Market mayhem forces packaging businesses toward alternative materials, study finds

22 Jun 2022 --- A study released today by printing company R.R. Donnelley & Sons Company (RRD) has found the packaging market’s most pressing challenges are forcing decision-makers to shift priorities and rethink operations, with 90% changing how their packaging is sourced. The Unpackaging Reality Report explores how converging disruptive issues like supply chain volatility, inflation, labor shortages and increasing environmental sustainability pressures have impacted the industry.

“RRD’s new Unpackaging Reality Report explores how brands are approaching packaging, coping with challenges, and pursuing adaptive opportunities to survive and succeed in an evolving marketplace,” Lisa Prunett, RRD’s president of packaging solutions, forms and labels, and retail solutions, tells PackagingInsights.

“Like most business functions, packaging decisions are being made in a quickly evolving market. Virtually all respondents – 96% – agreed that supply chain disruptions and inflation have impacted overall operations, such as budgets, timelines and sourcing.”

“The survey results demonstrate how these dynamics have influenced product packaging, from reprioritized materials to supplier management strategies and online consumer needs,” she adds.

Industry challenges
Surveying 300 packaging decision-makers in the US, RRD’s study found that material price hikes and supply shortages presented the biggest hurdles for the industry over the past year, with over half of respondents reporting they have been strongly impacted.

RRD’s study found that material price hikes and supply shortages presented the biggest hurdles for the industry over the past year.These challenges, among others, forced organizations to reprioritize packaging materials (68%), budget (52%), packaging design and aesthetics (49%) and environmental sustainability goals (45%). Despite the many challenges brought on by the pandemic and downstream issues, the report found that overall, the packaging industry proved resilient and continued to track toward a more environmentally sustainable and innovative future. 

“There’s no disputing that rising costs, supply chain snares, and talent pinches have posed major challenges to the packaging industry, but that doesn’t mean this reality is all doom and gloom,” says Pruett.

“These challenges transformed the industry into a more innovative, agile, and environmentally-conscious sector. Organizations responded with diverse strategies as there is no one-size-fits-all approach to tempering disruptions.”

Survey findings
RRD commissioned an online survey of 300 procurement, brand marketing and packaging engineering decision-makers to provide insights that inform strategy, priorities, and investments. Survey participants are located in the US across a variety of industry sectors. The survey, conducted by FINN Partners in Spring 2022, is weighted to be nationally representative. 

The company conducted a comprehensive survey to offer insight into this complex landscape of both immense opportunity and challenges for decision makers. The study’s key findings underscore the packaging industry’s willingness to evolve operations in the face of challenges without losing sight of environmental sustainability goals: 

1. Supply chain challenges lead to innovation: To navigate the market challenges, organizations have been willing to explore a wide range of solutions to their supply chain issues. Specifically, 62% diversified suppliers, 42% outsourced manufacturing and fulfillment, 39% consolidated suppliers, 30% substituted specs, and 26% reshored their manufacturing to the US. There is broad willingness to pivot to different packaging materials in light of supply chain sourcing challenges, with over one-third (36%) saying they were “extremely” willing to use alternative materials.
   
   
2. E-commerce ignites packaging demand: Packaging needs have skyrocketed in recent years, in part due to the acceleration of online shopping amid the pandemic, and this has created both strain and opportunity for the packaging industry. Organizations have been willing to explore a wide range of solutions to their supply chain issues.The survey indicated that a majority of respondents (57%) experienced an increase in e-commerce orders in the past 1-2 years and, for nearly all of them (92%), this resulted in an increase in packaging needs. Packaging professionals responded to the growth in e-commerce orders by increasing inventory (55%), expanding warehousing (53%), changing materials (52%), and increasing staff (51%).
   
   
3. Surprising strides in sustainability despite cost pressures: The survey findings contradict the sentiment that sustainability initiatives fell to the back burner as companies grappled with other pressing priorities, with almost all respondents (94%) agreeing that sustainability is a key consideration in packaging and label decisions. Further, two-thirds of packaging professionals shifted to more sustainable packaging than what they used previously. When considering sustainability, budget is the top influencing factor – more so than external regulations or consumer preferences – suggesting that cost-effective eco-friendly materials are in high demand.

“The Unpackaging Reality Report is the first annual survey of packaging decision-makers by RRD, which follows on two years of studies that explored perceptions of marketers. RRD’s specialty research helps decision-makers in marketing, packaging, print and supply chain better understand peer opinions, industry trends and investment priorities,” concludes Pruett.

By Natalie Schwertheim