Packaging Can Impact Product Success

BOSTON—Many brands will be spending significantly more on packaging in coming months, according to a new study from L.E.K. Consulting. In a survey of 250 brand owners across the consumer-packaged goods (CPG) spectrum, 75% said they plan to increase packaging spending during the next year, reports PR Newswire.

That’s a big jump from both 2018 and 2017, when 65% and 40% expected to increase spending, respectively.

Why the increased focus on packaging? A full 90% of brand owners say packaging is critical to their brand’s success and a way to adapt to industry pressures, including fast-changing consumer preferences.

“CPG brand owners recognize consumers want more convenience, and companies are looking to packaging to help provide it. This will entail some major changes to packaging,” said Thilo Henkes, managing director at L.E.K. Consulting and coauthor of the 2019 Brand Owner Packaging Study.

Among surveyed brand owners, 57% say they’re developing packaging that’s easier to open, 51% say they’re working on more single-serve package sizes, and 49% say they’re stepping up placements in new distribution channels, such as convenience stores, the survey noted.

Another top driver of brand growth is the rise of premium products. Forty-two percent of respondents say they’ve expanded their premium offerings, with 35% changing their promotional strategies and 32% expanding their price-pack offerings. Packaging is often central to the marketing of premium offerings, since the packaging often conveys the product's status.

Among other consumer trends that the report says has direct implications for packaging are:

• Customization: New technologies have made product customization more cost-effective. More than half of brand owners have increased product personalization during the past two years, and brand owners say they plan to launch 15% more SKUs in 2020 vs. 2018. Differentiated and effective packaging will be crucial.
• Ever-increasing health focus: As demand for healthier products skyrockets, companies have adjusted their products to include good-for-you and natural ingredients. Packaging changes in the past two years reflect this, as 60% of brand owners have introduced all-natural or non-processed products, and 53% have introduced “health-focused” products that have required updated packaging. 
• Green growth: Environmentally friendly products are going mainstream, and brand owners see this as a top source of growth over the next two years. Eighty-five percent say they’ve made at least one significant change to packaging materials in the past two years, most frequently to increase ease of recycling, and they expect the value of packaging containing biodegradable, recycled or compostable material to grow by 1.3 to 1.4 times from 2016 to 2022.
• E-commerce expansion. As more consumers shop online, brand owners are turning to a variety of packaging strategies. Fifty-five percent say they’ve entered new digital channels, 47% have implemented mobile on-demand ordering and 47% have increased investment in their websites. CPGs also will need to make changes to packaging to protect against breakage, maintain freshness during delivery and keep a consistent look and feel across multiple channels. 

“All indications are that brand owners consider ongoing investment in packaging to be critical to their brand’s success,” says Jeff Cloetingh, managing director at L.E.K. and report coauthor. “By conveying both valuable attributes and a potent brand message, packaging continues to have the unique capacity to make products stand out in a crowded marketplace.”