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March 11, 2022 08:31 AM

Sustainability, online shopping drive packaging trends

Jim Johnson
Staff Writer
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    The Kroger Co.
    COVID-19 has drastically changed the demand for online shopping, even for grocery items. Prior to the pandemic, online sales were 2 to 3 percent of the overall market. That number went as high as 17 percent during the pandemic.

    Austin, Texas — Packaging, including plastics, is entering a "new normal" where sustainability and electronic commerce considerations will play an increasingly outsized role.

    "I'd like to make the case that we are entering really a new trend and a new normal," David Feber, a partner at consulting firm McKinsey & Co.'s Detroit office, said at the recent Packaging Conference in Austin.

    "If I could oversimplify and cut up the last 22 years or so into three different sections, I think the first 10 years of this century, it was really about substrate wars. PET and plastic was growing; it was taking share from glass and aluminum in some cases, as was flexible packaging, stand-up pouches. There was a lot of growth," Feber said.

    "The next 10 years we started to see sustainability come into more focus. The big driver in sustainability was lightweighting and downgauging, which was really a cost-reduction play, but also using less, which is good," he explained.

    "We started to see recycled content actually start to be trading at a premium to virgin and put into materials. And we started to see the first types of e-commerce and digital in the grocery category," said Feber, who leads McKinsey's packaging group.

    And then COVID-19 struck.

    "During the pandemic, we really hit two big shifts that hit a tipping point. One was sustainability sensitivity. At the very early part of the pandemic, things kind of went backward where there was a big increase in single-use packaging," Feber said.

    "And then there was a counterreaction and the world stood up and said enough is enough. And we've seen regulation and consumer commitments really at an all-time high. It really is a new chapter. It's not like it has been for the last 10 or 15 years," he said.

    From the Packaging Conference
    NAPCOR: New life cycle assessment shows improved PET numbers
    Sustainability, online shopping drive packaging trends
    Indorama working to increase PET recycling by 2025
    UPS
    Sorting packages for deliveries at a UPS center.

    The other trend is e-commerce in the grocery category. Prior to the pandemic, online sales were 2 to 3 percent of the overall market. That number went as high as 17 percent during the pandemic and has retrenched a bit, Feber said.

    "Right now, it's around 10 percent. But it will settle in around 20 percent of the full category in the next five years," he predicted. "That is super material. It has big implications on packaging, and packaging design will likely drive generally a trend across optimization of primary, secondary and tertiary packaging," he said.

    "So a lot of the way we do things today and how we make it will change for some of these key segments as a lot of brands look at e-commerce SKUs as opposed to what they are doing now," Feber said.

    Brands and retailers still heavily rely on a packaging suited for brick-and-mortar stores. They then ship those goods using protective secondary packaging to help ensure online orders arrive safely. But as more demand comes from online shopping, brand owners will rely more on separately designed e-commerce packaging.

    Another key trend impacting packaging is hygiene, Feber told the conference crowd.

    "The new one that really emerged in the pandemic is hygiene. Hygiene was always important when it came to packaging on the inside. But it's really also extended to the outside of the package. And so we've seen some packaging companies launch antimicrobial coatings for the outside of packaging. This is something we believe will be a remaining consumer concern as we go forward," he said.

    Feber brings a dual view of the packaging world as he previously was an executive at Amcor Rigid Packaging for about eight years between two different stints at McKinsey, returning to the consulting firm in 2017.

    He also told the conference audience that COVID-19 has put the damper on new products coming to market, but he expects to see that change at some point.

    "We've seen a decrease in new product launches across most categories over the last 18 months. Supply chains everywhere have been stressed," he said. "Companies have put the brakes on launching new products.

    "There's going to be this whole catch-up period as we get over the hump of supply chain stress as companies start readjusting," Feber said.

    More from the conference
    Amcor Rigid Packaging leader: PET needs unified voice on sustainability
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