Consumers, retailers embracing eco-friendly packaging
Eco-friendly packaging continues to be an opportunity for private brands to differentiate across many product categories — and to do the right thing in the process.
As concerns about the environment continue to build momentum, the connection between sustainability and consumer purchase decisions has never been more important, says Mark Lutgens, vice president of new product development and innovation for Ardagh Group, Glass/North America, a Luxembourg-based packaging company.
“Today’s consumers are embracing the role of packaging and how it can help improve our environment and benefit them personally from a health and wellness perspective, resulting in a wide demand for sustainable packaging,” Lutgens adds.
Joseph Barbara, national sales director of Baldwinsville, N.Y.-based Giovanni Foods, which manufactures sauces, marinades and other products, says U.S. consumer demand for eco-friendlier packaging has been steadily on the rise and the consumer packaged goods (CPG) industry has responded with lighter weight, eco-sustainable packaging across many CPG segments.
“There are consumers that desire responsible, eco-friendly packaging across all categories, so clearly they are the fuel that feeds the fire,” Barbara says.
Scott Byrne, environmental specialist for Tetra Pak U.S. and Canada, says a 2017 survey of U.S. consumers about the environment shows that the number of U.S. consumers who avoid a particular product or brand for environmental reasons has grown to 68 percent, which is nearly a 30 percent increase from the first time the company asked the question in a 2005 survey.
Rachel Kirkpatrick, product commercialization manager for Portsmouth, Va.-based coffee manufacturer Massimo Zanetti Beverage USA, says consumer demand is growing significantly for any coffee product that offers a sustainable message of which packaging is an important component.
“Recyclability is critically important while we are seeing continued awareness of compostable packaging,” she adds. “Building eco-friendly packaging into the brand identity plays into the authenticity of the brand, making it more believable.”
Although consumers of all ages are concerned about the environment, the focus seems to always turn toward millennials, says Lutgens, noting that business media company Forbes reports that millennials prefer to do business with corporations and brands with sustainable manufacturing methods.
Kirkpatrick says product quality and sustainability are factors that affect millennials’ loyalty to a brand. “Both should be present for the brand to win,” she adds.
Barbara says it’s easy to see that millennials lead the charge on many fronts when measuring consumer analytics on various factors. “However, reducing waste and doing the sensible thing for the environment isn’t a behavior practiced by one group,” he adds. “It touches consumers of all ages and all consumer segments.”
Retailers are no different from anyone else when it comes to caring about the environment, but they are in a great position to make a positive impact through private brands with eco-sustainability, Barbara says. Retailers are anxious to capture new customers and keep their loyal customers on a variety of scales.
“It would be a mistake to assume retailers are not thinking about having eco-friendly packaging solutions for their private brand portfolios,” Barbara adds. “Their customers expect the same if not better quality on private label items versus national brands.”
Many retailers, including some that aren’t generally considered pioneers in eco-innovation, have implemented specific environmental criteria for the products they stock, Byrne says.
“The focus is often on sustainable sourcing, end-of-life recovery and optimization of packaging design,” he adds. “Many retailers are making a real push to ensure their own private label brands meet or exceed certain environmental benchmarks.”
Clay Dockery, vice president of retailer brands for Massimo Zanetti Beverage USA, says eco-friendly packaging has to serve two needs: product protection and true environmental benefit.
“While the packaging does cost more than conventional packaging, this is a huge opportunity within private brands given that you can offer differentiated and improved packaging while just managing a slight narrowing of price gap to national brands,” he adds. “Progressive retailers are looking for differential advantages in their own brands, and offering better packaging options is a differential advantage.”
Sandy Gott, co-owner and executive vice president of Shelburne, Ontario-based Ice River Springs, a provider of store brand bottled water, says retailers are incorporating socially responsible practices into their merchandising and operational strategies to not only meet a growing consumer demand but also to demonstrate to their stakeholders that what is good for the planet is also good for business.
There are challenges, though. In the markets it serves, there is stronger interest in eco-friendly packaging from private brands and smaller specialty brands looking to differentiate themselves, says Joel Schmidt, director of market development for Neenah, Wis.-based packaging manufacturer The Outlook Group. But Schmidt says cost is an issue.
“For the most part, brand owners and consumers still are not willing to pay more for sustainable options, and many of the more sustainable options do cost more,” he adds.
Barbara believes consumers by-and-large want to do right by the environment, and there are consumers who will pay a premium for some eco-friendly packaging.
“The first challenge is controlling cost, especially in the private brand space,” he says. “The second challenge is continuing to create innovative packaging that is not only eco-friendly, but also doesn’t require the consumer to have to stray too far from the core attributes of why they like the product in the first place.”
Lutgens says a recent Nielsen study suggests that consumers are increasingly willing to pay more for socially responsible products. He notes that Iceland Foods, a British supermarket chain, has pledged to remove plastic packaging from its private brands by 2023 and began making changes in February. Iceland Foods says 80 percent of its customers say they would support a supermarket that decided to go plastic-free.
“Iceland is demonstrating the possibilities of private label brands to engage with this trend, so they are not left behind by upcoming legislation or increasingly engaged consumers who choose to make purchases that align with their values,” he adds.
Another challenge is that “eco-friendly” is a broad term that encompasses many different aspects, including recyclable, compostable, bio-based and down gauge, Schmidt says. Many consumers and brand owners are unclear on what each of these terms means and which aspect of eco-friendly is most important and most viable for their particular application, he adds.
Kirkpatrick says since eco-friendly packaging is not as far along in its development life cycle; it sometimes doesn’t offer the same level of durability and strength.
Dockery adds that eco-friendly packaging has to deliver against several issues including recognizable environmental benefit, modest difference in cost and functionality in manufacturing.
“If any of those components are missing, little progress can be made,” he states.
Gott says the challenge for retailers and suppliers is to educate shoppers on the additional social benefits of sustainable packaging while delivering a great consumer experience.
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