Sustainable Autonomous Packaging Solutions

Drive customer satisfaction through sustainable, technology-led innovation.

Analyst Perspective

Drive customer satisfaction through sustainable, technology-led innovation.

Packaging plays a critical role in enhancing a product's appeal and creating a memorable customer experience. The design, materials, and sustainability of packaging are all vital in creating a positive brand image and meeting consumer expectations. Consumers are beginning to appreciate the potential of smart packaging, which can offer additional features such as product information, personalized promotions, and enhanced interactivity. As sustainability becomes a critical driver for regulatory policy, companies are undergoing a digital transformation to meet the growing demand for eco-friendly packaging solutions.

The shift toward sustainable packaging is driving the use of digital software and automated hardware to optimize supply chains, reduce waste, and improve sustainability. Adopting circular economy principles and leveraging digital technologies can help companies reduce costs, meet consumer sustainability demands, and gain a competitive advantage in the market. It has now become critical for companies to monitor evolving regulations and take a proactive approach to sustainability to meet consumer demands and regulatory requirements.

To succeed, companies must invest in innovative and sustainable packaging solutions that provide value to the customer while reducing environmental impact. Packaging plays a significant role in shaping consumer behavior and brand perception, making it a crucial element in the success of any product or brand. The combination of digital innovation and circular economy principles is driving the packaging industry toward a sustainable and customer-focused future.

Shreyas Shukla
Principal Research Director, Manufacturing Industry
Info-Tech Research Group

Executive Summary

Your Challenge

Packaging must modernize. Packaging suppliers and companies which use packaging material have been transforming their approach to keep up with consumer preferences and the competition.

Regulations are changing. The increasing restrictions on material used in packaging is impacting technology.

Waste is a growing concern. Consumers are paying attention to packaging disposal.

Transformation is being driven by:

• Consumer advocacy toward sustainability
• The recent e-commerce boom
• Varying degrees of regulation of packaging material

Common Obstacles

Businesses must adopt a technology-led approach to make their packaging both more sustainable and more relevant to consumers. Several obstacles complicate these efforts to use packaging to its fullest potential:

• Lack of maturity regarding the hardware and machinery used in packaging
• Failure to utilize packaging as an effective branding tool
• The high cost of exploring and developing alternative packaging materials
• Inability to keep up with tighter regulations
• Losing out on consumers because packaging is not attractive, convenient, or sustainable

Info-Tech’s Approach

Info-Tech recognizes that technology plays a key role in sustainability and related regulations.

Choosing the right technology will help accelerate progress on sustainability.

Info-Tech will provide:

• An overview of innovative emerging technologies covering both packaging hardware and software
• A snapshot of a technology maturity model covering packaging technology and processes
• A guide for properly beginning your journey toward higher packaging technology maturity

Sustainability in packaging is now a competitive differentiator. Technology-led initiatives that leverage alternative sustainable materials in packaging will improve production efficiency, increase sales, satisfaction and retention, and help companies beat the regulatory curve.

Packaging is essential for protecting products

Packaging type

1. Industrial packaging
   Industrial packaging is used during the manufacturing and/or warehousing stages of product movement.
2. Primary packaging
   This layer of packaging is in immediate contact with the product.
3. Secondary packaging
   This layer of packaging is used to group various pre-packaged products of the same type.
4. Tertiary packaging
   This layer of packaging is usually intended for palletization and transportation.

Packaging function

Physical protection

Protects product from the elements, vibration, compression, mechanical shock, electrostatic discharge, temperature variations, tampering, pilferage, counterfeiting, and theft during transport and storage.

Barrier

Prevents damage to product from permeation of air, water vapor, and dust, and segregates product components before end use when required.

Information

Provide information on product contents, usage, transport, recycling, and disposal of packaging as mandated by consumer law.

Agglomeration

Containment of multiple units or large quantities of product for efficient storage, display, and sales.

Portion control

Division and distribution of product suitable for individual or personal consumption for granular inventory tracking, ensuring product consistency, and regulating prices.

Marketing

Product differentiation and branding communication through packaging to reflect messaging, values, and features to help consumers make purchasing decisions.

Packaging is a growing global market

The global packaging market is valued at approximately US$1 trillion. A little over half the total packaging market is comprised of packaging for consumer goods, food, hygiene, and pharmaceutical products. The consumption patterns of these products have been volatile since the pandemic hit, but generally remain unaffected by economic cycles.

The global packaging market is expected to register a compound annual growth rate (CAGR) of 3.94% during 2022-2027.

