Defining the new normal of packaging beyond COVID-19 (Part 2)

This blog is a continuation of the discussion around megatrends in packaging that are expected to emerge as a result of the COVID-19 pandemic. We covered two trends in Part 1 – sustainability and e-commerce packaging. This blog explores three more.

3. Consumer preferences

Consumer are seriously cutting back on spending on non-essentials. Also we find customers buying on bulk in fear of future lockdowns. In terms of categories there is a stronger consumer focus on essentials, both up- and down-trades, and a strong pull-back of discretionary spending. There are also signs of consumers returning to larger, more well-known brands. Within channels, there is a significant shift to online shopping. Longer terms, consumers are expected to shop from the comfort of their homes ostly.

Within households, where more people are spending time indoors and working from home, thereby leading to more meals being cooked and hence more cleaning up required, families are found wanting to use disposable plates, cups, bowls and trays to save time and effort. At Ecoware, we see this happening on a very large scale in the form of massive uptick in small-value orders coming from individual households all across India. For example, on Amazon, we receive approx. 300-400 orders every day for a 100 piece plates + bowl set which will normally lasts a family of 6 a full month. In many of these households, domestic help is also unavailable or restricted, increasing the demand for disposable tableware.

Potential impact of changing consumer behavior on packaging expected to be medium to high.

4. Local Supply Chains

Nobody wants to be caught off guard again. More and more multinational companies are realigning their supply chains to be less global and more regional. Packaging converters with global sales and, more important, raw-materials suppliers must explore how they can develop a regional supply chain (possibly through co-location with customers) as well as greater vertical integration. Their aim will be to increase the flexibility and resilience of packaging production, and, among other goals, to create transparency for customers regarding stock levels and backup plans for supply. At Ecoware we are blessed to locate our manufacturing facility close to the source of raw materials. All our raw materials come from withing a 500 km radius of our facility. We certainly do not import. On sales side, we have been successfully in filling the void created by Chinese imports into Middle East and southern Europe. Customers located here have identified and accepted the advantages of sourcing from regions such as India which are both geographically and culturally closer than countries in east Asia.

Potential impact of using local supply chains on packaging expected to be medium.

5. Digitization

A further consequence of the pandemic is an expectation that all parts of the value chain will become more digitized, to reduce supply-chain and production risk. We also expect more automation, AI, and remote support to drive productivity and result in greater resilience.

By bringing big data to the supply chain, companies are able to better understand the chain as a whole – particularly if incorporating blockchain and thus increasing trust in processes. Moreover, the potential benefit to the consumer, even setting aside cost savings from efficiency increases on the part of manufactures, could be hugely important given current consumer desire for increased transparency. If companies have more information on the supply chain, they are not only better able to catch any problems before they develop too far, but can pass that information on to the consumer to assure them of the trustworthiness of product and company alike.

Potential impact of digitization expected to be low to medium.

Source: McKinsey & Co.

Image Credit: recyclingtoday.com