The fundamental problem, however, is that companies – regardless of size and turnover – often have limited procurement capacity to initiate new packaging projects.
Sustainable Packaging: Relevance, Challenges and Opportunities
From the perspective of the packaging, consumer goods and retail industry | Survey results and recommendations for action by INVERTO
Everyone wants them, but everyone understands them differently: The criteria that packaging must meet to be considered sustainable are not precisely defined. Many different aspects play a role and do not necessarily go hand in hand: Sustainable is, for example, the use of renewable raw materials, good recyclability of the material, resource conservation in general or the reduction of the CO2 footprint.
Laws and guidelines for more sustainable packaging have been developed on the part of polistics and continue to be part of ongoing and future decision-making processes. For retail and the industry, however, it is a great challenge to orient themselves and to pursue a futureproof, strategic roadmap for the implementation of measures. Meanwhile, the demands on material properties are constantly increasing: For example, the Packaging Act has set recycling quotas that can only be achieved through better recyclable packaging. At the European level, the Green Deal has set the targets for sustainable packaging. Levies such as the “plastic tax,” whose assessment basis is the amount of non-recycled plastic waste, are about to be implemented.
At the same time, there is increasing pressure from consumers and retailers to drive innovation and offer more sustainable packaging solutions. Packaging manufacturers, consumer goods producers and retailers assume that the demand for sustainable packaging will grow
strongly in the coming years and will be a decisive competitive factor in the future.
It is interesting to note that companies perceive a discrepancy between what consumers regard as sustainable and what science and politics define as such. They are therefore facing major challenges in developing and implementing sustainable packaging solutions, as they try to meet both the sustainability expected by consumers and the sustainability defined by science and politics.
To get to the bottom of these challenges in detail, developed this study on sustainable packaging and consulted Prof. Dr. Sven Sängerlaub. Mr. Sängerlaub is a professor at the University of Applied Sciences in Munich. He teaches and conducts research on the subject of sustainable packaging.
This whitepaper provides a detailed insight into the results of the “Sustainable Packaging 2020” survey. We also outline how you can take a holistic view of this complex topic in order to identify potential and develop a customized, sustainable packaging strategy at company and product level.
Comments from the market
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“Basically, we need to look at the subject of sustainability from a holistic viewpoint, keeping an ecological balance sheet or life cycle assessment. In practice though, the issues of waste and packaging recyclability currently dominate.”
Leading packaging manufacturer
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“I think that the issue should be more about how we use systems for returning packaging and where these systems can be introduced. […] I see takeaway items as the biggest problem, as they pose the greatest littering risk and the waste is
not actually being sorted.”Sustainability manager in the food retailing sector
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“If we wanted to completely switch to renewable raw materials, it wouldn’t be possible straight away, as we don’t have the
material and production capacity for it yet.”Prof. Dr. Sängerlaub
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“Protecting products is the highest priority, followed by functionality using the least amount of materials possible.”
Leading packaging manufacturer
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“There is no single material that is particularly sustainable. The type of packaging must be considered for each product, for its market or for the processing technologies that are available.”
Packaging developer from FMCG sector
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“If companies try to implement every aspect of sustainability at the same time, it can lead to a conflict of objectives. Retailers and consumer goods businesses have to define and follow their own clear strategy to achieve both ecological
and economical results.”Rudolf Trettenbrein, INVERTO GmbH
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“One challenge is quite clearly processability and machinability. Many products are developed and work well, but their costeffectiveness and (customer) acceptance are often a problem. Changing to new packaging is a complex challenge for manufacturers and users, especially maintaining high production speeds and short cycle times. Often investments in existing, sometimes even new, equipment are required. Therefore a holistic total cost of ownership consideration is a must.”
