Tuesday, February 24, 2015

Sustainable Packaging is Good for the Enviroment and the Bottom LIne

Sustainable packaging reduces environmental impacts, saves money, it can even increase sales and support premium pricing. The 500 billion global packing industry is addressing burgeoning demand and meeting the challenge by developing packaging that saves on materials that do not compromise stability. This is hardly a new trend and it has been gaining momentum for a number of years now.

A 2009 AMR research study reported in an IndustryWeek article said the most frequently used method of generating savings is by reducing packaging waste. More than three quarters (76 percent) of the companies surveyed stated that they are engaged in efforts to reduce packaging waste.

A 2007 survey by the Sustainable Packaging Coalition and Packaging Digest magazine indicated that almost three quarters (73 percent) of 1,255 respondents involved in packaging stated that their companies were emphasizing sustainable packaging.

Efforts to reduce packaging include some big names like Dell which in 2008 announced its plans to cut its packaging by 20 million pounds. Others include sustainability leader Unilever which has promised to cut its use of materials by one third by 2020. Kraft Foods now uses recyclable cardboard instead of tins for its coffee brands (Maxwell House, Nabob and Yuban).

In 2010 US market analyst Pike research predicted that sustainable packaging will grow to 32 percent of the total global packaging market by 2014, up from just 21 percent in 2009. Pike Research estimates that global sales with sustainable packaging will almost double between 2009 and 2014, from 88 to 170 billion dollars.

"The environmental awareness of consumers has significantly increased as a consequence of the climate debate," said Pike Research President Clint Wheelock.

Paper and paper-based packaging are the largest sectors with more than 40 percent of the global packaging market. However, plastic and metal base recycling will continue to grow. Plastic accounts for 35 percent of packaging materials and it may see the fastest growth while metal is the easiest material to recycle. Pike estimates that by 2014 more than 63 percent of metal based packaging will be environmentally friendly.

Wheelock also said “ the move toward sustainable packaging represents a broad based effort by manufacturers, retailers, industry groups, and governments to promote the design of minimal packaging that can be easily reclaimed. A tremendous amount of innovation is going into reducing energy requirements to manufacture packaging and using more recyclable and compostable materials, but there is still a long way to go.”

A 2011 Packaging Digest survey revealed that interest is being driven by Consumer demand (48 percent), pricing pressure (47 percent) and retailer/brand owner requirements (35 percent).

In addition to saving costs, sustainable packaging can also increase sales and justify higher price points. According to a Viewpoint report from Stora Enso, sustainable packaging can increase net sales by between 2 and 4 percent. They further predict that this will increase as millenials assume more buying power.

Almost 60 percent of millennials consider packaging sustainability to be important. Four out of five millennials consider packaging as important when making purchasing decisions and 85 percent of millennials consider packaging material part of the brand experience, compared to 71 percent among non-millennials.

Even more interestingly, the report reveals that 44 percent of millenials are prepared to pay a premium for products with sustainable packaging.

Sustainable packaging is growing and offers a competitive advantage.  

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