Active, intelligent, and connected packaging, or more simply “smart packaging,” is a catch-all category that comprises a host of disparate, outwardly unrelated technologies. But in practice—for our purposes, that means in CPG, FMCG, food/bev, or pharma applications—this suite of tech shares a common attribute: using the package itself to connect, record, communicate, and add value across the supply chain far beyond that package’s original duties of delivering a product to a consumer intact.
In-market examples of smart packaging are varied. On-carton sensors that change color as your milk spoils, or antimicrobial packaging from suppliers like Aptar to extend the shelf life of your produce, are two examples on the “active” side of the coin. Pharma is using this tech for medicines like biologics that must stay within certain temperature ranges during transport, otherwise lose efficacy. When it comes to connected packages, those carrying RFID or NFC radio transmitters—once prohibitively expensive components for anything but spirits and cosmetics that are falling in price accordance with Moore’s Law—communicate directly with consumers via smartphones. This was once was a one-way street, with brands sending messaging toward their consumers, hoping to be heard. That model is evolving into a feedback loop as brands learn to collect that consumer interaction data to glean behavior insights, then adapt their offerings to match. Even the once lowly QR code is storming back after an inauspicious start, and standardization by organizations like GS1 are consolidating tons of data and multipronged utility in a single, unique, consumer-friendly 2D datamatrix. And perhaps most loudly reported in Europe this past year vis a vis HolyGrail 2.0, digital watermarks printed covertly on packs carry data on product and package make-up called a digital passport. Material recovery facilities (MRFs) can scan this digital watermark to instantly ID the material constitution of a discarded package, improving sortation and recovery for recycling. Clearly, smart packaging describes a diverse landscape.
Any new packaging tech is bound to exhibit an adoption curve all its own and evolve toward greater degrees of sophistication and complexity. For smart packaging in particular, this is hardly a linear journey, as the many disparate technologies within the category mature at different paces. Changing consumer pressures—the recent advent of the sustainability-minded consumer for instance—tend to move the goalposts. Plus, the fragmented nature of different technology providers, and different technologies that don’t always integrate easily with one another, make it difficult for brands who have to cobble together a single solution out of a stack of possible tech.
But even with this scatterplot distribution of results and uneven pace of change, trend lines are visible when all the data points are plotted. And nowhere in the world is that picture clearer than at the annual World Congress, hosted every November in Amsterdam by the Active and Intelligent Packaging Association (AIPIA). With practically all the relevant parties in the same room, it becomes apparent that the adoption curve for smart packaging is steepening. That’s due in part to regulation, especially in Europe, and in part to sheer utility for brands and retailers. More importantly, the brand owners employing smart packaging are beginning to take better advantage of the full suite of applications, not just the consumer engagement piece that often serves as their on-ramp to smart packaging.
“When we talked to brands back when we first started, they were talking about consumer engagement. Even though we knew the potential was so much more, it was all about the consumer engagement piece. They just wanted to form closer relationships with their customer base,” Andrew Manly, communications director of AIPIA remembered of the World Congress’s early days. “Now, the narrative has shifted towards delivering impactful information about their environmental, social, and governance (ESG) efforts. Brands are now more focused on imparting information that reflects their sustainability efforts, not just to their consumer, but to the wider world.”
The sustainability piece, or at least the potential for it, has always existed under the smart packaging umbrella. But only more recently has it come to the fore—so much so that it’s almost subsuming smart packaging’s other attributes. Since this Nov. 2023 World Congress was co-located with Packaging Europe’s Sustainable Packaging Summit, there was a more pronounced sustainability flavor to the event than usual. Manly is fine with that, so long as brands don’t lose sight of the other legs of the smart packaging stool, namely harvesting and acting on consumer insights, and supply chain optimization.
Biggest hurdles: data management and consumer education
“Some of the things we’ve heard over the last year that are top of mind now at this event include educating consumers on how to use smart packaging, and also educating brands and retailers on how to manage and put to use the data they’re getting via smart packaging. If we’re honest, we feel the development of some areas of smart packaging is being held back by that lack of [brand and retailer] education and a lack of ability to share data. Instead of not having enough, they have loads too much that they often don’t know what to do with, or can’t share it with people who would know what to do with it,” Manly observed, referring to a type of data paralysis that brands experience when their outgoing communications suddenly start generating feedback loops of valuable, actionable, but overwhelming consumer behavior data.
