Brand owners ramp up packaging spend to improve sustainability

24 November 2021 3 min. read
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Consumer packaged goods brands spent more on packaging over the last two years – and new research suggests they will increase spending in the next two years. While eye-catching graphics are at the heart of this push, sustainability concerns are also becoming a leading cause of packaging spending.

Land-origin plastic pollution has both severe economic and environmental impacts on the world, its people and businesses. Plastic pollution could be resulting in an estimated economic loss of $19 billion for 87 coastal countries, according to one previous study, while the brutal toll plastics have on ocean ecosystems has been heavily documented – and caused major public outcry.

Indeed, public opinion has turned so far against plastic use that a majority of people would now pay a premium to see their goods packaged in eco-friendly materials. A 74% majority of respondents in one global survey said they would pay more for sustainable packaging.

Changes in brand packaging

With this demand promising major new opportunities for consumer packaged goods (CPG) brands, a new study from strategy advisory firm L.E.K. Consulting has revealed brands are investing in their packaging at an accelerated rate. The majority of companies have already increased spending, but two-thirds of CPG brand owners further expect to increase packaging spend in the next two years.

The most common causes for this heightened spend are presently graphics and packaging size. In 11% of cases, spending was linked to graphics and printing changes in the last two years – with eye-catching rebranding hoping to better catch consumers’ eyes during lockdown. At the same time, packaging size was a leading factor for a further 11% of cases – as by investing in new technologies, packaging size could be reduced to enable long-term savings when it came to procurement of needed materials, and the distribution of products.

However, most responses pointed toward the number of firms investing on these fronts holding, or falling in the coming two years. The only motive to see a boost, in contrast, was sustainability. Rising from 8% over the last two years, 9% of respondents said they would be spending more to increase the share of packaging that is sustainable.

Actions take on primary brand regarding sustainable packaging

Looking more specifically at this, L.E.K. found that from a base year of 2019, by 2023, respondents expect a 36% boost to the share of packaging that they use. Meanwhile, a growing number of brands indicated that 100% of their spend would go toward sustainable packaging in the same time-frame. While around 10% of firms indicated as much, meanwhile, two-thirds said that spending on sustainable packaging would take up at least 40% of their spend.

The most common type of action implemented to this end in the last two years was “switching to material that is able to be recycled.” However, L.E.K. indicated that brands are finally broadening their drives for sustainability. In the coming two years, the largest number of firms will design their packaging to be recyclable, and decrease the amount of material types used in packaging to increase their re-usability. Meanwhile, one-quarter of brands will look to use post-consumer recycled material itself in the creation of their packaging.

“There’s a major opportunity for packaging converters and investors to partner with brand decision-makers, understand what their challenges are and deliver value-added solutions,” said Jon Moss, Senior Engagement Manager at L.E.K. and coauthor of the report. “Practically speaking, these solutions can take many forms and some providers may need to build or acquire new capabilities to complement existing ones.”