Packaging is on a growth path, no doubt about it. Among all the packaging sectors perhaps FMCG (Fast Moving Consumer Goods) industry also known as Consumer Packaged Goods is more lucrative. Coca-Cola, Dettol, Dove, Dairy Milk and many more well- known brand names are all part of the fast moving consumer goods. In this article we look into FMCG industry trends and developments and its impact on packaging industry as a whole.
When we talk about packaging we also mean label as well so using the term product decoration maybe a better option to explain everything that decorates and safeguards a certain product. Packaging for FMCG is divided to carton packaging, flexible packaging, thin-wall packaging, container, glass packaging and metal packaging.
Carton packaging is marked by moderate growth. However for high end added value folding cartons the growth is strong. Due to increasing price of paper fiber the sector is experiencing price pressure at the moment. There is also more demand for inline finishing and converting operation.
On the other hand flexible packaging is experiencing strong growth rate especially in barrier and convenience packaging. The printing process of choice for flexible packaging is flexo. During recent years with the introduction of high resolution (HD flexo) flexo printing this process has become more popular than ever. Based on figures released by Smithers Pira flexo printing market value in Middle East from 95 million Euro in 2002 increased to 153 million in 2012.
The total global market value of flexo printing during 2012 was in excess of 32 billion Euros. Now within the flexo printing the demand for packaging with easy opening and reclosing features such as re-closable pouches and trays, re-closable or easy opening lid is high.
Another type of packaging which is showing strong growth rate especially for convenience food, ready meal, “on the go” food and beverage is thin wall plastic packaging. The demand for plastic packaging and plastic parts that are lighter weight and engineered for increased strength using less plastic material, have made thin wall molding a sought after capability. Typically, “thin wall” is considered as plastic parts or plastic packaging with a wall thickness less than.8 mm (0.031 inch).
The process requirements for thin wall plastic injection molding and the thinner wall sections are different than those for standard plastic injection moulding with the need for higher pressures and molding speeds, faster cooling times, and modifications to part ejection and gating arrangements.
High speed plastic injection molding machines, robotic systems, special thin wall plastic injection molds, and proper part design and material selection are also all critical to successful thin wall plastic injection molding.
Next stop is glass packaging. The future of glass packaging production due to its weight, high energy consumption and high carbon footprint is not promising. PET and other plastic bottles are replacing glass packaging for many food products and beverages. Metal packaging is not popular as well. Its production requires high energy and high carbon footprint.
It lacks aesthetic value convenience especially for opening and reclosing. Container packaging on the other hand is showing strong growth especially for household products, lubricant oils and etc. Last but not least is speciality packaging that come in different forms and shapes such as tubes. This type of high growth packaging is mainly used for cosmetics, oral care and household products. It enjoys excellent haptic characteristics and you can print directly on them.
Label family is growing
Label is an important part of packaging. It informs the consumer and decorates the product. The label family is growing. The World demand for labels was 40,500 million square meters during 2010 with a global label market value of $24 billion USD. Among all the labels available pressure sensitive and wet glue labels with 41% and 28% have the biggest market share globally. On the other hand paper labels with 74% market share is most widely used label in the world. However its market is declining fast while filmic labels that boast a 26% market share is featuring a double digit growth year on year. There are a number of reasons behind accelerated growth rate of filmic labels including:
• No-Label-look capability / Excellent life time
• Excellent chemical properties
• Resistant against humidity and moisture
• Squeezing and rolling capability / Excellent haptic property
Narrow web press is now the technology of the choice for printing labels. It is used for printing a wide range of labels and packaging including wrap around label (WAL), injection mould or in-mould label (IM-IML), shrink sleeve label (SSL), tube laminate, flexible packaging, lid, bottle capsule, roll-on shrink-on (ROSO), filmic wet glue label, candy wraps, paper cups, ice cream wraps, thermo forming label (TFL) and liner-less label.
With the growing sophistication in production methods labels are now able to cater to niche markets and special applications such as fruit ripeness indicator label or time temperature indicator (TTI) label. Booklet label on the other hand is becoming more and more important especially for pharmaceuticals, house hold products, house hold chemicals, food and beverages, health, beauty and cosmetics, toys, IT products and promotional products. Pharmaceutical, chemical, and consumer-industrial product’s companies need booklet labels to help them add a lot of copy in a small space. For example, if a company is shipping overseas, they might want to consolidate all the country languages into one booklet label.
This reduces cost by eliminating the need to print separate labels for each language. Chemical companies use booklet labels widely to fit pages of government required information and directions for use. It is not uncommon to see a booklet label over 76 pages in that industry.
On the other hand packaging is becoming smaller and there are more vital information that should be squeezed in label. The size of label is also important. Labels are getting smaller because product decoration of each brand has major impact at POS.
Another type of special application label that is becoming more and more appealing to food manufacturers is insulating sleeve label which is made of co-extruded, shrinkable polystyrene foam. The material provides cushioning for glass containers and insulation for food containers whose contents will become hot or cold.
