By: Shreyas N. Deshmukh*
Fast Moving Consumer Goods, as the name suggests, are low-cost products with low shelf life (they are either high in demand or deteriorate rapidly, or both). Packaged food, beverages, toiletries, stationery items, medicine, makeup — all of them come under the FMCG label. There are countless companies which manufacture such goods, and the only thing that distinguishes one company from another is its distinct packaging. As important as fast moving consumer goods are, their packaging is equally important. It’s the first thing that the consumer sees and that catches the eye. There is special focus on creating attractive and distinct packaging that can set a product apart from others on the shelf.
The FMCG packaging market is expanding exponentially. It was estimated to be over $700 billion in 2017. With world population on the rise, consumption of food has increased, thereby creating a demand for higher quality packaging. While at the same time, packaging has become more complex and competitive. There are various new market strategies like graphic designs, logo art, catchy slogans, different product wrapping methods, innovation in packaging material etc. The largest user of FMCG packaging is the e-commerce sector. Internet is easily accessible nowadays, and it connects a vast majority of the population to e-commerce websites. According to a study, around 60 percent of the sales of FMCG are done online. Before a product can be delivered to the buyer, it must be packaged with precision, to avoid any damage in handling and transportation. To ensure that, a system of multi-layer packaging is put in place; the carton carrying the product is stuffed with air-filled plastic bags for protection. However, this is a waste since all of that material is thrown away eventually.
From food to medicine and makeup, packaging matters. The customers want their money’s worth and packaging plays an important part in it. For a long time now, plastic and other polythene compounds have been used for packaging. Plastic is easy to manufacture and is cost-effective. A lot can be achieved at a small price. It is durable, secure, and waterproof, making it best for transport and storage. But again, it also creates large amount of waste. These days people are more aware about environmental concerns and it has created a resistance in the use of plastic packaging. Various government organisations have banned the use of plastic, owing to which the plastic industry has faced a setback. There is a need to acknowledge sustainable packaging solutions that do not harm the environment in the long term.
The modern consumer is more aware and increasingly concerned with the impact they are making on the environment. The current generation recognises and wants to fix the damage that has been caused by several years of unsustainable practices. People are willing to pay more if the product is more environment friendly. This is where sustainable packaging market for FMCG finds its opportunity.
The sustainable packaging market is a strategic approach to resource management. However, the cost reduction in this style of packaging is the biggest challenge. This gives rise to a lot of opportunities for companies to research and develop environment friendly or/and reusable packaging products. The market needs biodegradable packaging material and strategies to design them in a way that can fulfil their purpose of protecting and storing the product, carry information about the product, can be advertised to the customer, and used efficiently for distribution.
Although a recent phenomenon, sustainable packaging (or green packaging) solutions are redefining packaging in the global FMCG market. Manufacturers collaborate with brands, designers, leading labs, suppliers, and universities to make packaging that weighs less and creates less waste, with aim is to make a positive change. Assessing the life cycle is an important step in the manufacturing and packaging of a product. It involves the analysis of the overall environmental performance, considering the whole life cycle — from cradle to grave — along with a wide range of impact categories. If a package is light in weight, it may cause the product inside to be damaged during transit. Major emphasis is given on carbon and water footprint. To decrease carbon footprint, upgraded equipment is used, coupled with optimised scheduling. It has the ability to reduce annual greenhouse gas emissions and save non-renewable natural resources. Upgraded water footprint results in the annual reduction of fresh water intake and improved efficiency at the site’s cooling tower.
Sustainable packaging ensures optimised use of material; reduced use of energy and shipping weights; increased product life without any damage to the product or the cover; and factors reusable and recyclable properties. For example, the use of cloth or jute bags for grocery shopping which can be washed and reused multiple times. Many retailers encourage the customers to bring their own bags. It cuts down the use of plastic bags and promotes sustainable habits. Another significant change being made towards green packaging is reducing the number of layers that are required for the packaging, which in turn decreases the number of upfront materials required. For example, a company has started the use of filmless holographic technology which gives a shiny appearance to the product without using a film lamination. Another company has made use of the plastic waste collected from the water bodies to make biodegradable plastic that can be used for mass distribution of products. Use of other materials like aluminum, glass, metal, wood, paper, and paperboards depend on the product that is being packaged within. Metal packaging offers convenience and provides safety to the product. Paper packaging is environment friendly, but it means cutting down more trees for their production.
The Asia Pacific region has seen the highest growth in terms of eco-friendly packaging of fast moving consumer goods. The rising population in countries like China and India, along with urbanisation and modernisation of most Asian countries, has contributed to the growth of this market. The waste generated here is significantly higher, which is causing harm to the environment and health problems in communities. It demands for taking up major initiatives towards using eco-friendly sustainable packaging and products. The region is followed by North America and Europe in terms of growth in the FMCG packaging market. The drive toward green packaging of FMCG is thriving, to meet the demands of a more conscious world, in turn giving rise to various new opportunities for innovation in packaging technologies that can help reduce the environmental damage and preserve our surroundings for the future generations.
*Senior Consultant, Adroit Market Research