“But that’s silly, the know-how is there,” he said, pointing to a presentation by Jenny Stanly of Appetite Creative, a company devoted to creating consumer experiences and gamification via connected packaging, such as brand owner Schweppes’ Jus de Fruits Caraibes campaign that PW covered last year. The Appetite model collects a wealth of data on consumer behavior via their interactions with the package and feeds that data back to brands in a feedback loop. According to Stanly, it’s true that brands don’t use that data as much or as well as they should, but she notices that it’s improving.
“According to Jenny, they’re going to have to use that data, partly because they’re being pushed by legislation to do so, and partly because the culture in the companies is changing as this new era of data and data management comes online. It’s breaking down the silos that house this data, and more easily sharing it, that’s going to be the hardest part.”
Notably, legislative pressures on packaging-borne data use and ownership are more advanced in Europe than in the U.S. Consider our Drug Supply Chain Security Act (DSCSA), which originally had a series of phased milestones—some of which were delayed—leading up to the 2023 deadline for full compliance. That enforcement deadline has been extended again, another year, into 2024.
Still, legislative drivers in Europe will impact packaging-derived data sharing practices the U.S. market. That will be sooner than later for multinational brand owners like Nestlé, P&G, Unilever, and Mondele-z since a singular approach to data management is simpler and more economical than a piecemeal-by-market system of approaches.
Successful data management by brands and retailers may unlock the potential for not only smart packaging, but an entire smart retail ecosystem with smart shelves populated by smart packaging. Consider automated and autonomous grocery stores (smart stores) based on NFC or RFID, with NFC-based AIPIA presenter ST Microelectronics and retail pioneer Blockstore Group at the leading, bleeding edge. There’s a consumer engagement element since the NFC can communicate with smartphones, but there’s also a strong inventory management and replenishment element for the brands and retailers. The automated payment potential with consumers’ connected smartphones may further reduce retailers’ reliance on trained human workforce.
“You’ve got Walmart [in the U.S.], who seems quite wedded to RFID and traceability elements of smart packaging, but it’s not yet translating through to consumer engagement and the full integration of a smart store. Meanwhile, such retailers are always under pressure from lack of trained personnel and workforce scarcity, so a smart store with smart packaging on smart shelves is a logical outgrowth that I’m sure we’ll see.”
Platform interoperability is an issue for brands
An aggravatingly persistent attribute of smart packaging is the fractured nature of its technologies and technology suppliers. Brands and retailers seek turn-key smart packaging solutions but find themselves instead having to erect their own layered stacks of technology to create one-off, bespoke, and proprietary smart packaging solutions and data streams. And when a combination of solutions is necessary to provide a total answer, data sharing can be tricky between layered and sometimes competing technologies.
“I just heard on the show floor that sometimes simple is best,” Manly said. “Don’t overengineer something that you don’t need, or find too confusing, or find too costly to implement. You can go step by step and scale a smart packaging solution as you become more sophisticated along with it. You can add elements as you go, and as you become able to cope with them.”
From the technology suppliers’ point of view, the brands and retailers are themselves fragmented—each brand owner has a different product with different marketing and supply chain aims, so each is looking for a different suite of smart packaging technologies. A provider can’t exist to solve a problem that only one brand faces. Standardization by the likes of GS1 and its Digital Link, alongside market consolidation, are both working to align technologies and terms in smart packaging and reduce fragmentation. Events like AIPIA, where the disparate techs connect under one roof, also serve as standardizing steering bodies.
“Ultimately, we’re making progress in smart packaging. There are more implementations, there’s more QR, there are more chips out there and their prices are getting lower. There are just more mass rollouts of some smart packaging technology than ever before,” Manly summarized of the state of the smart packaging landscape. “But those mass rollouts are not enough. A company like Coca-Cola has done countless smart packaging campaigns, but each one is its own, compartmentalized, self-contained effort that has a beginning and an end date. The benefits of smart packaging are fully realized when it’s a sustained effort, not just singular campaigns. If we can get a retailer to implement that, then it would really get that momentum rolling. Walmart has done this for some of its SKUs, but I don’t see any supermarket or grocery chains who have done this, other than in the apparel sector where RFID is now almost universal for inventory management, shrinkage control, and warehousing. But apparel isn’t CPG or FMCG, and that’s where we need to get some sustained, mass-market traction. AIPIA exists to try to keep on plowing through, jointly facing headwinds, keeping people connected to make [smart packaging] happen.” PW