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In today’s dynamic food and beverage sector, procurement teams are increasingly vital in ensuring that packaging solutions meet both market demands and company goals. With consumers and regulators pushing for more sustainable practices, paper and wood-based packaging is back in the limelight.
However, the path to effective procurement in this area is fraught with challenges. This guide explores these challenges and offers strategies to navigate them effectively.
One of the primary hurdles procurement teams face is packaging price volatility.
Anticipating costs and balancing them with quality and sustainability is crucial. Strategies such as bulk purchasing and negotiating long-term or index-based contracts can alleviate financial pressures while ensuring supply consistency. Additionally, fostering strategic partnerships with suppliers can lead to collaborative cost-saving innovations.
Fastmarkets helps packaging buyers manage costs by providing price benchmarking tools, market insights and custom indices, enabling informed supplier negotiations and strategic procurement decisions.
Ensuring a reliable supply of packaging is paramount, even while the packaging industry is going through a period of transformation under pressure. 2024 saw two sizable mergers of major players – International Paper and DS Smith, and WestRock and Smurfit Kappa.
Procurement teams must find suppliers who can consistently deliver quality materials. This involves thorough vetting processes and maintaining strong relationships with suppliers. Regular audits and performance evaluations are essential to keep standards high and foster trust.
Building and nurturing strategic relationships with suppliers not only ensures reliability but also opens avenues for innovation. Collaborative efforts can lead to the development of new, sustainable materials and practices. Regular communication and feedback loops enhance these partnerships, ensuring both parties are aligned in their objectives.
Fastmarkets helps packaging buyers manage supplier relationships by providing tools and insights to identify and vet new suppliers, including the emissions profile of production facilities. Through our packaging news service, we provide regular updates on market movements including mergers and acquisitions, investment in new production capacity, packaging innovations and more.
Navigating the ever-evolving landscape of packaging regulations poses a significant challenge. In 2024, packaging buyers were monitoring the new EUDR regulation closely. When it comes into force in 2025, it will require packaging sold and used in the EU to be deforestation-free. This will necessitate comprehensive due diligence and could lead to increased compliance costs, potentially affecting pricing and supply chain strategies.
Procurement professionals need to stay informed about changes such as the EUDR that could affect their sourcing strategies. Staying ahead of regulatory changes requires a proactive approach. By participating in industry forums and integrating compliance checks into their processes, teams can safeguard against regulatory pitfalls. This knowledge allows procurement teams to adjust their strategies pre-emptively, ensuring compliance and reducing the chance of disruptions.
Fastmarkets helps procurement teams keep on top of evolving regulations through its news and analysis services and events.
Aligning procurement practices with sustainability objectives is complex but necessary. The challenge lies in selecting materials that meet eco-friendly criteria without compromising on other fronts such as durability or cost. In the food and beverage industry in particular, the intersection of food safety regulations and sustainability goals presents complex challenges.
Food safety regulations prioritize the safe handling and storage of food products, necessitating packaging materials that prevent contamination and extend shelf life. This can involve using non-porous plastics, multilayer composites or other materials that provide an effective barrier against environmental factors. However, such materials may not always align with sustainability goals that call for recyclable, biodegradable or compostable packaging. The challenge lies in finding materials that are both effective for food safety and environmentally friendly.
We expect an increase in the use of boxboard in food service as an alternative to other materials as corporations implement plastic substitution and work towards finding more environmentally sustainable products.
Embedding sustainability into procurement processes is more than a trend; it’s a necessity. By setting clear sustainability criteria and engaging suppliers who share these values, companies can make significant strides toward their environmental goals. Encouraging suppliers to innovate and adopt greener practices benefits the entire supply chain, leading to the development of new packaging materials such as bio-based polymers.
Fastmarkets helps packaging buyers achieve sustainability goals by providing insights into decarbonization and circular economy practices, offering tools for carbon emissions benchmarking and promoting the use of recyclable and renewable materials. We support companies in navigating sustainability regulations and trends, such as the European Green Deal, to enhance their competitive advantage and meet consumer demand for environmentally friendly packaging solutions.
In 2024, food and beverage packaging procurement teams face increased scrutiny due to the changing regulatory landscape, necessitating precise material tracing and compliance. This, coupled with heightened consumer demand for sustainability, compels teams to align closely with marketing and sustainability departments to reflect eco-friendly brand values across the food and beverage product portfolio.
The scenario demands cross-departmental collaboration and the integration of procurement strategies with broader company goals. A unified approach for procurement, marketing, production and sustainability teams ensures that packaging strategies align with broader company goals.
Investing in the development of procurement teams is crucial for staying competitive. By providing training on the latest trends and technologies, companies can ensure their teams are equipped to tackle future challenges. Encouraging a culture of continuous improvement and adaptability is key.
Addressing the procurement challenges associated with paper packaging requires strategic thinking and proactive measures. By focusing on cost management, supplier reliability, regulatory compliance and sustainability, procurement professionals can enhance their sourcing strategies. Aligning these efforts with company objectives not only ensures compliance and cost-effectiveness but also positions businesses as leaders in sustainable practices. Embrace innovative solutions and proactive strategies to secure a competitive edge in the ever-evolving food and beverage industry.
Having the right insights on raw material prices and trends is key to making informed procurement decisions and gaining an edge in the industry. You can download the Fastmarkets checklist for food and beverage manufacturers to help you create effective procurement strategies.
Learn how to monitor packaging prices using cost and price indices and understand the underlying cost drivers, from material cost to labor, energy and more. Examples include cartonboard, liquid container and paper bag.