What is the prospect of traditional printing companies transforming to the packaging field under the epidemic?
Opportunities for the packaging industry under the epidemic
In the past two years, most industries have been negatively affected by the new crown epidemic. However, reports from many packaging companies show that their market demand is increasing during the epidemic. Among them, those companies that mainly supply packaging for basic supplies such as food, beverages and medicines, and companies that provide packaging for online shopping are the biggest winners. In addition, the industry has quickly responded to the high demand for masks, hand sanitizers and various other personal protective equipment.
At the beginning of the epidemic, due to the decline in demand for printed products in traditional sectors of the printing industry, many printers chose to enter new areas to tide over the difficulties. Unsurprisingly, packaging printing is proving to be a very attractive field.
In a recent Printweek poll, 21% of respondents said they had recently started offering packaging services, while 12% said they were considering doing so.
Challenges Facing the Packaging Industry
However, although there are many opportunities for commercial printing companies to realize the benefits through business transformation into the packaging field, perhaps the reality is not as simple as it seems, and the industry still faces many challenges:
01 Logistics and Labor
Factors such as the COVID-19 epidemic and Brexit have led to various logistics and labor issues, such as stagnant logistics, rising transportation costs, tight labor supply, etc., making the printing and packaging industry face huge pressure from energy and material costs for weeks.
02 Raw material supply
Raw material supply is also a particularly acute issue. The strike action at UPM's Finnish factories that started on January 1 has had a serious negative impact on the stable supply of packaging and labels. Media outlets such as the Financial Times and the BBC have become aware of the potential consequences of this supply crunch, and the strikes have gradually made national news.
Will Parker, former chief executive of Optimum Group's Telrol self-adhesive label business, said: "Machine in Europe is now stalled due to delays or lack of supply, which will affect all consumer supply chains, not just food and pharmaceuticals. There will be severe shortages of key items on shelves in the near future. Even if a solution is found, the time to restart the supply chain and return to normal levels will extend into the second and third quarters of this year, which will lead some companies to collapse".
Ian Kendall, CEO of Reflex Group, also pointed out in an interview with "Print Weekly" in early January this year, "It is currently a nightmare to obtain packaging raw materials. The delivery time of the past two days now takes four weeks, and the delivery time of the past four weeks now takes four weeks." The delivery time now even takes four months, and almost all the costs have increased by about 30% in the same year.”
But for most companies, a bigger problem than rising prices remains access to packaging materials. Due to the supply shortage caused by the strike at the Finnish paper mills, many companies have been forced to change their previous packaging materials and formats in the past few months.
Jon Clark, general manager of cartons at BPIF, said that during times of shortage, specific materials often "disappeared". "Under normal circumstances, a company will choose a specific packaging material produced by a specific printing factory, but in the case of a shortage of raw material supply, in order to ensure the normal supply of goods, any alternative material within a reasonable range may be accepted."
"Shrinkflation," where pack sizes shrink while prices stay the same, has also been a hot topic in the past few weeks. Food writer Jack Monroe called the trend "insidious as hell, so hard for consumers to spot right away".
But whatever the reasons for changes in customer packaging formats, packaging companies must be very reactive and push these changes quickly, without compromising the R&D, testing and inspection phases they require.
03 Policy pressure
First of all, packaging processors must pass FSC and PEFC chain of custody certification, and these certifications require printers to have a deep understanding of the standards and relevant laws that must be complied with in terms of low migration printing inks and direct food contact.
Secondly, for those companies that want to enter the packaging field, another new pressure comes from the plastic packaging tax introduced by the British government on April 1, 2022. The tax law clearly stipulates that all plastic packaging, including tertiary packaging such as stretch wrap, needs to have at least 30% recycled content, otherwise a packaging tax of 200 pounds per ton will be imposed.
How to make a good transition to the packaging industry?
1 Development of sustainable packaging
In the recent M&A activity in the packaging industry, major players have snapped up small sustainable businesses to enhance their own sustainable packaging offerings. For example, Hewlett-Packard acquired Scottish company Select Packaging, which claims to be "the inventor of the world's only commercially available plastic-free paper bottle".
Coveris has also made sustainability a priority during its recent acquisitions. Will Mercer, research and development director for the company's paper business unit, believes sustainable packaging is one of the industry's biggest growth opportunities and a key driver of packaging development. The strategy looks at the three areas of performance, efficiency and environmental benefits, with no product waste, packaging waste and operational waste.
The business has also recently launched several new paper-based products, as well as a recyclable monomaterial film that offers an alternative to non-recyclable films and complies with the 30% recycling rate imposed by the plastic packaging tax.
2 Professional training
Vince Brailey, managing director of operations at High-quality carton manufacturer Offset Print & Packaging, mentioned that commercial printing companies are involved in the field of packaging, which requires the professional knowledge and related skills of employees. If Indian companies want to produce high-quality packaging day in and day out in a cost-effective manner, they need highly skilled personnel, which cannot be separated from investment in training personnel and bringing in talent.
3 Grasp the market development trend
Andy Wilson, chairman of the Flexographic Printing Industry Association UK (FIA UK), said the most obvious market for commercial printers is the narrow web flexible plastics, labels and carton packaging markets.
“However, what commercial printers need to understand is that this is a completely different model and value chain. Brands, printing companies, printer converters, packers and retailers all play different roles in the supply chain. In recent years, Supply chains are becoming more automated, integrated and interconnected, and the seasonality and development phase of new packaging launches can be as little as six to nine months. It is not always a market driven by individual employment, as is the case in many commercial printing industries .Indian companies should talk more to organizations like the British Flexographic Printing Industry Association to understand market needs, technologies, trends and challenges."
Despite the many outside pressures, the packaging sector remains a great opportunity for commercial printers, especially those considering sustainable products.
Wilson concluded: “Packaging is a fascinating market with many opportunities for all parts of the value chain, whether it is making the supply chain more digital, automated and connected from brand to processor, retailer to consumer. ; Or to change packaging materials, forms, and consumers' understanding of the role of packaging in their lives through sustainability and circular economy. This industry is an innovation-led industry with great vitality and development potential in the future!