Prof. Dr. Sängerlaub
Key findings of the Survey
Sustainable packaging is a very relevant topic with future potential
Sustainable packaging is an important aspect of the much discussed sustainability topic. This is the assessment of around 50 percent of the participants in the INVERTO study. More than 80 percent of those surveyed expect the demand for sustainable packaging to rise sharply in the next five years. Half of the consumer goods manufacturers
surveyed even expect an increase in sustainable packaging solutions to 76 to 100 percent over the same period.
50 percent of all companies surveyed go so far as to attribute a decisive contribution to sustainable packaging for future competitiveness.
High product complexity, limited material availability and limited capacity in procurement inhibit development and implementation
One of the biggest challenges in the development and implementation of sustainable packaging solutions is the variety of customer requirements and country-specific regulations. These lead to a large number of variants and complexity, according to the majority of respondants. Only 23 percent of the
participants have sufficient capacity in procurement to drive new packaging projects forward. The availability of sustainable materials also poses a problem for 85 percent of those surveyed. Just over half simply lack the necessary, sufficient market overview of sustainable packaging solutions.
Consumers increasingly demand sustainable packaging solutions, but are not willing to bear the additional costs
Half of those surveyed see the origins of the pressure to act to develop and implement sustainable packaging among consumers and retailers.
The implementation of sustainable packaging leads to
additional costs for 95 percent of the study participants. More than 50 percent of those surveyed believe that the consumer is not prepared to bear the full costs.
Relevance of sustainability and sustainable packaging
The consumer is at the center of the sustainability analysis.
High relevance of sustainable packaging for competitive positioning.
The well-being of consumers (64 percent), a healthy society (56 percent), fair business practices (63 percent) and circular economy (57 percent) are rated by those surveyed as sustainability goals of great importance.
The well-being of consumers (64 percent), a healthy society (56 percent), fair business practices (63 percent) and circular economy (57 percent) are rated by those surveyed as sustainability goals of great importance.
“How important is ‘sustainable packaging’ compared to other sustainability topics (in procurement) in your company?”
For half of the participants, sustainable packaging is very important compared to other sustainability topics. The proportion of those who share this assessment is significantly higher among packaging and consumer goods manufacturers.
46 percent of respondents believe that sustainable packaging is crucial to their competitive position. Among the respondents with a high proportion of sustainable packaging (sector-independent view), more than two-thirds even share this opinion.
“To what extent do you think the use of sustainable packaging is relevant for your competitiveness?”
Sustainable packaging has a major impact on brand perception
“To what extent does the introduction of sustainable packaging influence the following aspects?”
Two-thirds (63 percent) of those surveyed attribute a (very) large influence
on the reputation of their own company to sustainable packaging. The significance for sales and risk management is
predominantly rated as moderate.
If one compares the assessment of consumer goods manufacturers and retailers,
a similar picture emerges.
Case study claro: holistically conceived sustainability as a competitive advantage
The example of claro, a producer of dishwasher detergents in Austria, shows how sustainability can be an approach to successfully position oneself in highly competitive markets. From the very beginning, founder and owner Josef Dygruber pursued the idea of developing and producing a dishwashing tab that not only has excellent cleaning quality, but also meets the highest ecological standards. claro achieved its breakthrough with the water-soluble individual packaging of the tabs. The completely biodegradable dishwashing tabs clean efficiently without colorants or fragrances. Every ingredient has been traced back to the raw material manufacturer to ensure 100% freedom from genetic engineering. At the Anif site, claro not only develops but also produces. This keeps transport distances short, which saves CO2. The cardboard packaging comes from Austria and consists mainly of grass. The result here too: 50% less CO2.
Of course, the costs of the product and the packaging are correspondingly higher. However, part of these additional costs can be compensated for by a slightly higher sales price, because customers appreciate claro‘s commitment and the ecological benefits of the products are recognizable and comprehensible. The benefit for claro: increasing acceptance by end consumers and thus also increasing sales.
Many relevant consumer goods manufacturers and retailers act only because of the moral pressure exerted by consumers. A credible and sustainable strategy to implement the topic authentically is often missing.