“64% of consumers will try a new product because the packaging grabs their attention.”
– Nielsen

Several factors impact the packaging industry

Political

• War in Eastern Europe continues to impact supply of commodities & labor
• Threat of impending recession is forcing consumers to change their behavior

Consumers likely to become cautious with spending

Economic

• Global economies are in flux
• Supply chain issues persist, labor shortages continue, and inflation is rising, increasing prices of goods

Demand continues to be volatile

Sociocultural

• Consumers have growing concerns about the behavior of large companies
• Consumers want clear & transparent messaging to reflect branding claims and regulations to enforce it

Consumers want more sustainable products

Technological

• Consumers are more curious and have a strong desire to make well-informed choices
• This forces brands to build digital experiences and ecosystems for their products

Technology driven digital experiences are a differentiator

Legal

• Brands must address new regulations targeting use of environmentally damaging material to continue operating in major markets

Sustainability regulations becoming tighter and more complex

Environmental

• Consumers still believe they can save the planet from climate change and are forcing brands to develop more eco-friendly products and become environmentally responsible

Consumers willing to make eco-friendlier choices

Consumer behavior and environmental challenges drive changes in packaging approaches

Brands and manufacturers must understand four global drivers guiding today’s packaging trends to develop an actionable packaging strategy for the present and future.

Consumer behavior

• The average consumer is younger. Consumer demographics have changed over the last three decades.
• Consumers today prioritize convenience but are also willing to make a purchase decision based on packaging.
• Consumers care about sustainable packaging and how it is treated at end-of-life.
• The pandemic caused e-commerce to explode, and this will continue to drive the packaging market.

Environmental challenges

• Consumer advocacy has forced companies to rethink their packaging strategy to incorporate more eco-friendly materials.
• Brands are pursuing sources of alternate materials, hybrid bio-based material, renewable polymers, and breakthrough technologies in recycling and waste reduction.
• Recycled and compostable material are easy entry points to meet new demands.

Regulation

• Regulations are tightening around the use of harmful material in packaging and treatment of waste.
• The European Packaging and Packaging Waste Directive obligates member states to meet targets for the recovery and recycling of packaging waste. This is an example of the rigorous approach governments are taking to limit the environmental impact of packaging waste.

Technology

• Evolving hardware and digital technologies are helping companies use packaging material in a more sustainable and cost-effective manner.
• Digital technologies enable rapid prototyping of new designs and exploration of alternative packaging materials.
• Machines automatically right-size packages based on the product’s required amount of packaging.

Source: Esko, 2022

Sustainability and technology are leading the transformation in packaging

Consumer behavior has been driving the last 20+ years of packaging innovation/transformation. The drivers of innovation have shifted over time. Now, a mix of politics, ethics, laws, and consumer demand is impacting packaging trends – technology is enabling packaging to become more eco-friendly.

• Finland introduced a deposit return scheme for recyclable bottles and as a result 90% of purchased bottles were returned in 2020.
• Unilever launched a cheaper concentrate of their laundry detergent in a 500g pack, equivalent to 3L of their liquid detergent.
• SmartLabel allows US consumers to view additional digital information that can't fit on product packaging.
• Harvest Snaps adding QR codes on their packaging allowing consumers to join a TikTok community.
• BCG launched an AI-powered digital platform that helps companies quantify their emissions and provides them with solutions at scale.
• From January 2023, sale or distribution of food packaging containing PFAS chemicals at/above 100ppm is banned in California.

Packaging plays an important role in consumer decisions

• 80% of consumers want packaging to keep product safe
• 69% of consumers care about useful information on packaging
• 49% of consumers want packaging to digitally connect them with online information
• 65% of consumers care about recyclable packaging
• 56% of consumers are willing to pay more for product with eco-friendly packaging
• 63% of consumers say that packaging elevates product perception
• 25% of consumers will make a purchase decision solely on the quality of packaging

Source: WestRock Pulse Packaging Survey, 2022

Consumers rely on packaging to provide safe access to products.

Consumers also expect packaging to provide access to product information, shape their perception of the product, and explain how sustainable the packaging is. The following are criteria that play a role in consumer purchasing decisions:

Safety

Consumers want packaging to keep product safe, fresh, effective, and protected from tampering.

Information

Consumers care about useful information on packaging and want packaging to digitally connect them with online information.

Sustainability

Consumers care about sustainability of packaging and will choose (or pay more for) a product with recycled packaging.

Perception

Consumers sometimes choose a product due to its packaging and feel that it adds to the premium perception of a product.

Sustainability in packaging can be achieved in many ways

Affordability is no longer enough for most consumers. New, sustainable packaging materials must be explored, developed, and applied to products.

1. Remove demand by eliminating packaging where possible.
2. Reduce demand to optimize packaging by right-sizing or light-weighting.
3. Re-source packaging materials by replacing vendors, packaging materials.
4. Rework processes using efficient packaging, improving throughput, and common-use SKUs.
5. Reuse/Refurbish packaging to extend its life, reduce costs and carbon footprint.
6. Recycle packaging material, use recycled material for packaging, and implement circularity.
7. Recover waste from each part of the production process and recycle/reuse generated waste.

“Whereas ten years ago, customers wanted a good product for the cheapest price possible, that is just not enough now. People are so much more aware of our surrounding environment, so we will have to be.” – David Hampton, Group Commercial Director, Snowfox Group

Development and application of new materials is challenging and will require a significant investment of time, money and innovation to be successful.

There are four categories of alternate materials that can be adapted for packaging use:

Some examples of alternatives include mushrooms, bamboo, hemp, cellulose, sugarcane, shrimp shells, limestone, feather, wool, liquid wood, palm, coconut.

Source: Efficio Consulting, 2023