2021 is quickly approaching, which means it’s time to reflect and think ahead for what’s next. Although 2020 was a volatile year, definite patterns emerged for the plastic packaging industry.
As you plan ahead for the future, keep these key industry trends in mind.
COVID-19 and the Plastics Industry
It goes without saying that COVID-19 will continue to shape the plastic packaging industry in the coming year. Demand for plastic in certain end-uses will continue to grow, while others will shrink. In 2020, for example, demand for plastic in uses including groceries, home entertainment and household supplies grew, while personal care products, apparel, jewelry and out-of-home entertainment uses shrank. (McKinsey & Company).
McKinsey & Company went so far as to examine COVID’s impact on “megatrends” affecting the plastics industry. These are trends that were already in place before the pandemic but will be affected in various ways going forward. They include:
- Sustainability Requirements
- Customer/Consumer Preferences
- Retail Margins and Supply Chains
- Digitalization of Packaging
We’ll discuss each of these in more detail below and explain how they could have an impact on your business.
Plastics and Sustainability
Global consumers – and governments – continue to demand greater accountability in all areas of plastic production. They want to know what their plastics are made from, what impact that will have on the environment, how they can be recycled and more. Commercial consumers are also interested in these areas.
Now is the time to emphasize your company’s commitment to sustainability (whether downstream or upstream) with programs like reclaiming scrap and the usage of bio-based plastics. You may also want to educate yourself further on the future of the plastics industry with reports like “The New Plastics Economy.”
E-Commerce and Plastics
Shopping and business have officially moved online and are there to stay. Digital Commerce 360 reports that e-commerce sales grew 44.4% in Q2 2020 from the same quarter in 2019. And in that time period, $1 of every $5 spent was online.
Packaging for end-users, as well as products for warehouses and e-commerce suppliers, will continue to be a driving force in this area for 2021.
Customer and Consumer Preferences
Hygiene and food safety concerns continue to grow as consumers navigate the pandemic. Some restaurants and cafes, for example, are suspending their bring-your-own cup/bag programs to help mitigate the risk of cross-contamination. Consumers are also hyper-aware that the coronavirus may remain on surfaces for hours or days.
At the same time, more consumers are doing things at home that they might have previously done in public spaces. Grocery sales have spiked, while eat-in restaurants have seen enormous drops in sales and patronage. Think about the shift to spending more time at home and less time in public as it applies to your customers.
Retail Margins and Supply Chains
Interwoven with the shift to at-home living and e-commerce is the drive for businesses to make their supply chains more efficient and cut costs where possible. With some industries being hit hard by the pandemic, companies are taking closer looks at all aspects of their business and finding efficiencies.
Packaging and plastics are important pieces in the supply chain puzzle. Reinforce your value to customers concerned about their supply chain costs.
Digitalization of Packaging
The Internet of Things is arriving, and it includes packaging. The digitalization of packaging can include things like upgraded tracking labels or increased reporting at each level of the packaging process.
This ties in neatly with the idea of increased e-commerce sales and more efficient supply chains. While this exact topic may not directly impact your business at this time, let customers know that you can innovate with their needs and are ahead of packaging trends.
Other Forces Shaping the Plastics Industry
Consumer Safety Concerns
In addition to COVID-related safety concerns, more and more consumers are questioning what their packaging is made of and how it could affect their health.
A Smithers article reports, “As the use of plastic films has become more common, concerns have arisen about their ability to allow the exchange of gases and vapors that can compromise the quality and safety of packaged products, and this is being addressed by the introduction of safe, novel barrier films and coatings.”
Virgin Feedstock & Petroleum Costs
Tied into the supply chain and sustainability trends is the volatility of resin’s virgin feedstock material costs – namely, petroleum. As oil prices change, so do resin costs.
While the industry is still a long way from what The New Plastics Economy calls “decoupled plastics from fossil feedstocks,” know that it continues to be a factor that affects costs far upstream of the consumer.
Stay in the Know About the Plastics Industry
Read more trends, insights and tips from the packaging experts at Versa Pak in our distributor news resource section.