Rudolf Trettenbrein, Managing Director
Future development of sustainable packaging solutions
The vast majority of those surveyed anticipate (strongly) increasing demand. But only the packaging manufacturers invest a majority in research and development
The majority of packaging manufacturers are already actively working on innovative solutions for sustainable packaging. Only 30 percent of the retail sector and 36 percent of the consumer goods industry have reached a comparable level of maturity.
86 percent of those surveyed believe that the demand for sustainable packaging will continue to grow over the next five years.
Consumer goods manufacturer
Packaging manufacturer
Wholesale/ Retail
Currently, most of the participants in the study put the proportion of sustainable packaging in their company at a maximum of 25%. It is expected that in five years at least half of all goods will be packed in an environmentally friendly way.
Looking at the future development of each industry in detail, it becomes clear that consumer goods manufacturers in particular expect a share of sustainable packaging solutions of over 75%.
Implementation of sustainable packaging: Influencing factors and progress
Pressure to act to develop sustainable packaging comes from consumers and retailers
More than half of those surveyed stated that it is primarily consumers and retailers who are pushing the implementation of sustainable packaging.
More than half of those surveyed stated that it is primarily consumers and retailers who are pushing the implementation of sustainable packaging.
Discrepancy between scientific and perceived sustainability influences companies
“In your opinion, is there a discrepancy between publicly perceived and scientifically based sustainability?”
“To what extent does this discrepancy influence sustainable packaging decision-making in your company?”
80 percent of all respondents see a high discrepancy between scientific and customer perceived sustainability, which leads to uncertainty in companies.
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Results of the representative consumer survey by the market research institute Innofact:
Consumers understand ‘sustainable’ as packaging made of renewable materials (70 percent) or recycled materials (65 percent) as well as reusable concepts (65 percent).
Complexity, limited market overview and limited availability of sustainable materials inhibit successful implementation
“Do different customer requirements or country-specific regulations lead to a high number of variants and complexity for your company?”
More than half of the study participants (52 percent) state that the topic of sustainable packaging is associated with high complexity – whether it is due to different customer requirements and/or country-specific regulations.
“Does your company have a sufficient overview of various sustainable packaging solutions on the market?“
Only 75 percent of packaging manufacturers are confident that they have an overview of all available sustainable solutions. In the case of retailers and consumer goods producers, the figures are even below 50 percent.
“Many companies are regularly faced with the problem of not obtaining sufficiently sustainable material/packaging (e.g. rPET). Does this apply to your company?”
In addition to the limited market overview, it is also the limited availability of sustainable materials, which affects 65 percent of the participating companies to varying degrees. Medium -sized and large companies in particular are struggling with the problem, although recyclates are still more expensive than new materials.
Sustainable packaging is associated with additional costs for most companies. The willingness of consumers to bear the additional costs is only partly given
For 95 percent of those surveyed, the
implementation of sustainable packaging
leads to additional costs.
Opinions differ as to whether consumers are prepared to bear these additional costs: 50 percent of the experts
from the companies surveyed do not
believe this, while 46 percent trust that
they can pass on at least part of the
costs.
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Results of the representative consumer survey by the market researchninstitute Innofact:
Many consumers would be prepared to pay additional costs for sustainable packaging. Around threequarters (72 percent) of the participants stated that they would pay at least 10% more for a product if it was packaged sustainably. Almost 30 percent of consumers would be prepared to accept a price premium of over 20%. The younger the respondents are, the greater the acceptance.
In principle, however, caution is called for when it comes to the topic of sustainability: because there is often a gap between the statements made by consumers and actual purchasing behavior at the point of sale.
How well is procurement prepared?
The role of procurement is characterized by capacity bottlenecks and knowledge deficits
For over half of the participants from the consumer goods and packaging industry, procurement is largely involved in the process of packaging development and implementation.
