then the name, brand, description and other vital information should be easy to read and help in attracting customers.

 

Stand out from competition: You need to attract customers. For that your packaging should be different from your competitors. Scour the market and see how your competitor is packing its products. Figure out what innovation can you use in your packaging. The shape, colour, texture, anything can be used to differentiate your packaging from your competitor’s packaging.

 

Use good quality material: Show that you mean business when it comes to caring for your product. Good quality material conveys a premium image. It says that the product is so good that it deserves high quality packing. Besides this, a high quality material ensures that your product is not spoilt during transit or storage.

 

Enhance user convenience: Will it be better in a bottle or a plastic pouch? Hardcover or soft cover? Think from customer’s perspective. What would be easy for him. For example, if it’s ketchup that you are selling, should it be in glass bottle or plastic squeeze bottle? Remember Harpic? The nozzle design helps in reaching under the bowl’s rim. That’s a great design.

 

Describe the product use and abilities: But do not exaggerate. Never overstate the abilities of your product. If the product does not meet it stated capabilities, it will not only turn away existing customers, but will also turn away future customers. Just state the facts and promise the attainable results. If your product is good the word of mouth publicity will do its work and increase your sales.

 

The text should be legible: The text on the packaging should be large enough to be read clearly. It should be printed in contrast so that it’s easy on the eye. Choose the font, size, colour wisely. These not only help pass the information, but can be used to build a brand image. For food and medical products, the ingredients and expiry dates should be very easily locatable and clearly readable. If your product is packaged in a transparent packing and the product itself is carrying this information, the make sure the product is oriented properly so that the information in clearly visible.

 

Be target specific: Identify who is your customer. Who are you selling to? If your answer is everybody, then you need to do more research. Identify the segment of the market that is your target audience. Design the packaging keep that audience in mind. Just as one product does not work for every segment, same packaging will not work for every segment. It could be the material of packaging, the design, or even as simple as colour combination. So, identify your core audience and design your packaging for them.

 

Provide different packaging sizes: Some like to buy in bulk, others like to buy smaller quantities, because they won’t use it regularly, or like to shop frequently. Perhaps they are travelling and prefer carrying smaller packaging. Others don’t like to shop frequently or are cost conscious and like to buy large quantities. Provide various options of packing sizes to your customers. For example, in shampoos it’s always good idea to provide small 10-20 ml bottles up to 200 ml bottles, so that new customers can try your product and the regulars buy larger bottles.

 

Freshen up your packaging: There is no product that will continue to sell forever with same packaging. Customers are finicky. They get bored quickly. They like to see new things. Keep freshening up your product presentation. Use contemporary shapes, designs and colours. Try to freshen up your brand.

 

Packaging is the first touchpoint your customer has with your product or your brand. While its primary purpose is to protect the main product, it is also a great medium of marketing. There is no reason why you can’t be creative and entice the customer with your packaging. You just need to be creative and know what your customers like to see.