FMCG Packaging Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The FMCG Packaging market was valued at USD 711.56 billion in 2019 and is expected to reach USD 935.98 billion by 2025, at a CAGR of 4.6% over the forecast period from 2020 to 2025. The food and beverage industry is going through enormous changes due to factors such as changing consumer preferences, which prompt the FMCG companies to adopt new technologies and measures to offer packaging on-par with the changing trends. Modern packaging technology is being adopted by packaging vendors to improve the quality of packaging to serve a more extensive range of customers (FMCG companies) and to enable them to achieve product differentiation.

Key Highlights

• With the rising demand for nutritional foods among consumers, the FMCG packaging companies are innovating their packaging to preserve the nutritional value of the products that are being packed. In May 2020, sealed packages of fresh-cut produce imbibed a new technology that releases an anti-pathogenic agent inside the container to protect against bacteria, fungi, and viruses. The InvisiShield by Aptar Food is a platform technology specially formulated to release the amount of the agent to extend shelf life, maintain freshness, and improve efficacy in food safety. The company's next launch is on tomatoes, onions, peppers, and sliced apples. The company is developing the technology to release different anti-pathogenic agents for leafy greens and berries.
• The transportation of packed goods and consumables can have adverse effects and can also lead to a reduction of the nutritional value of the packaged contents. More and more hyperlocal supply chains are emerging in combination with consumers' desire to have information about the origin of the food products. With the recent trend of private labels, big retailers are ramping up their packaging to attract customers. According to a survey conducted by Daymon, more than half of consumers are loyal to a specific store due to its private-label brands. Moreover, the report also found that 85% of consumers believed they trust a private brand just as much as a national brand, and 81% said that they purchase an individual brand product during every shopping trip.
• Modern developments in the seafood packaging are becoming more sophisticated and more attuned to the social inclinations touted by consumers, retailers, and for essential foodservice buyers who shop for them. Sustainability of seafood has been a robust trend promoting a healthy seafood resource for generations to come. The same idea is now being focused on the viability of packaging used to protect and ship seafood. According to consumer-facing packager Bemis, the concern for sustainable practices from all areas of the supply chain is expected to continue to increase. Many beverage companies are showing interest in transforming their packaging and, thereby, switching from bottles to aluminum cans for water and introducing interactive digital platforms.
• With the outbreak of COVID-19, consumer goods are considered necessity products and do not react to slowdowns as much as products in other sectors. However, the stock prices of FMCG companies, like Unilever and Procter & Gamble, dropped 15.6% and 6.7% respectively over 21 February-17 March 2020. The consumer demand pattern has been up due to stock-piling behaviors, and hence, supply chain disruptions were evident. For instance, milk producers have been reducing prices in the United Kingdom. For example, Medina Dairies in the United Kingdom have cut their cost by 2p per liter to a standard 23.75p per liter from May 1st, 2020. Also, with small distributors of the F&B segment, concerning packaging material, manufacturing would face financial hurdles as the shopping has gone online along with stricter regulations.

Key Market Trends

Beverage is Expected to Hold Major Share

• The beverage segment has a massive consumer market, and it is supported by the high technological connectivity environment. The vendors globally are focusing on packaging equipment innovation. For instance, in august 2019, AVE UK expected to launch its new range of bottling equipment in either Monobloc (filler/capper) or Unibloc (rinser/filler/capper) version, which would be capable of handling a variety of different materials in a single machine. The adaptable bottling machinery aims to reduce CAPEX costs for shifting from plastics to glass packaging.
• Then, Macfarlane, in September 2019, launched a biodegradable packaging protection solution for wine bottles. The Flexi-Hex product is primarily made from recycled materials and is biodegradable and plastic-free. Its design comprises a concertina style honeycomb sleeve protector that forms an impact-resistant layer around bottles for protection. Also, in November 2019, Uflex launched its 3D effect 'Asepto Eye' aseptic packaging for beverages. The aseptic packaging domain-specific innovation constitutes a ripple concave lens and single-lens technology that gives 3D results on aseptic packs.
• Developments on commercial printing front have led to variable printing capabilities on beverage packaging. With packaging end-customers appreciating the benefits of digital printing (aesthetics, personalization, etc.), customer loyalty to a particular FMCG brand is heightened. Moreover, quick response (QR) codes have become a basic/mainstream print on product packaging to be scanned with a smartphone for additional display of data, such as product info, promotional content, to name a few. This further enhances on developing a customer stickiness to a brand.
• As of March 2020, SoluCan printed a QR code on the side of its aluminum beverage cans at this pandemic. The company installed a Tonejet Cyclone direct-to-pack digital beverage that can use the printer. With the QR code, the scanner is taken to the Zappar Web portal to an AR experience of being surrounded by virtual objects. The company aimed to bring color and joyfulness among its customers amidst the lockdown period. In early 2019, Tetra Pak announced that it would offer full-color digital printing on its carton packages, in collaboration with Koenig & Bauer. Such investment in digital on-package printing is enabling newer possibilities for beverage brands to customize products and differentiate branding.