“To what extent is your procurement department involved in the process of packaging development and implementation?”
“Which statements apply to the knowledge base on sustainable packaging in your company?” (multiple selection possible)
However, many procurement departments do not have sufficient knowledge about sustainable packaging to ensure successful implementation. 50 percent of consumer goods manufacturers certify that their procurement department only has basic knowledge.
“Does your company have sufficient procurement capacity to support new projects in the field of sustainable packaging?”
The fundamental problem, however, is that companies – regardless of size and turnover – often have limited procurement capacity to initiate new packaging projects.
Recommendations for Action
Implementing sustainable packaging solutions regularly poses new challenges for businesses. As demand for sustainable packaging will grow significantly over the next few years, companies will continue to find it complex and challenging. Social developments, such as the rising number of single member households and the trend for convenience as well as the boom in e-commerce, not least because of the Covid-19 pandemic, all put an even greater focus on the subject of packaging and packaging waste. Therefore, it is all the more important for all companies to analyze what potential there is for them in terms of sustainability and sustainable packaging and what solutions are worthwhile for their own business. Sustainability does not necessarily need to result in additional costs if the issue is looked at in full and for the long term, and if strategic procurement is involved in the procurement of resources at an early stage.
Creating Transparency and Calculating Maturity Level
A holistic appraisal and analysis forms this basis: how is a company currently positioned in terms of sustainability – also in comparison to the competition – and what are its aims?
To calculate the maturity level, it is essential to define a list of criteria that reflect every aspect of sustainability as comprehensively as possible. It is crucial to define the criteria in a quantifiable way.
With the aid of this list, a company should eventually be able to create transparency across four dimensions: governance & strategy, packaging materials, cost excellence and operational excellence.
In each of these areas, a comparison needs to be made between the company’s sustainability status quo – where you are at the moment – with the goal being aimed for – and where you want to be – so that the gaps can be identified.
INVERTO Model for Assessing Packaging Sustainability
1 Governance & Strategy
Is sustainability incorporated in the business strategy, and to what extent? Defining a company’s individual target vision is essential for developing a clear strategy and guiding principles that can always be adhered to.
Governance covers all the issues that a business needs to address for achieving its sustainability goals and the measures linked with them. This includes, among other things, setting a timescale for when you would like to reach your sustainable packaging goals. Setting a budget for implementing your sustainability strategy also comes under governance.
Other aspects that need to be considered may include whether a code of conduct exists for suppliers that support the company’s sustainability strategy. Similarly, there could be an incentive scheme for employees who help the implementation of sustainable packaging to progress.
As a basic rule, the defined sustainability strategy needs to consider interests and influences both internally across all departments and externally from customers, trading partners, legislation etc.
2 Packaging Material
Firms also need to ask themselves which packaging solutions support their business strategy and what measures can ultimately be used to manage sustainable packaging – for example how much recycled content is in the new packaging, or what its CO2 intensity is.
The use of a sustainability matrix is useful for evaluating sustainability approaches in general at a product level. It compares the effort the implementation processes will take the company to the actual relevance for the market or customer. Depending on the particular perspective – the packaging manufacturer versus the food and drink sector – possible approaches for sustainable packaging solutions will be regarded and evaluated differently.
In food retail, shelf life and product quality assurance are the top priorities. Another factor is making the product as easy and convenient for the customer to use and handle as possible. The use of recycled materials is therefore only possible to a certain extent.
Using less material is a game changer in terms of sustainability for retail and the consumer goods sector. On the one hand it is seen as quite time-consuming, but on the other hand very much in demand from customers.
Using less material is a game changer in terms of sustainability for retail and the consumer goods sector. On the one hand it is seen as quite time-consuming, but on the other hand very much in demand from customers.
3 Cost Excellence
How well is the company placed to manage its procurement overall? What costs would potential sustainable packaging strategies bring about in the business? What pricing strategy can and should be adopted for the end product?
