The Influence of Sustainability on Packaging
IT Strategies is een Amerikaans consultancy-bedrijf, gespecialiseerd in digitaal printen. Vice-president Marco Boer, inderdaad met Nederlandse roots (op zijn 12de naar Amerika is geëmigreerd vanuit Rotterdam), duikt vaak op als spreker op grafische conferenties en publiceert regelmatige artikels & opinies. In deze en de volgende Eye Opener maken we kennis met enkele van Marco’s opinies: duurzame verpakkingen en hoe de papierschaarste opportuniteiten voor digitaal printen genereert (Eye Opener mei), veel leesgenot.
In the print industry, we’ve long looked at packaging printing as the salvation of print volumes and revenue as commercial printing and publishing are pressured from all sides by electronic communication substitution. The packaging printing industry however is not without its challenges either, but from a very different source than electronic communication substitution. The package printing industry is under pressure to reduce its volumes, as public sentiment demands more environmentally sustainable alternatives.
Turbulent Times
The COVID-pandemic has accentuated the pressure on trends that have been long in the making. Our habits have changed dramatically, from where and what we eat and drink to wonderment why we put up with poor travel experiences for all those years when video conferencing is now commonly accepted. Add political polarization, protests, and greater environmental appreciation, and it’s easy to see why large business are at the cross hairs of taking a leadership stance on these big issues. Whatever position they take, there is a good chance that they will alienate a group of their customers.
Figure 1 A desire for leadership
As part of the turbulence, fossil fuel providers are starting to be held accountable for global warming. Consumer goods manufacturers, especially the pre-processed food manufacturers, are at risk of being held accountable for obesity and all its associated medical ills, over-packaging, etc. The #1 conversations in the board room and the company annual reports are about ESG: Environmental, Social, and Corporate Governance. Many of the ESG initiatives can be controversial to their customer bases, but there is one issue where there is little controversy: the need for packaging to become more sustainable. This means:
- Reduction in the amount of packaging used
- Greater recyclability
- Re-usability of packaging
A quick glance at the annual reports of some of the leading Fortune 500 companies will show that greater packaging sustainability is the lead topic of much of their messaging.
Figure 2 2020 Annual report comments
All of them talk a lot about the end-to-end chain of custody of packaging materials, from raw materials to disposal. This is where it gets complicated. It is easy to see how a reduction in raw materials is beneficial to the environment. Nearly everyone can relate to the excess of Amazon packaging. Despite Amazon’s visibility, a bigger impact in packaging reduction can be made in primary packaging. A move towards thinner, lighter materials has long been afoot. Think of how soup packaging has evolved from metal cans to folding cartons to flexible pouches. The hot topic currently is a discussion about the elimination of labels in favor of direct-to-object printing. Not all of these materials and processes are equally recyclable, and even if they are fully recyclable, there may be little economic incentive to recycle them.
Figure 3 Packaging Life Cycle
There is great pressure in the production of materials to use greater amounts of recycled content. However, sometime the process of creating useable recycled content involves harmful chemicals (bleaching), large amounts of energy, and transport. In some cases, a farmed product like virgin paper can be more sustainable and environmentally friendly than the use of recycled paper. All of these factors are difficult to measure, slowing the process to come to a common understanding of what is truly environmentally friendly and what is not.
In the end, the simple way for consumer goods manufacturers to measure and show a trend towards sustainability in an annual report is a reduction in the consumption of packaging material. Recall how water bottle screw caps were reduced to half of their original size, and how the bottles became so thin that they would almost collapse upon themselves when half emptied.
The ultimate sustainability in packaging is to “Go Back to the Future”. Think of the milkman with reusable glass bottles. Nearly all the major consumer goods manufacturers have initiatives to investigate what is viable in reusable packaging, often in markets far removed from the US and Europe. Nestle is trailing a program in Chile for reusable beverage containers.
Figure 4 A Nestle initiative in reusable packaging
Imagine how Amazon could benefit from reusable packaging since it too has a closed loop system with its suppliers, warehouses, and customers. Reusable packaging is the ultimate method of sustainability.
This is where we get to the proverbial elephant in the room for packaging converters. Packaging converters make their money through the sale of volume of material, in both weight and square meters of material. If consumer goods manufacturers make good on their promises to provide more sustainable packaging, there will be a slow-down in growth of packaging in emerging markets, and possible even a reduction in those markets that have declining populations.
Figure 5 The sustainability elephant in the room for packaging converters: a reduction in packaging volume
The packaging converter business models focused on increasing volumes will become defunct. They will have to find new sources of revenue, find ways to increase the value- add. Digital printing of packaging can be part of the future packaging converter business models, as can greater education of what sustainability means economically and environmentally to consumers.
The Bottom Line
The packaging industry is not immune from challenges, and with the movement towards greater sustainability it is not necessarily a “safe haven” for the printing industry. Given the diversity of packaging materials, regional differences in recycling capabilities, encompassed by economic requirements, it is unlikely we’ll see dramatic changes in the packaging industry short-term. Longer-term, altruistic regulatory requirements may dictate the direction of the packaging industry, along with all of its unintended consequences.
The good news for digital packaging printer manufacturers is that there is lots to learn, with pockets of opportunity. The use of new packaging substrates will likely require different printing technologies. With little incumbent installed base, digital packaging equipment manufacturers should be able to move faster than the traditional package printing equipment suppliers in serving those new, more sustainable packaging needs.