North America is Expected to Hold Significant Share

• Strong growth rate in the food and beverage industry geared toward time-pressed consumers and the prevalence of convenience and discount retailers throughout the region are attributing to the growth of FMCG packaging. In the past few years, the United States has witnessed strong demand for dairy products, including milk, cheese, and yogurt. For instance, per capita cheese consumption grew from 14.3 pounds to 40 pounds between 1975 and 2018, according to USDA ERS and, a survey by US Department of Agriculture; USDA Foreign Agricultural Service suggested that county's per capita dairy consumption also increased from 630 pounds in 2015 to 646 pounds in 2018.
• Due to the changing consumer habits, the beverage industry in the United States has noticed a substantial growth. According to PMMI's 2018 Beverage Report, the North American beverage industry is expected to grow by 4.5%, during the period, 2018-2028. The significant portion of the beverage sales in the North American region is achieved by the sellers in the United States. Packaging and labeling providers in the US region, which cater to the beverage industry, are focusing extensively on packaging innovations. It demonstrates the visual manifestation of the products' positioning, where words, fonts, and images reinforce the image of the brand of the product in people's minds.
• According to PMMI's 2018 Beverage Report, the North American beverage industry is expected to grow by 4.5%, during the period, 2018-2028. Globally, the United States is the largest wine consuming country. For instance, California leads to US wine production, and the retail value of California wine sales in the United States was USD 40.2 billion, in 2018, according to the Wine Institute. According to Wines & Vines, there were 10,742 wineries in the United States as of January 2020, which is an increase of 699 wineries compared to January 2019. According to OIV, the United States accounted for 9.4% of global wine production in 2019, which is an increase of 1.22% compared to 2018.
• Vendors in the region involved in M&As and innovative packaging launches, which are likely to change the market landscape. In January 2020, Ball Corporation launched aluminum bottles that are infinitely recyclable and can be turned into other aluminum products. The bottles are present with a re-closable threaded cap that allows consumers to twist the top on and off. On the other hand, FMCG companies are re-thinking their packaging decisions. For instance, P&G aims to make 99% of their North American fabric care packaging, recyclable by 2023. Another example of sustainable packaging is of Dawn dishwashing liquid in North America. The company is currently using 35% recycled plastic (PCR) in clear bottles.

Competitive Landscape

The FMCG Packaging Market has the potential to shift rivalry, opening numerous new avenues for differentiation and value-added services. They will also enable firms to tailor offerings to more-specific segments of the market and even customize products for individual customers, further enhancing differentiation and price realization. As the market is characterized by the concentration of unique brands and new players, the firm concentration ratio is quite high.

• May 2020 - Ball Corporation named Acosta, a leading sales and marketing agency in the consumer packaged goods industry, to exclusively represent the company's aluminum cups in retail and on-premise outlets, including grocery, drug and C-stores, food service, specialty channels, and select mass channel retailers, across the United States.
• January 2020 - Amcor announced its partnership with Moda vacuum packaging systems in North America and Latin America. By combining Amcor'sAmcor's shrink bag and roll stock film for meat and cheese with Moda'sModa's system, producers can gain operational efficiencies and drive total cost savings.

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