In the late 1980s, the dawn of “mass customization” began the shift from producers driving the global economy to putting the consumer in the driver’s seat. Twenty-five years later, the global processing and packaging markets are dictated by consumer trends, according to "Global Packaging Trends," a new report from PMMI, The Association for Packaging and Processing Technologies.
Produced by Euromonitor, the report shows three influencers — increasing disposable income and purchasing power, a growing awareness of health and wellness and environmental responsibility — making a mark in each of six regions: Asia Pacific, Western Europe, North America, Latin America, Eastern Europe and Middle East/Africa.
"These trends are affecting packaging because they're driving consumers' purchasing choices," said Jorge Izquierdo, vice president of market development for PMMI.
Although the report looks forward through 2019, one must look back in time to identify the rise of the consumer.
When Henry Ford’s Model T was parked in the driveways of so many American households, producers of news products drove the economy. The cost was the driver, with standard designs competing on price and customized products offered only at a premium. That was true across all markets as food, beverages and even package types grew into commodities.
Today’s modern consumer, however, is highly educated on cost and price. The Internet has opened new avenues of accessibility to the valuations of materials, overhead and the overall processing and packaging supply chain. With this knowledge, consumers can push the industry to meet their demands.
As countries emerged from the global economic crisis, moderate job growth and rising asset values began to drive increased spending. Disposable income has increased, meaning a larger proportion of the global population has access to products that were previously unaffordable.
Price pressure from the food and beverage sectors is forecast to be the highest of any industry in the coming decade. A large proportion of food and beverage sales are through large retail outlets such as Wal-Mart and Target or club stores like Costco. These retailers have formidable purchasing power. Each retailer has the ability to request differentiation on products and product packaging – and they’re taking full advantage. In turn the consumer is requesting new assurances, whether it be healthier organic produce, prepackaged meals or short shelf-life natural juices.
In the food and beverage industries alone, the landscape is wide open, as SKUs have exploded from dozens of items to thousands of items, and the cause is directly tied to the continuing evolution of mass customization.
Urbanization is also driving mass customization. The world continues to urbanize at a steady pace, driven both by rural migration to cities in the developing world and re-urbanization in the developed world.
Already, more than half of the world’s population lives in densely populated urban areas. By 2050, the United Nations projects that 64 percent of the developing world and 85 percent of the developed world populations will live in cities.
For the first time in a century, the largest American cities are growing at a faster rate than the suburbs. Millennials are flocking back to the urban environments that Baby Boomers fled in the 1950s and 1960s.
Urbanization creates many challenges. Urban retailing typically involves larger numbers of smaller stores, and urban consumers may purchase smaller quantities per trip due to lower storage capacity in urban dwellings. Vehicle ownership rates are lower in urban areas, increasing demand for home delivery of goods and driving e-commerce. Urban areas also tend to have more diverse demographics, creating demand for a higher variety of products.
"Recyclability and reusability of packaging are dominant trends, and we're predicting that will continue to be seen as PET and glass bottle usage increases," Izquierdo said.
Packaging markets in the Middle East and Africa are anticipating 5.3 percent CAGR growth in volume, but forecasts for Western Europe and North America land at the other end of the spectrum, with 0.4 percent and 0.5 percent, respectively.
The expansion in the Middle East and Africa is the result of increasing exposure to modern lifestyles and is manifesting in growth opportunities for a variety of products. In Asia Pacific, forecast for 4.3 percent CAGR increases in volume, the increasing demand for PET bottles, particularly in the bottled water category, supports health and wellness concerns.
North America, on the other hand, is a mature market, but consumers are developing growing interest in several categories. These include both healthy categories and areas of innovation.
Worldwide, PMMI’s “Global Packaging Trends 2015” report notes flexible plastic remains the dominant pack type, accounting for 29 percent of the market, while PET bottles (12 percent of the market) will be among the fastest growing, with 4.7 percent CAGR. Bottled water is expected to add 135 billion units through 2019, accounting for 54 percent of the absolute volume growth in PET bottle use. While beverage packaging drives growth in PET and glass, food categories prop up flexible packaging use.
PMMI’s most recent shows, Pack Expo Las Vegas and Pharma Expo 2015, brought together more than 2,000 exhibitors and nearly 29,000 attendees. It includes more than 40 vertical markets.
The next show will be Pack Expo International, scheduled for Nov. 6-9, 2016, at Chicago’s McCormick Place. PMMI market research revealed a food and beverage industry desire for a comprehensive processing event showcasing crossover technologies from multiple vertical markets — similar to Anuga FoodTec, but in North America.
ProFood Tech, debuting April 4-6, 2017, at McCormick Place, is a collaboration of three trade show powerhouses: PMMI; Koelnmesse, known for Anuga; and the International Dairy Foods Association (IDFA). Organizers are projecting 150,000 net square feet of exhibit space and more than 400 exhibiting companies. For more information on these trade shows, visit www.packexpo.com.
– Sean Riley is the editorial director for PMMI, the Association for Packaging and Processing Technologies
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