Luxury Packaging: Global growth driven by new technologies

12 Sep 2018 --- Luxury Packaging London 2018 – the UK’s only designated luxury packaging show – has exhibited a market in good mood and one which is growing on a global scale, even exceeding general consumer goods packaging by some accounts. This is despite challenges concerned with how luxury packagers can continue to “stand-out” and be commercially successful in an arena where new technologies and processes have enabled cheaper production and greater efficiency, allowing competitors to undercut prices.

PackagingInsights sat down with Neil Farmer, luxury packaging expert and Founder and Owner of Neil Farmer Associates, at the show after he had presented on the trends and innovations that are driving luxury packaging and the new technologies to look out for.

“There is a rising demand for luxury goods and luxury goods packaging. To put this into context, the global consumer goods packaging market will be worth US$530 billion in 2022, growing at a rate of 3 percent per annum from its current levels. The luxury packaging market will be worth US$19.8 billion in 2022, with a growth rate of 5 percent per annum over the same time-span,” explains Farmer.

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“The introduction of new technologies and innovations will be the key factors in market growth. Brands are striving to provide product differentiation at the point of purchase. Nowhere is this more vital than in the luxury packaging sector – luxury packaging has to have that ‘wow’ factor to succeed.”

“Innovative new designs, package shapes and decorative techniques can therefore be created as added value features. As a result, materials and technologies will drive demand for luxury packaging and enable companies offering these services to succeed. Similarly, use of special decorative effects will provide even greater product differentiation and shelf appeal,” he says.

Intelligent packaging
Farmer explains how the increased use of social media and brand communications in combination with the rise in intelligent packaging technologies such as NFC and augmented reality has facilitated new innovation in the luxury market.

“Developments such as the Diageo and Thin Film Electronics smart bottle printed sensor from 2015, to detect both the sealed and unsealed state of a Johnnie Walker Blue Label bottle through the use of smartphones, is a great example of utilizing leading-edge technology in the luxury packaging sector,” he says.

“This important trend will continue over the next five years,” he continues. “The global intelligent packaging market will be worth almost US$2 billion in 2021, a growth of 18 percent per annum over the 2016 to 2021 period.”

Read more about how connective technologies are enhancing consumer packaging here.

Customization and personalization
Customized added value packaging materials will also enhance a product`s desirability, Farmer explains. He highlights that technologies such as 3D printing will enable manufacturers to transform designs into products within a short period of time.

“The continuing rise of digital print technology will enable luxury brands to broaden their ranges and customize their product offerings with greater ranges of limited editions and personalized products,” he says.

“These sectors all benefit from digital`s speed to market and ever-improving print quality. The digital print for packaging market was valued at US$14.5 billion in 2017 and growth is forecast to continue at a rapid rate to US$28 billion by 2023; the luxury sector is a key part of this.”

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Famer highlights an example of a successful limited edition pack launch: AB InBev`s Stella Artois partnership with The Wimbledon Championships earlier this year, which provided limited edition packaging in UK retail outlets.

“The packaging united the heritage and the fans affection for both brands. On-pack promotions offered two tickets to the tournament for ten winners for either the men`s or women`s final. Fans purchased special Stella Artois packs to see if they contain one of ten white winning bottles. [This is] a great example of customization and limited edition all rolled into one.”

E-commerce challenges
Corrugated packaging has been identified as one of the sectors of the market to have a fast rate of growth to 2023, according to Farmer. E-commerce is identified as the prime sector for further market development.

“For the luxury packaging market, this means the potential to utilize transit and secondary packaging more widely as a display packaging format. The complexity and intricate nature of corrugated packs with innovative design and construction will help luxury markets, which have sustainability and zero waste agendas,” he says.

“Corrugated board producers, with the benefits of flexibility, sophisticated graphics and high-quality materials, can help luxury packaging markets evolve, providing the complete packaging solution encompassing display, secondary and transit. Companies such as DS Smith come to the fore in this respect.”

Sustainability
Luxury packaging is not exempt from the sustainability challenges facing the wider packaging industry. There is a global demand for luxury packaging which is sustainable as well as being personalized and highly attractive, as Farmer details.

“The drive is, of course, to produce packaging from renewable sources, with resources and materials being used for as long as possible. Essentially this is extracting maximum value from materials whilst in use, with recovery and regeneration at the end of life, forming the complete circular economy.”

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“All packaging producers, whether in the luxury sector or otherwise, are needing to respond to the needs of a changed world. Consumer goods companies ultimately want 100 percent of their packaging recyclable or reusable, by as early as 2025 in some cases. There is no reason why the needs of the luxury packaging market should differ in this respect,” he explains.

Global growth
The growth in the luxury packaging market is truly global. By Farmer’s estimates, the Asian Luxury Packaging market, for example, will grow at a rate of 6 percent per annum over the period to 2022, a higher rate than the overall market figure of 5 percent per annum.

“I believe the Asian and other emerging markets, including Central and South America, will benefit from higher disposable incomes, the desire of consumers to acquire more prestigious branded products and the ability of producers to respond more quickly to changes in demand using innovative technologies.”

“The importance of the authentic luxury brand and its intrinsic qualities should never be overlooked in this buoyant sector,” he concludes.

By Joshua Poole, reporting from Packaging Innovations/Luxury Packaging London 2018

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