A new study published by market research consultancy Lux Research reveals that 2020 was in many ways, a watershed year, and not in the least for consumers’ interaction with consumer packaged goods. These changes in consumer behaviour are being felt by companies and challenging them to adapt their innovation strategies to the 'new normal', the report’s authors write.
Developing more sustainable packaging solutions is a critical business issue for manufacturers of CPGs. Not only are consumers demanding more environmentally-friendly packaging, regulatory actions, viewed as key drivers for the circular economy, are driving companies to take on a more active role in sustainable packaging innovation. Additionally, a ‘rush for sustainable investments throughout CPG industries’ is driving the demand for disruptive innovation in packaging, as is the need to reduce packaging’s environmental impact to meet the various goals and sustainability commitments made.
Published under the title “Building an Innovation Strategy for Sustainable CPG Packaging", the report evaluates existing innovation strategies for CPG companies, examines the strategies currently being employed in the market and discusses potential approaches available to companies in order to bring their innovation strategies better in line with consumer buying methods and habits. It identifies the three stages in which companies may find themselves ranging from those with an innovation strategy in place that is optimised for the company; those who actually have an innovation strategy but are struggling to execute it and need to adapt or optimise; and those who are still developing an innovation strategy.
The report also outlines a set of six potential strategies based on the observed trends.
- Strategy is driven by regulations, for example, the inclusion of recycled content: Companies and industries do not have a choice but to adapt and innovate around policies and regulations. However, it is more beneficial for companies to have innovation strategies aligned with existing and proposed policies so these aren’t overly disruptive. Ideally, companies should have some foresight on upcoming proposed regulations so the innovation strategies can be robust and durable.
- Reusable packaging for in-store or e-commerce platforms is gaining momentum as a direct replacement for single-use packaging, with many large companies trialing the approach. It is being digitalized with IoT technologies and blockchain for traceability and tracking.
- Digitalization to integrate data collection and innovation using that data. Not only is the packaging itself becoming more digital, but digital tools in the production process and the entire value chain are also developing rapidly. One of the transformations being developed is improving the end of life sorting of waste.
- Adoption of alternative materials as direct replacements without changing packaging function - but companies need to do a thorough analysis on if innovations on the net impact in the change. Alternative materials can often shift the burden rather than solving issues. Alternatives to plastics can be beneficial for some applications, but those are limited and niche.
- Adopting packaging before product: inverse innovation to fit new packaging forms for material and design changes. This approach is a ‘gamble’ says the report, as companies are assuming consumers will be willing to adopt new product formulations and change their behaviour and interaction with products just for sustainable solutions for the packaging. But the growth in this strategy is breaking into mainstream products that will allow for consumer behaviour compliance.
- Design for modularity to eliminate problem articles and make separation and collection of different elements easier. There is a growing awareness that certain elements of packaging may just be unnecessary, such as the label on a bottle, which can be eliminated by directly printing on the bottle structure. This reduces the number of parts of the packaging, reduces the number of materials used for a packaging, and makes sorting of packaging significantly better.