In the developed world, overall demand for consumer goods has been relatively static. However, demographic changes (e.g., decline of the nuclear family, increase in average age) and increased market share competition between established FMCG producers has required innovation on the packaging side.
This has seen the introduction of a number of new developments in recent years, for example:
1. Convenience features such as resealable packs, easy-opening and stand-up pouches.
2. Smaller pack sizes for single-serving and on-the-go use.
3. More promotional packs and brand extensions to maintain customer loyalty.
4. More eye-catching and colorful designs to enhance brand awareness and to stand out on the shelf.
From an operational perspective, this means packaging producers have to be able to deliver new shapes, use new materials, print more colours, in greater definition and deliver short-run lengths economically. These capabilities require investment both in new capital equipment and training. Packaging companies that don’t invest in the right technologies and capabilities are at a competitive disadvantage.
But this alone is insufficient. The real driver of innovation is the ultimate end-market consumer, which means that packaging producers have to have well-developed and collaborative relationships with their customers, who are closer to the end consumer.
Thus it is the relationships with the product development teams of end-market facing firms and how this is fed into the manufacturer’s own R&D programs that are a key indicator of future profitable growth. For example, the best consumer packaging businesses will have multi-year visibility of FMCG product programs, what role they will play and what investment is required. They will also probably be active collaborators in the development of new consumer products, rather than just a supplier asked to quote on a final packaging design.