To be able to answer these questions, firms must achieve transparency about additional costs. In concrete terms, this means performing a Total Cost of Ownership (TCO) calculation for the conversion of production and the changeover to new materials.
Aspects that need to be considered include: general additional costs, which could result with the production and enterprise transision, the
time needed for production testing and product testing, impact on the packaging’s functionality, throughput speeds, resource availability in
general and the potential impact on machinery.
Once transparency is achieved, you can move on to look at the classic approaches to optimizing procurement costs, which also apply to sustainable packaging:
• Strategic procurement – in other words, regularly benchmarking market prices and renegotiating where necessary,
• Reducing packaging volumes overall or replacing with more efficient materials,
• Standardizing materials and using them for several products to reach synergies or procurement volumes and to reduce the time you need to spend sourcing.
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Examples from INVERTO’s project experience
show that switching to sustainable packaging solutions can also bring cost benefits:By changing its packaging from a can – made out of a combination of plastic, aluminum and cardboard – to purely cardboard packaging, one food company managed not only to produce more sustainable and completely recyclable packaging, but also to make savings amounting to 8 percent. The packaging, by changing from composite material to 100% cardboard, also made licensing cheaper.
Using GT1 recycled cardboard instead of GC2 virgin fiber-based board for snack boxes meant that a company in the foodservice industry could make savings amounting to 25 percent.
4 Operational Excellence
Every step of implementation must be planned consistently, meticulously and sustainably to prevent the organization as a whole from becoming overburdened. It is essential for all internal stakeholders to work together: departments such as logistics, marketing, procurement, production and management. Only through this kind of teamwork will it be possible to reach goals agreed across all departments, and to eventually set up a process for packaging development that incorporates the most diverse aspects of sustainability and also cost perspectives.
When it comes to knowledge about sustainability issues, many companies have some catching up to do, as the latest study shows. It is important to achieve continuous transparency about the market situation and sustainable packaging solutions.
Additionally, an internal quality control authority needs to be established to test new packaging for relevant sustainability issues and to ensure that defined internal guidelines comply. In procurement, it is a good idea to establish strategic sourcing of raw materials and suppliers, with a focus on sustainability issues. Procurement and raw material price changes must be recorded and regularly benchmarked. To ensure sufficient access to sustainable materials, it is vital to systematically build up and develop a sustainable supplier pool. These
challenges can often only be met if companies create extra procurement resources.
Conclusion
The one single sustainable packaging that is the best solution for every product and every company simply does not exist. Many factors need to be considered: legal requirements, scientific findings, customer demands, limited resources, technical feasibility and costs, as well as differing sustainability goals which unfortunately may not go hand in hand and which sometimes contradict each other. Using renewable raw materials, for example, does not necessarily make packaging sustainable if it has been produced abroad and transported halfway round the world.
Even with all its challenges, sustainable packaging is a relevant subject that will become increasingly significant in the future. The time has now come for companies to act in terms of sustainability as legal requirements in Europe are becoming more stringent. Precise recycling goals for packaging waste and strict regulations for Europe-wide compliance were defined in the “Green Deal”: by 2030, 70% of all packaging and 55% of all plastics must be recyclable. There are also plans to introduce a minimum recycled content in packaging. The ruling includes further measures to tackle superfluous packaging as well as an action plan for circular economy with a particular focus on resource intensive sectors.
Companies should take independent advice and determine which sustainability criteria are most important to them. The starting point is a holistic analysis of company‘s current sustainability maturity level and of goals for the future. Once a sustainability strategy has been decided, the next step is to implement it consistently within the organization. This will enhance the credibility, strengthen a company‘s ability to compete and ensure the return on investment.
INVERTO Offering “Sustainable Packaging”
Sustainable Packaging: Relevance, Challenges and Opportunities
From the perspective of the packaging, consumer goods and retail industry | Survey results and recommendations for action by INVERTO
