Part One: Spotlight on alcohol beverage pack innovation in the COVID-19 era

10 Jul 2020 --- The alcohol beverage packaging sector has undergone more change in the past decade than in its entire history. From wine in tin cans to spirits in aseptic cartons, the space is ripe with diversified solutions that adapt to evolving e-commerce channels and calls for streamlined eco-centricity. With insights from key suppliers, PackagingInsights explores the trends leading NPD in alcoholic beverage packaging in this first of a two-part report, as well as how the COVID-19 crisis has exacerbated the main challenges alcohol packaging companies face in this increasingly crowded space.

“The alcohol packaging sector is no longer reluctant to embrace change. As most of the growth comes from innovation, wine and spirits, brand owners try to find ways to innovate their brands and one of the solutions can be packaging. In general, we see more audacity in the spirits sector,” says Lucie Neubauerova, Trade and Communication Manager at France-based Amcor Capsules La Défense. 

While Scotch whisky and fine wine have well-established packaging design cues, others are much more open to innovation, according to Melianthe Leeman, Global Innovation Leader at US glass manufacturer Owens-Illinois. “Rosé wine, vodka and especially gin are categories that have a much more adventurous approach to package design. The variation is enormous in gin styles, [ranging] from elegant, pastel-colored bottles like Silent Pool [to] chunky, black apothecary styles like Hendrick’s [and] the tall but heavily embossed Jenever brand Hooghoudt.”

Meanwhile, Riccardo Castagnetti, Director Portfolio Strategy & Planning at Tetra Pak, highlights that global producers are “increasingly appreciating” the advantages of using Tetra Pak aseptic cartons for wine and spirits packaging. “Tetra Pak cartons help [wine] retain both color and flavor. Carton packages are available in a wide range of sizes and are printable on all sides, offering wide design and branding opportunities. Their lightweight design makes them cost-effective to ship and store, and helps reduce waste due to breakage.”

In India, he details, cartons are used for whiskey and liquors, while cartons make an “ideal solution” for specific applications such as mixers and low-alcohol drinks in the US and South Africa. 

Sidel introduced an agile, auto-adjustable Pick & Place case packer Cermex FlexiPack, which improves flexibility by handling a wide variety of bottles’ diameters and heights.Category blurring and increased competition
Driven by the increasing consumption of millennials, the sector is witnessing change at every stage of its value chain, states Olivier Goffin, Vice President Global Accounts Beer, Wine & Spirits at Sidel. 

“It starts with the sophistication of the consumption trends with the regular launch of products of a new generation, such as Ready-To-Drink beverages (RTDs), premixes, hard seltzers, wine cocktails, low-alcohol and low-calorie cocktails. All these new drinks are competing with each other and with traditional beverages at the same time. With drink categories quickly blurring, consumer profiling is becoming more and more difficult,” he details. 

To keep up with this sector evolution, brands must improve their production tools, manage a growing number of stock-keeping units and, consequently, increase their flexibility. “At the end of the value chain, e-commerce is acting as a game-changer further requiring agility at the production level,” Goffin highlights.

E-commerce booms
Within the e-commerce sector, product and shipping packaging go hand in hand. Alcohol packaging market will need to shift more toward packaging crafted for home deliveries to offer alcohol end customers “the best unboxing experience,” notes Justyna Bialoglowicz, E-Commerce Marketing Manager for the UK & Ireland at UPS.

“The wider packaging industry needs to pivot toward comprehensive solutions that will ensure the best overall customer experience. It must offer both security in transit and a quality home delivery experience, which will ultimately lead to greater customer satisfaction and brand loyalty,” she details. Moreover, by co-developing packaging solutions that meet the standards of shipping safety, packaging companies can establish stronger confidence in industry partnerships and ultimately deliver “peace of mind” for customers. 

UPS initiated a four-partner collaboration with Macfarlane Packaging, Sealed Air and Smurfit Kappa earlier last month called UPS Spirits Pack. Their partnership brought a new range of recyclable cardboard packaging specifically designed for shipping individual bottles of spirits and wine.

Innova Market Insights has also pegged “Packing an e-Punch” as its third top packaging trend for 2020. The e-commerce sector has been rapidly developing in the past few years, but coronavirus-related quarantine requirements and the closures of public dining spaces have led to at-home consumers turning to e-tailers to access a myriad of products at their fingertips. 

“Traditionally, drinks producers have positioned their brand on a shelf and the presentation value was often determined by ‘point of sale’ packaging. However, home deliveries mean that certain types of alcohol packages, ranging from tins to boxes, become more difficult and less [environmentally] sustainable to deliver in their current form,” flags Bialoglowicz of UPS.

In a four-party collaboration, UPS initiated UPS Spirits Pack, designed specifically for shipping individual bottles of spirits and wine.COVID-19: Sustainability has “not gone away”
The COVID-19 crisis has forced a dilemma on companies having to choose between investing in recovering from supply chain disruptions or in environmental sustainability efforts. Neubauerova underscores that some of Amcor’s markets were particularly impacted, “usually where the crisis struck hardest, such as France.”

The pandemic jolted a number of Sidel’s customers’ investment schedules, while for Owens-Illinois, several of the US-based supplier’s customers have had to pivot their lines to manufacture alcoholic hand sanitizers in support of their communities’ health services.

Nevertheless, Neubauerova at Amcor states that although it is “too early to say” to what extent the pandemic has left a permanent mark on the alcohol sector, her company witnessed how alcohol consumption rose thanks to off-premise rise in sales and stockpiling of liquor in some countries. Leeman from Owens-Illinois similarly sees the hospitality sector gradually reopening, which will lead to factories slowly returning to full capacity. Anticipating the “switch to an industrial culture of agility,” Sidel has also made itself “ready” by honing in on its line design, engineering expertise and following new market trends.

With carton packaging still a relative “newcomer” in the entertainment and event sectors, Tetra Pak has “not felt a significant impact,” says Castagnetti. The company has consolidated its position in this segment across few markets, reconfirming carton packages credentials in terms of food safety, convenience and sustainability.

Ultimately, the needs of climate change “have not gone away,” adds Leemand. “We are likely to see a renewed concentration on sustainability and further opposition to plastic pollution.”

In conclusion, Neubauerova of Amcor warns that: “There are still some very traditional wine regions that are not very willing to turn away from their traditional ‘heritage’ packaging cues. But as the consumer landscape is changing, they’ll slowly have to adapt if they want to be successful with the upcoming generations.”

Click this link to read Part Two of this alcoholic beverage packaging report, where we delve into how packaging companies interpret the growing premiumization trend on an industrial scale. Moreover, we’ll explore how alcohol brands are integrating interactive digital technology to improve consumer-brand relationships and boost product traceability.

By Anni Schleicher