CPG spending on packaging on the rise

Drivers of this investment in packaging include the rise in premium products, customization, and consumers’ focus on health and environmentally-friendly products, among others.

Seventy-five percent of CPGs say they’re going to spend significantly more on packaging over the next year.
Seventy-five percent of CPGs say they’re going to spend significantly more on packaging over the next year.

Seventy-five percent of Consumer Packaged Goods brand owners say they’re going to spend significantly more on packaging over the next year, with a third saying they will increase spending by more than 10%. That’s according to a new surveyof 250 CPG brand owners by L.E.K. Consulting, which also found that 90% of brand owners say packaging is critical to their brand’s success as they seek to adapt to an increasingly competitive landscape and rapidly changing consumer tastes.

“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, and CPGs are responding and investing,” says Thilo Henkes, Managing Director at L.E.K. and co-author of the 2019 Brand Owner Packaging Study. Accordingly, 57% of brand owners 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.

Another top driver of brand growth, says the survey, is the rise of premium products, as consumers turn to these as a way to convey their unique personal tastes. Forty-two percent of CPG respondents say they’ve expanded their premium offerings, with 35% changing their promotional strategies and 32% expanding their price-pack offerings. And packaging is often central to the marketing of premium offerings, sincethe packaging format, substrate choice, printing, texture, and other features often convey the product’s high-end status.

Among the other consumer trends the report says have direct implications for packaging:

  • Customization: New technologies have made product customization more cost-effective, and in turn, consumers have gained a fondness for specialized products. More than half of brand owners have increased product personalization over the past two years, and 42% have implemented additional customization of their products.
  • Ever-increasing health focus: As the demand for more healthy products skyrockets, companies have made adjustments to their products: 60% of brand owners have introduced all-natural or non-processed products, and 53% have introduced “health-focused” products that include more healthy or natural ingredients. These products have required adjustments to packaging to communicate these changes to consumers.
  • Green growth: Environmentally-friendly products have begun to move out of their niches onto the center stage, 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 their packaging material 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 and more consumers choose to shop online, brand owners are turning to a variety of strategies that involve packaging. 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. As a result, CPGs 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.
More in Package Design