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The packaging industry is constantly evolving, prompting buyers in the food and beverages (F&B) consumer goods industry to seek greater transparency into the factors influencing inflating costs. While pricing isn’t the sole consideration when sourcing the right materials for your F&B packaging needs, quality, availability, environmental impact and price are all important factors influencing companies’ buying decisions.
In this article, we will break down some of the key factors influencing the packaging purchasing decisions for F&B brands, including:
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Reflective price data can play a crucial role in helping F&B companies choose more sustainable packaging materials by providing valuable insights into the cost-effectiveness and long-term financial implications of different packaging options.
Three macro-categories of packaging are important in ensuring food safety. These different types of packaging are used across the entire supply chain and include:
The dominant secondary packaging materials consumer goods companies use generally consist of paper, card, plastic and wood. Many factors play into the packaging purchasing decisions for F&B companies including aesthetics, durability and cost. But with mounting pressure for companies to reduce the environmental impact of their packaging, some brands are shifting away from plastics and incorporate more paper and alternative packaging options into their secondary packaging strategies. Sustainability is fast-becoming the driving force behind packaging innovation.
In an interview with Smurfit Kappa’s chief sustainability officer, Garret Quinn we discussed how regulatory changes are among the top sustainability challenges facing the forest products industry. Especially in the European market, a lot of new regulations are being introduced, with many often overlapping or contradicting each other, placing even more pressure on consumer goods companies to seek reliable data solutions to inform purchasing decisions.
Quinn went on to talk about barriers to sustainable packaging highlighting that “cost is a potential barrier to sustainable packaging … In a world with high inflation, more costly like-for-like packaging solutions can be a deterrent”.
In recent months, we have seen numerous price increases affecting the paper packaging market. In the North American, domestic market, we observed levels for 42-lb unbleached kraft linerboard (KLB), 35-/36-lb high performance linerboard, and 30-/31-lb recycled linerboard rise $40 to $860-870/ton, $870-880/ton, and $760-770/ton, respectively. These are the first linerboard price increases in the domestic market in two years.
Interested in understanding these price movements? Speak to us about how our short- and long-term forecasts for the paper packaging market can help you plan ahead. Talk to us today.
A large percentage of producers and boxmakers reported price increases earlier this month, according to a survey of buyers and sellers by Fastmarkets’ PPI Pulp & Paper Week.
Earlier this month, Klingele Paper & Packaging Group, Mondi and Saica separately confirmed plans to hike RCCM prices by Euro 80/tonne ($87/tonne) from March 1. This comes after the announcements from the Heinzel Group and Hamburger Containerboard last week, with Heinzel seeking an increase of Euro 85/tonne for March business and Hamburger Euro 80/tonne.
Price data can provide insights into the cost dynamics across the supply chain for different packaging raw materials, helping F&B companies identify potential cost savings opportunities in areas where sustainable packaging materials may offer competitive advantages or disadvantages.
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In an interview with Industry Affairs at the American Forest and Paper Association (AF&PA), Vice President Terry Webber we discussed how paper packaging can help the industry meet its sustainability goals. Paper-based packaging offers F&B brands and retailers a compelling sustainability story, with high sustainability rates and significant use of recycled content.
The challenge with sustainable paper packaging is the misconception that recycled boxes won’t meet a brand’s aesthetic standards. Despite paper packaging made from virgin materials being accepted as a ‘sustainable’ option depending on local market preferences or product characteristics – innovation in recyclable materials are bridging the gap, allowing paper packaging options to tick the sustainability and aesthetic boxes of F&B brands.
By leveraging price data in negotiations, F&B companies can secure cost-effective deals for sustainable packaging materials without compromising quality or performance.
Webber continued, “Packaging is one of the important components of the overall impact of consumer products and it plays a crucial role in ensuring products arrive safely, undamaged and unspoiled to consumers”, he went on to say “…due to our renewable and sustainable raw material source from well-managed forests, the robust recycling infrastructure and demand for recovered fiber use in packaging, as well as the high recycling rate after their use. It is hard to find a more sustainable material option in the marketplace.”
Consumer habits are constantly evolving, and with that comes the need for an evolution within consumer goods companies.
More F&B companies are choosing to engage with consumers about the environmental benefits of paper packaging and the importance of recycling. This may involve labeling packaging with clear recycling instructions and providing information about the sustainability credentials of packaging materials.
… given the pressure from consumers for sustainable solutions, I cannot envision a future where paper, particularly in packaging , does not win.
In an interview with Smurfit Kappa’s CEO Laurent Sellier, he highlighted that “customers always bring about new demands and requirements….. given the pressure from consumers for sustainable solutions, I cannot envision a future where paper, particularly in packaging, does not win over other types of materials.”
Plastic has been used for packaging in the F&B sector since the mid-20th century; known for its durability, versatility and cost-effectiveness; it remains a constant fixture in the world of packaging. The problem with plastic is its environmental impact; where most paper-based packaging is renewable, highly recycled and biodegradable, plastic is tarred with a negative environmental reputation. Several factors contribute to the negative perception of plastic, including the accumulation of plastic waste which in most cases takes centuries to degrade.
With that being said, innovation in packaging technologies is playing a crucial role in helping packaging companies become more sustainable. Paper packaging companies must continue to invest in research and development to improve the recyclability of their products, and developing advanced printing and coating technologies for sustainable packaging designs could help reduce the risk of being out-competed by other packaging materials.
Access to market-reflective price data can help F&B companies quantify the costs and benefits of sustainability investments to support initiatives that offer the greatest return on investment (ROI) in terms of both financial and environmental performance.
Interested in learning more about paper packaging market developments and trends in the industry? Speak to our team today and find out how we can help you stay ahead of the competition.
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.