Offset or flexo printing on the surface is available and it results in a no-label look. The use of UV Varnish with low COF (Coefficient of friction) is advisable for front printing utilizing its thermal insulating properties, the label can be applied to various types of containers: plastic packages, glass packages, packages for microwave use, etc.
With rising demand for environmentally sound approach to labelling manufacturers are looking for new innovative labels. Linerless labels seem to be a good option.
Linerless labels are available in Paper, Board or Synthetic materials. Linerless labels do not utilise carrier backing paper due to their unique glue track and silicone face construction. This reduces the weight of the label product by 40% on average and increases the number available per reel using the same outside diameter as a conventional self-adhesive product. More labels per reel equates to fewer reel changes and less downtime on line, combined with high-speed application, accelerates production efficiencies. The application of Linerless labels requires dedicated application equipment due to the nature of the construction.
There is also the so called, ½ or partial wraparound label introduced by Krones. The Krones Group, headquartered in Neutraubling, Germany, plans, develops and manufactures machines and complete lines for the fields of process, filling and packaging technology These labels are applied in a wraparound labelling system but only cover part of the bottle’s circumference, which results in material and cost savings.
New realities such as urbanization, ageing population and technologies have altered consumer behavior. At the same time the demand for well being and luxury products is growing. Meanwhile number of single households is rising. Today consumers have less time for cooking. That’s why the consumption of ready meals and eating meals “on the move” is growing. And when people do decide to buy something 70% of the times the decisions are made at the point of sale. Not surprisingly 85% of FMCG buyers are women. Today there is more demand for wellbeing and luxury products. Buying online is also a growing trend especially among younger generation.
New strategies for cost reduction
FMCG manufacturers are constantly looking for ways to reduce the inventory carrying cost.
One of the new strategies to achieve this is called open stock postponement model. Based on this strategy manufacturing is delayed to let the consumer demand catch up. In this model the manufacturing process is broken into three tiers. First the product unit is manufactured without packaging. Basic product units are then stored in a Finished Work in Process (FWIP) buffer inventory area. Then it will be sent for packaging.
The reasons are that FWIP inventory will be the basic unit, inventory density can be highly efficient, and inventory cost will be minimized. Packaging centers benefit from being located within key distribution centers along with the FWIP buffer inventory. However this model will impact label printers in many ways including:
• Order sizes will decline more and more in the future
• Lead time will be shorter
• Demand of “Zero-defect” on shipped label will increase in future (100% digital inspection, 100% inspection with human eyes)
• No under-delivery will be accepted
Labels can be private too
A fast growing segment of label industry which for many is not familiar is the so called private label. Private label products or services are typically those manufactured or provided by one company for offer under another company’s brand. Private label goods and services are available in a wide range of industries from food to cosmetics to web hosting etc. They are often positioned as lower cost alternatives to regional, national or international brands, although recently some private label brands have been positioned as “premium” brands to compete with existing “name” brands. The best example for private label in UAE is Carrefour. The supermarket chain is selling a number of products manufactured by other companies under its own brand.
The Private Label Manufacturer’s Association (PLMA) in the United States categorizes PL manufacturers into four main categories:
• Large national brand manufacturers that utilize their expertise and excess plant capacity to supply store brands.
• Small, quality manufacturers who specialize in particular product lines and concentrate on producing store brands almost exclusively. Often these companies are owned by corporations that also produce national brands.
• Mjor retailers and wholesalers that own their manufacturing facilities and provide store brand products for themselves.
• Regional brand manufacturers that produce private label products for specific markets.
With 22% of total label market share Private label is growing faster than brand products.They are ubiquitous in FMCG market and competing with brand product by quality. The growth and high demand for private labels means that product variety will increase, job sizes will decline further plus there will be more frequent design and job change. Meanwhile price pressure on brand owner will grow.
From FMCG to SMCG
Meanwhile FMCG industry will grow and capture market share. The higher demand for FMCG means that there will be higher grade of printing and converting to create eye catching products. Narrow and mid web presses with combination and inline solutions will become more popular mainly for rigid and flexible packaging. Environmental issues and implementation of 3R’s ( Reduce, Reuse and Recycle) in the production process becomes a norm rather than exception, while at the same time. The fight between retailer and brand owner will intensify. Global food safety and packaging regulations will be implemented across many countries as global brands expand their markets throughout the world and rise of private labels create serious challenges to brand owners.
The high of growth FMCG is undeniable and the new global development and the technology breakthroughs are driving all of us to consume more fast moving products. But there are also signs that FMCG is shifting to SMCG or slow moving creative goods. More people want to know where their food is coming from. Many people also have a tendency to grow vegetables and foods in their back yards and even sell it to people. Young people are also very creative and Internet is teaching them how to cook proper food.
Although the SMCG concept at this time seems very remote and idealistic but ultimately it will find its way into minds and heart of the people.