Smurfit Kappa talks potential US$504B e-commerce market amid climate legislation changes

14 Sep 2023 --- E-commerce continues to play a substantial role in driving the packaging industry, according to Arco Berkenbosch, Smurfit Kappa’s chief innovation officer. Meanwhile, packagers strive to balance environmental sustainability and recyclable packaging claims amid changing legislation.

Packaging Insights discusses the industry’s challenges, current drivers in purchasing behavior and how Smurfit Kappa is meeting customer demands with Berkenbosch.

Our discussion follows the recent announcement that Smurfit Kappa will soon be merging with WestRock in a US$20 billion tie-up, which will create one of the world’s biggest packaging corporations. 

For what kinds of packaging are you currently identifying the biggest customer demand? 
Berkenbosch: We continue to see the increased value that our customers place on sustainability. Many want to switch to more sustainable packaging alternatives as this can be a relatively easy change. They also see the potential impact that using non-recyclable packaging materials can have on purchasing behaviors. For that reason, there is significant demand for our Better Planet Packaging solutions, a range of paper-based products designed to leave no trace on the planet. Many of these are used to substitute single-use plastic items such as shrink wrap and multipacks.

Smurfit Kappa’s BPP Ready2GO product line includes a fruit and vegetable punnet which can easily be customized and placed onto the shelf.Customers are also under increasing pressure from NGOs and investors to validate their ethical claims. The changing regulatory landscape also impacts customers’ packaging requirements, and the EU Green Deal continues to drive innovation.

However, while we support the EU regulation’s ambitions, the proposed amendments submitted to the European Commission’s packaging and packaging waste regulation risk doubling the amount of plastic packaging in Europe by 2040. Reusing and recycling are critical to reducing waste and carbon emissions, so we closely monitor developments in this area.

The demand for e-commerce packaging continues to be high and shows that it is much more than a humble box. 

How are you meeting this demand?
Berkenbosch: Smurfit Kappa’s integrated model has enabled us to ensure the security of supply to our 65,000-plus customers against a challenging macro backdrop. We were pleased to deliver a strong first-half performance this year, which, even in a declining volume environment, reflects the quality and resilience of Smurfit Kappa’s integrated and geographically balanced business model.

In July, we also expanded our geographic reach by opening a new integrated state-of-the-art plant in Morocco and acquiring a specialty packaging operation in Spain. Our sustainability credentials also enable us to offer packaging solutions that help our customers meet their sustainability goals.

How is Smurfit Kappa tapping into current packaging trends and customer demands?
Berkenbosch: The demand for sustainable packaging continues to grow, so we have continued to add to and extend our Better Planet Packaging (BPP) portfolio. We are currently running a pilot in our Ermelo plant in the Netherlands involving a pallet wrap made of 100% paper, which can potentially be a game-changer for the market.

The BPP Ready2GO product line, a range of BPP solutions, includes multi-packs, inserts and replacements for plastic crates, which have been designed specifically to enable customers to go to market faster. Examples in the range include a fruit and vegetable punnet, which requires only small tweaks to customize, and a pack that can be placed directly on the supermarket shelf without unpacking, which Danone uses for their Alpro soya milk range.Smurfit Kappa launched a portfolio of wine packaging solutions to help businesses capitalize on the growth in e-commerce wine sales. 

We also use a combination of digital tools, data and analytics to help our customers manage their supply chain sustainability and deliver a superior consumer experience. Customers can also avail of our Design2Market Factory, which creates a fast development process from packaging design through to marketing launch and caters for the two biggest trends in the packaging industry – sustainability and e-commerce.

This means that customers can test a tangible prototype with consumers and then use the resulting feedback to refine and hone it before moving to full-scale production.

Furthermore, when they choose a packaging partner like Smurfit Kappa, they are guaranteed paper and corrugated board that is renewable, recyclable and recycled at scale.

What trends are you seeing in e-commerce post-pandemic?
Berkenbosch: While e-commerce is not growing at the rapid rate that it did during the pandemic, it continues to be an important channel, with the European e-commerce market projecting it to reach a market volume of €504 billion (US$540 billion) by 2025.

Our experience and expertise in e-commerce mean we can provide customers with flexible, easy-to-pack solutions that are right-sized and eliminate any risk of product damage in transit, ensuring products arrive in perfect condition.

Earlier this year, we also launched a portfolio of wine packaging solutions to help businesses in the e-commerce sector capitalize on the continued growth in e-commerce wine sales. One of the solutions in the portfolio consists of a new wine multi-pack with a design comprising an outer box and buffers and is robust enough to reach the end consumer no matter how complex the supply chain is. This solution also holds Amazon’s Frustration-Free Packaging certification, an important prerequisite for many companies.

By Natalie Schwertheim