An obligation to excellence – inside the contract packaging industry

14 April 2015

As manufacturing companies continue to need products made to higher specifications with shorter turnarounds, there has been an enormous growth in the need for contract packaging services. President of the Contract Packaging Association Chris Nutley offers further insight into this sector of the industry.

The contract packaging industry serves various functions, furnishing solutions for packaged goods across nearly every consumer sector. As a result, packaging reflects a range of influences, from personal consumer preferences to larger economic forces such as free-market competition and mass-marketing.

To stay one step ahead of evolving demands, contract packaging companies respond to shifting consumer behaviour, continually striving to meet the needs of producers, retailers and end users.

The key to success for contract packagers in 2015 lies in their ability to push the envelope on packaging innovation, while maintaining a strict focus on economy and sustainability.

Finding the proper balance between cost-effectiveness and merchandising impact remains central to contract packaging success, which now calls for responsible environmental practices and high levels of package customisation.

A question of materials

Consumer awareness of environmental issues is peaking alongside producer demand for economical packaging options. As these forces converge, creative contract packagers will continue to turn to earth-friendly alternatives and ecologically sound package designs.

Packaging materials fall in and out of favour over time. This trend has moved consumer packaging away from paper and cardboard, and towards streamlined plastic materials.

In a retrograde shift, paper packages are sometimes emerging as the most environmentally friendly option, replacing plastics and other materials that aren't always recyclable. Contract packagers should once again see growth in the use of certain materials, which may actually lead to a return to more traditional options.

In addition to adopting socially responsible production and packaging practices, contract packaging providers will continue to respond to the rising cost of materials.

Plastics used for packaging are petroleum by-products, so the price of petroleum will continue to shape packaging decisions. In 2015, package redesigns will strive to reduce the total amount of materials used, resulting in greater economy and responsible packaging ecology.

Technological advances continue to drive contract packagers towards innovative solutions. Consumer demand for creative new packages will not let up in 2015, as buyers expect products to offer convenience and enhanced functionality. Specific contract packaging sectors will be affected more than others, such as the food packaging industry, which continues to respond to shoppers' call to reduce food waste.

More than 18 million tons of food make it to landfill each year in the UK alone, so global consciousness continues to influence packaging decisions, leading to calls for better shelf life and portion packaging.

Reusable and resealable packaging is poised for growth, too, as portability and serving-sized packages continue to resonate with consumers on the go.

Data gleaned from the recent Pack Expo 2014 shows growth trends in flexible packaging and using improved films to replace rigid containers, as well as security improvements to thwart tampering and counterfeiting.

Child safety is another chief concern shared by contract packagers and their customers, calling for effective child-resistant containers.

As producers and consumers demand greater accountability among packagers, flexibility and package customisation are also gaining increased attention.

The trend will not wane in 2015, as contract packagers partner with retailers to create a unique shelf presence. As part of this trend, contract providers will use smaller production runs to maximise the impact of custom options.

Seasonal specials and promotions, for example, will be closely linked to package labels that can be easily altered for pinpoint merchandising.

Increased collaboration between packaging contractors, and the manufacturers and producers they serve will streamline packaging costs and help to keep the packaging supply chain tight in 2015. By strengthening relationships throughout the packaging process - from design through to product management - contract packagers will continue to expand service offerings and their ability to respond quickly to custom requests.

For flexibility and efficiency, packagers are delaying some parts of the design process until the final stages of production. For example, creating standard labels with customisable portions for last-minute messages to consumers enables producers to send timely, personalised slogans or promotions directly to their target audience.

In some cases, shifting printing responsibilities to packagers, rather than relying on printers, is the most cost-effective approach. In practice, the adaptable strategy conserves materials and aids warehouse inventory management.

What's trending?

The Contract Packaging Association estimates that the industry has doubled in size since 2008. With that scale of growth, and packaging innovators' willingness to expand services in 2015, the industry is poised for continued gains in the new year.

Food and beverage, pharmaceutical and personal care products continue to furnish a large share of contract packagers' business, and this won't shift dramatically in the coming months. In fact, the call from these industries will continue to increase for contract packagers as more dynamic solutions are required.

Technology plays an important role in the future of packaging contractors, with serialisation, digital printing and advanced robotics leading the way for cutting-edge providers. Integrating the latest technology into the packaging process includes streamlining and economising through more efficient production methods, but technology also finds its way into packages themselves, pushing the envelope on materials and merchandising capabilities.

Contract packaging is a growing business, paving the way for providers of all sizes to make gains in the coming year. Pharmaceutical packaging alone, valued at $50 billion in 2011, will purportedly grow to an industry worth more than $73 billion annually by 2018.

Sustainability and customisation will continue to drive contract packaging trends in 2015, leading to growth in consumer packaged goods such as personal care products, food and beverages. Contract packagers and their clients share additional forward-thinking goals of integrating technology and reducing the amount of packaging materials used.

Better together

With the seemingly endless demand for sustainable packaging and the constant efforts by manufacturers to cut costs and increase efficiency, players in the contract packaging industry must continue to provide innovative and cost-effective solutions. Collaboration within the supply chain between contract packagers and manufacturers has been a strong driver for the creation of new packaging concepts and innovative designs with improved cost margins.

With this type of mutually beneficial arrangement, contract packagers garner new designs, while manufacturers can reduce R&D costs. With somewhere between 73 and 85% of consumers' purchase decisions made at the point of sale, packaging designs need to be innovative and attractive if a brand hopes to gain the attention of new customers.

In recent years, contract packagers have expanded service offerings to include more end-to-end processes, such as early-stage design capabilities through the management of the product throughout its life cycle. With a broader range of services offered by contract packagers, manufacturers are able to streamline operations and rely on fewer suppliers for the production of goods.

The following are some of the other notable trends and highlights within the contract packaging industry:

  • some contract packagers have gained an edge over competitors by adopting progressive technology such as serialisation concepts, robotics and digital printing
  • serialisation remains at the forefront of contract packaging processes, but the regulations are often vague and unclear, leaving some packagers unsure of the value of offering such services
  • while manufacturers are concerned with sustainbility, many want to be more involved in the development of sustainable packaging to better understand how contract packagers are creating it
  • with consumers becoming increasingly concerned with the functionality of a product's packaging, this has become a critical consideration in the development of new packaging.

Due to the industry's ability to offer innovative and cost-effective solutions, the Contract Packaging Association predicts that the industry will continue to grow as manufacturers increasingly outsource this stage of the supply chain.

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