US$ 26 BN
"Brands that have prioritised packaging in their marketing spend have been especially successful in appealing to millennials-the most influential consumer group"
Over the course of the last decade, the role of packaging has evolved from being merely to secure goods and facilitate transportation, to acting as a differentiating factor for brands. Brand owners are aggressively investing in packaging, with key focus on sustainability, premiumisation, and customization.
Future Market Insights surveyed leading CPG brands to understand their spending patterns related to packaging. More than 3/4th of these brands were keen to increase spending on innovative packaging formats, with an average increase in spending of 8%-10%, over the next couple of years. Realizing how critical packaging is for their brands' success, they are looking to quickly capitalize on this latent opportunity of amplifying sales and maintain profitability in this highly competitive landscape.
Conceptualisation through implementation is becoming increasingly arduous, with exponential rise in demand for personalized packaging to allure consumers. Achieving right sizing and material downgauging, while maintaining aesthetics continues to be a critical challenge for most packagers.
Packagers are increasingly focusing on creating a perfect balance between innovation and differentiation, to offer premium and personalised, yet sustainable solutions. In addition to this, established packaging manufacturers are making efforts to help brands in connecting with consumers beyond just the point of purchase. The 'perfect package' needs to tick the following four checkboxes:
Out-of-the-box Solutions for Out-of-the-chart Growth
Going Green to See Green
Click to Customize
Luxury translates to Loyalty
Success of packagers post-2020 will highly be dependent on how efficiently they incorporate smart technologies in their packages to provide a better consumer experience and maintain product integrity across the supply chain. Thus, the following decade is expected to witness even speedier adoption of smart technologies. Data suggests that consumers are inclined towards smart and intelligent packaging and are willing to pay more for these added features. Manufacturers are providing smart solutions through integration of tags and labels such as QR code labels to make packaging interactive. Contribution of technology has witnessed a gradual surge in packaging formats and would continue along the same trajectory during 2010-2020; however, enetration of smart technology in packaging is poised to reach 10-12% of package cost in the near future. As of today, for every US$ 1 spend on packaging, US$0.08 is the cost of integrating technology to packaging. FMI estimates this cost to increase by 50% in this decade.Source: FMI Analysis, 2020
Proliferation of internet of things (IoT) has seen its impact in packaging as well, with integration of IoT in packaging showing promising results. For instance, the launch of Near Field Communication (NFC) bottles by Malibu enabled the brand to add brand information in its caps. As packaging gets more interactive, so does demand for smart and intelligent packaging. As per a recent report published by FMI, the next-generation packaging market is estimated to be valued at US$ 18.5 Bn in 2020.Source: FMI Analysis, 2020
The popularity of smart packaging is increasing in consumer goods and logistics services, owing to high information communicating, reliable, and protective packaging systems. The smart packaging industry has more opportunities in the market in terms of end users and new product development. Increasing focus of various players across industries on prevention of product tampering and curbing counterfeiting will offer promising growth prospects to smart packaging in the foreseeable future.
Some other manufacturers have taken a different road to achieve customization, in which they incorporate sustainable materials to create packaging formats. This is primarily done to appeal to consumers who make their purchase decisions with sustainability in mind. After rigorous research and several experiments, packaging manufacturers have developed paper-based formats that can replace plastic packaging. Brands operating in different end markets are adopting these environment-friendly solutions. These brands are teaming up with packaging giants and putting their resources and expertise together, to introduce highly customized, differentiated, and viable packaging solutions for their products. As a result, the share of sustainable packaging has witnessed a steady increase in the packaging pie.
Carlsberg Group, unveiled its Green Fibre Bottle, developed by Billerudkorsnäs and Alpla. Other leading beverage companies such as Coca-Cola and Absolut have gotten on board the sustainability bandwagon, with their own iterations of paper bottles. This has created new avenues of growth for customized packaging which is sustainable, as liquids are often considered difficult to contain in paper.
Recently, Mondelēz International launched its Cadbury Energy bar in 100% recyclable paper packaging, as part of an exclusive trial in New Zealand. This trial is focused on testing the effectiveness of paper packaging, as unlike
most other paper-based food wraps which have a thin plastic film to protect the product, Cadbury Energy paper acts as the barrier to protect food and ensure freshness. The company aims to achieve 100% recyclable packaging by 2025 and drastically reduce its waste levels.
In a similar effort, leading French cosmetic company, L’Oreal, introduced paper-based bottles and paper-based tubes developed by Albea, a global packaging manufacturer. These products are aimed at improving the company’s environmental footprint and fulfill its sustainable commitments. Products marketed in such packaging formats are expected to appeal to consumers who prefer to go for "minimal waste" products.
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Small- and medium-scale e-commerce and retail companies are looking for opportunities to favorably position their brands in the global market and maximize sales. According to an independent survey conducted by Future Market Insights to understand consumer sentiments, three out of five people were found to be 'very likely' to notice custom-designed packaging when purchasing through e-commerce stores.Source: FMI Analysis, 2020
In the past five years, several companies, with a software-focused business model, have entered the packaging marketplace. These companies offer integrated and standalone designing, engineering, and production services to their consumers. These players provide online platforms and supply management for designing and conceptualising of packaging. These platforms enable clients to customize every aspect of packing, from different shapes and materials, to varying sizes.
Companies such as Lumi Inc., Packhelp sp. zo.o., and Packlane, Inc. provide bespoke solutions to end-user companies, at low cost and short lead time, while ensuring optimal quality. This software-based model is gaining significant traction, and is increasingly becoming popular amongst small-scale brands.
