Among the keynote presenters at the recently concluded 18th IAPRI World Packaging Conference at Cal Poly State University was Dr. Michael Okoroafor, vice president for Global Packaging Innovation and Execution at H.J. Heinz Co. He provided a unique outlook on global packaging trends for food and beverage.
Emerging and growth-leading economies now not only include the BRIC countries (Brazil, Russia, India, China) but also another group of emerging-market trend setters called the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkay, and South Africa). The BRIC and CIVETS countries, experts claim, now are experiencing swift increases in disposable income, aka higher consumer spending in the cosmetics, food, and beverage sectors. Okoroafor observed that in these countries, the term “middle class” is becoming less and less useful and recommended instead the term “buying class.” Because regardless of which societal category consumers fall under, they can be identified as an influential and trend-setting demographic when they have actual purchasing power. And purchasing power is what they are now acquiring.
Okoroafor also addressed how important it is that packaging be able to break through the clutter so prevalent in today’s retail environment. Few brands have gone out to truly take advantage of brand communication through packaging. Executing an “experiential” design philosophy for the brands is becoming increasingly dominant in maintaining and increasing market shares. The packaging for the consumable goods category needs to address “art” (emotive effects), “science” (functional effects) and “business needs.”
Okoroafor is certainly right about the clutter issue. I’ve also been noticing how the hyper competitive grocery industry is undergoing a rapid blurring of channels, causing brand owners and retailers of all stripes to revisit not only their business models but their packaging, too. Convenience stores no longer just provide “convenience” products but are increasingly becoming a “grocery” outlet. Traditional grocery stores are becoming the neighborhood convenience stores. Meanwhile, two thirds of adults now say the quality of store brands is much better today than it was five years ago. This is no accident, as private labels have devoted a lot of energy to improving the quality of their products and the packaging that contains them.
Understanding the difference between a want and a need has never been more important for CPG companies. Okoroafor recommended increasing consumer value through elimination of non-value costs and ensuring a value proposition that is firmly founded on the needs and wants of key consumer segments.
Okoroafor emphasized three key facts that brand owners should keep in mind—the economic recession is not a recession in eating, consumer frugality will stay fashionable, and the leading brands are at a crossroads. This group will emerge stronger only if they innovate, add value to retailers, and improve/increase communication through packaging.