Recent research on trends in consumer packaged goods (CPG) show there is significant interest by both manufacturers and consumers for more sustainable packaging. This is not a one-dimensional issue of simply upgrading unrecyclable plastic, for example. Packaging for sustainability impacts and is impacted by several other trends, all of which require thoughtful response from CPG companies.
The shift in consumer behavior is especially apparent in the massive increase in CPG sales via e-Commerce. According to industry consultant
firm McKinsey, eCommerce achieved the equivalent of 10 years of growth during just three months in 2020. Rarely was the phrase “porch pirate” heard until the pandemic.
Traditional retail channels require packaging that informs or entices the customer. Such packaging is not necessarily needed in e-Commerce, where the sale has already taken place. The unintended consequence of this channel shift is the rise in products damaged (from ill-suited product packaging) when being shipped direct to the consumer.
Products shipped to retail stores go through a relatively ‘low-touch’ journey. These products ship in full cases on trucks and are offloaded in a store and placed on the shelf by store personnel or a representative of the vendor. The e-Commerce channel, on the other hand, is extremely ‘high-touch’ and can be rough on packaging. Not only is the product not adequately protected, but e-commerce consumers find it frustrating to be throwing away all that excess unneeded packaging designed more for a retail shelf environment than shipping.
Designing packaging suited for a more arduous logistics journey is critical and, eventually, will lead to a circular packaging economy. But this challenge is not simple.
“There has been limited progress … on reducing the need for single-use packaging altogether,” notes the Ellen MacArthur Foundation in a report on sustainability entitled The New Plastics Economy: Reuse Rethinking Packaging. “Progress on shifting toward reusable packaging is limited, and elimination efforts remain focused on a relatively small set of materials and formats.”
The MacArthur study also comments on the economics of collecting, sorting and recycling packaging. Only 14% of plastic packaging is collected for recycling; 86% is either incinerated, sent to a landfill, or lost through “leakage.” The Foundation notes that Extended Producer Responsibility (EPR) is a proven way to secure the costs of collecting, packaging, sorting, and recycling packaging, but is seldom used.
The study also says the replacement of 20% of single-use plastic with reusable alternatives offers an innovation opportunity worth at least $10 Billion. The report sees six key areas of high innovation potential:
- Cut costs: Packaging and transportation costs can be reduced by supplying refills for reusable containers in compact form.
- Adapt to individual needs: Individual needs can be accommodated by reuse models that let consumers mix and match flavors, for example, or offer personalized packaging such as variable product quantity.
- Optimize operations: Economies of scale for distribution and logistics can be achieved through sharing reusable packaging across brands, sectors, or wider networks.
- Build brand loyalty: Brand loyalty and customer retention can be achieved through deposit and reward schemes for reusable packaging.
- Improve user experience: Enhance the look, feel, and functionality of reusable packaging. Costs can be higher to produce this kind of packaging, but the reusability lowers total cost over time.
- Gather intelligence: RFID tags, sensors, and GPU tracking can gather information on consumer preference.
To do what has not been done before requires companies to change how they approach the entire issue of creating packaging. Companies need to revise business models, retrain design and engineering teams to think in terms of circular design principles and sustainability, product lifecycle and circular economies, while investing in technology to support these new initiatives.
Research from IBM and the National Retail Federation (NRF) say consumers will pay a premium for five specific attributes of the sustainability agenda: “Clean” products; products that simplify daily routines; products with organic ingredients; recyclability; perception of being sustainable or environmentally responsible. All of these are as relevant to packaging as they are to the product. Eight in 10 respondents to the IBM/NRF survey said sustainability is “essential” for them.
One new technology gaining traction in manufacturing will also have a significant impact on improving CPG packaging sustainability, the virtual twin. In product development, virtual twin is a 100% accurate representation of the physical instantiation of a part or a product. In the CPG industry, the virtual twin can be the product, the packaging, and a representation of the supply chain. Real-time visualization of the CPG product ecosystem provides a single-source dashboard, making it easier to spot shortcomings and issues. CPG dashboarding can include data from consumer behavior as well as suppliers and formulation.
Virtual twin technology can benefit concept/design; material selection; virtual testing; consumer context; and LCA analysis. Having the twin as the single source of truth for a project gives all team members (including the extended team of shipping), access to the same information and equal ability to contribute valuable information to the project. A package’s entire circular journey can be planned and validated before a single unit is produced.
From happier consumers to well-run logistics, sustainable packaging suited to its purpose touches every aspect of CPG growth. Progressive companies already are using the latest technologies to research, design, formulate, and manufacture packaging with sustainability and suitability as core strategic values.
Join Dassault Systèmes at PACK EXPO Las Vegas and Healthcare Packaging EXPO 2021 taking place September 27-29. Stop by Booth #SU-8345 and SU-8444, and learn how to design, validate and make sustainable packaging faster – with the virtual twin. Register here and receive a free exhibition pass from Dassault Systemes.
To learn more, watch our video; Creating Sustainable Packaging with Virtual Twin Technology, or download our e-book called A New Vision of Sustainable CPG Packaging.