Packaging Industry COVID-19 Trends
To identify 2-3 trends surrounding the effects of COVID-19 on the packaging industry. For each trend, a description and examples should be provided.
1: Increasing Cost Pressures
- According to McKinsey & Company, with the effects of COVID-19, "cost pressures on the packaging industry are expected to increase, with its customers under strong pressure, consumers becoming even more price sensitive, and packaging converters needing to win a sufficient volume of orders to keep their plants well utilized."
- Insights published by Fastmarkets seems to corroborate this information, noting that while packaging demand is increasing, prices are also forecast to rise, especially in regard to paper packaging.
- As one example, Ink World Magazine reported that shortages caused by COVID-19 has been driving up the price on solvent-based packaging inks.
2: Sustainability Loses Priority to Hygiene and Safety
- Mickinsey & Company predicts that "concerns about hygiene and food safety in the context of the pandemic might become a higher priority while the sustainability performance of different packaging substrates could become a lower priority--at least for the short term."
- This theory is based on the idea that the pandemic will result in a new appreciation among consumers and businesses regarding the hygiene advantages of plastic packaging, and that these advantages are already outweighing concerns regarding recyclability and plastic waste.
- One example of these effects can be seen in the co-friendly food packaging market. Markets and Markets notes that shifting short-term priorities among eco-friendly food packaging clients and their customers will result in a growth decline. The company notes "the high cost of recycling and poor infrastructure available for recycling processes are likely to hamper the growth of this market."
3: Fluctuating Levels of Demand
- According to insights published by PwC, "Packaging manufacturers will likely face fluctuations in demand as the COVID-19 pandemic intensifies, with potentially disruptive effects on production and revenues."
- These fluctuations are caused by various factors, including consumer stockpiling certain products and a reduced consumer appetite in general based on "a prolonged period of economic uncertainty." Another factor is the well-being of the employee workforce, as employee illness are causing disruptions in supply chains.
Results of Early Findings
- Although there is some information available within the public realm which highlights the trend impacts of COVID-19 on the packaging industry, much of this information is hypothesis and forecasting from industry experts, and overall, there doesn't appear to be much hard data or specific case studies that align with these insights.
- While there does appear to be some objective, quantitative insights available, this data is mostly locked behind paywalls in market reports which contain COVID-19 updates. Despite this, some more robust digging may be able to uncover some harder to find data.
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