In December 2019, most of these companies received majority of traffic from search engines; this implies that numerous searches are being made for packagers who provide customized packaging solutions. Around 30% of traffic was through direct website visits, meaning brand-owners are aware of these platforms and are willing to experiment with unconventional formats and styles.Source: FMI Analysis, 2020
Several capital investment firms are investing in these budding players to grab a bite of this highly lucrative pie. Thus, the global personalized packaging market is poised to have a positive outlook and reach nearly US$ 38 Bn by 2025.
Mainly based out of Europe and the U.S., these companies are redefining the world of personalized packaging by bridging the gap between consumer and packaging manufacturers. Stalwarts in the packaging industry will need to diversify their product offerings significantly to compete with companies with such a focused consumer base and a wide array of customization that they are willing to offer.
The appetite for luxury goods is growing significantly across the globe as consumers are willing to spend more on the luxury experience. The luxury segment is no longer restricted to just a handful of consumers with deep pockets, and now includes the higher middle class as well. This makes it a highly lucrative segment, which is now being targeted by manufacturers, who, until recently, focused mainly on the large economical products segment.
Packaging plays a pivotal role in providing consumers with a well-rounded luxury experience. Brands are leveraging packaging as a medium to not just differentiate their offerings, but are now also leveraging as a highly effective medium for marketing. Furthermore, the trend of “unboxing” videos has exposed packaging to new audiences through social media. Luxury brands are working with packaging companies to develop personalised solutions to increase consumer engagement. This rising preference for one-on-one engagement is anticipated to bolster growth of the luxury packaging market in the years to come. Paperboard is projected to account for the lion’s share amongst all different materials used for luxury packaging, due to the consistent push for sustainability.
Premium brands in the alcoholic beverages market such as Glenfiddich and Glengoyne offer custom labels, with personalized messages for gifting purposes. Several jewellery manufacturers are opting for bespoke shapes and sizes by partnering with manufacturers of bespoke packaging such as Keenpac. Cashing in on this new trend, paper-packaging giants such as DS Smith, WestRock and Billerudkorsnäs are also offering custom products to improve their stand in the market.
Customised packaging revenue is generated from sales of packaging products/formats used for 'made to order' unique packaging designs. The global customised packaging market was estimated at US$ 26 Billion in 2019 and is projected to register a growth rate of 6% through 2029. Rigid boxes are creating a buzz in the global market, attributable to rising demand from e-commerce and retail sectors for sustainable packaging solutions. With advanced packaging and the presence of leading personal luxury goods companies, Europe is leading the customized packaging market in terms of manufacturing and demand generation. The adoption of high-end printing technologies and minimisation of production lead times are expected to be key trends in customized packaging.
US$ 26 BN
E-retail companies are partnering with packaging manufacturers to offer personalised packaging options. Packaging manufacturers are expanding customised packaging manufacturing capabilities to fulfil demand for customised packaging. The primary focus of manufacturers is on secondary packaging for improving shelf visibility of products.
Growth of the packaging sector in East Asia is expected to continue at an annual rate of 6% - 7% through 2025. This growth will largely be driven by the luxury spending of Chinese consumers.
Attributable to high local consumption, Europe is estimated to remain a strong market for customized packaging in the years to come.
South Asia remains a largely untapped market, with tremendous potential. The recent past has witnessed a spurt in luxury spending in the region, augmented by flourishing middle class with high purchasing power. To leverage this latent potential, packaging manufacturers can expand their distribution network and production capabilities in the region
"The key to bridging the gap between consumer expectations and brands is to provide packaging solutions that appeal to the consumers and offer them a premium experience. The industry will need to evolve from a one-size-fits-all approach to personalized packaging solutions to ultimately meet consumer demand."
Companies are projected to offer custom products and aim to provide sustainable and lightweight packaging materials. Small scale packaging manufacturers operating in regional markets can reap rich rewards from persisting with unique customisations in packaging. The larger packaging players would be placed favourably to venture into this space by leveraging their financial and technological strengths. Premium products, integrated with smart technologies would be more in line with the strategy adopted by heavyweights in the market. An inevitable wave of market consolidation awaits in the not too distant future, with packaging giants acquiring smaller players with unique offerings and loyal customer base, in turn, putting together the 'perfect package' for consumers.
The packaging division at Future Market Insights provides an in-depth historical analysis and projections for the next ten years and covers the competitive landscape through a unique dashboard view.
Ranging from packaging materials, packaging machinery to packaging designs & formats, Future Market Insights has an exhaustive database for these industry
verticals, serving clients with unique research offerings and strategic recommendations. With a repository of 1,000+ reports, the team has analyzed the packaging industry comprehensively in 50+ countries. The team evaluates every node of the value chain and provides end-to-end research and consulting services; reach out to explore how we can help.
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Future Market Insights (FMI) is a premier provider of syndicated research reports, custom research reports, and consulting and advisory services. Our complete packaged solution blends current market intelligence with future market trends to deliver valuable growth insights. We provide research services at a global and regional level with a core focus on emerging economies that include the GCC, BRICS, and ASEAN countries. Our offerings cover a broad spectrum of industries such as automotive, electronics, ICT, semiconductors, retail, food and beverages, chemicals, materials, energy, mining, oil and gas, and industrial automation and equipment. We ombine our knowledge and learning across multiple domains with our data analytics capabilities to provide the perfect solution for our clients.