How product differentiation pressures packaging
Here are the many ways product differentiation places pressure on packaging solutions.
Refrigerated and frozen food and beverage producers are continuously looking for ways to improve efficiency and productivity in their facilities. They also attempt to modify the presentation and packaging of food and beverage products to increase consumer appeal and cut storage and distribution costs. That’s why food producers work closely with equipment suppliers to respond to such pressures. Here’s the many ways product differentiation places pressure on packaging solutions.
Price, private label and personalization
There are numerous knock-on effects for packaging equipment manufacturers, including increased importance of price when sourcing suppliers; an increased need for flexible, efficient machinery; increased automation of machinery to reduce labor and associated costs; and an increased number of mergers and acquisitions. This trend is expected to continue, as the retail food market becomes more consolidated and price sensitive.
The food retail sectors have also enabled growth in sales of private label goods. The success of private label has increased supermarket power and pressure on the food supply chain. Many brands have responded by focusing on high-quality products and differentiating their product ranges through modifications to content, packaging and portion size. This drives investment in packaging machinery, as producers modify processes and introduce new lines.
Additionally, consumers are becoming more discerning and more demanding. Improved nutrition information and growing consumer health conscientiousness coupled with increased travel and busy lifestyles drive demand for indulgent yet healthy foods, convenience foods, different portion sizes (e.g., single-serve packaging), different packaging designs and entirely new items. Such growth also increases the demand for different types of packaging equipment.
To offer more nutritional information and form deeper customer connections, brands are also increasingly offering interactive ways to learn more about products via smart packaging applications such as QR codes and augmented reality. QR codes on products offer consumers the ability to scan with their smartphones and instantly receive detailed information such as the origin of the product and ingredients, expiration date, recycling information, etc. Similarly, augmented reality offers information about the product that consumers may not receive from the packaging otherwise.
Packaging for Millennials
Shifting consumer behavior will continue to drive the market for packaging machinery. Preferences between Millennials and Baby Boomers vary significantly, as reflected in the younger generation’s preference toward premium, sustainable goods and convenience products, among others. This shift will create a change in the products produced as well as the packaging methodology and machinery used to reflect these demands.
Another critical aspect is product visibility and clarity. Manifestations of this trend include innovative label designs, advancements in the promotional surface area and use of new inks and coatings. Changes in consumer demands and behavior, coupled with the availability of real-time consumer market information, has made having machinery that can quickly handle changing packaging formats a high priority for producers.
E-commerce has also helped influence the production of unique products or packaging. As e-commerce continues to rise in popularity and expand in scope of both products and services, CPGs are reconsidering all aspects of the product and packaging. A typical product on a retail shelf may have been handled a half-dozen times, while a product in the e-commerce channel will likely see between 20-30 touches before it reaches the consumer.
Whatever the challenge, today’s packaging solutions are in position to meet consumers’ needs in the future.