Published Tuesday 23rd July 2019
The packaging industry is in a period of drastic change. Highly publicised concerns about plastics and other non-renewable packaging have forced businesses across all sectors to re-think their long-term strategies. Packaging businesses themselves are increasingly investing money in research to develop new materials that are sustainable not just for the planet, but also their profits.
However, a traditional packaging format has achieved something of a resurgence. Corrugated packaging has seen an unlikely increase in demand across many industries. Whilst this highlights the need for plastic alternatives, it also paints a picture of an increasingly competitive packaging sector.
The Rise in Demand for Corrugated Packaging
According to a study earlier in the year, demand for corrugated packaging increased by 3.2% year-on-year for the previous two years. This high growth has been achieved despite the maturity of the packaging market. More importantly, industry experts believe that corrugated packaging’s growth will continue, although at a slower rate. The growth of corrugated carton packaging should continue at 2.7% per year for five years, before dropping to 2.5% for the next five, up to 2028.
The Benefits of Corrugated Packaging
Whilst a shift from plastic has benefited the corrugated packaging sector, there are many more factors that have led to this growth. The biggest reason for this substantial rise is the growth of e-commerce against bricks and mortar retail, which demand increasing from both sides of the divide.
E-commerce retailers often favour corrugated packaging due to the increased protection and relative value it can offer. Whilst not the most adaptable, corrugated packaging provides a lot of benefits when used for quick, bulky deliveries. Its value is one of the main reasons it has also found appeal amongst the struggling bricks-and-mortar sector. At a time when businesses are forced to reduce their expenses, corrugated offers a simple and effective packaging method. This advantage is why corrugated has become particularly popular among supermarkets. To compete against the growth of Aldi and Lidl, major supermarkets are taking advantage of the value, simplicity and presentability of corrugated.
The Future of Non-Plastic Packaging
As with many other packaging methods, corrugated has also benefitted from broader industry changes. The recent EU plastics strategy is just one of many global reforms designed to limit the future use of plastics in packaging. Consumer demand is moving towards more recyclable alternatives, and many retailers are now looking at alternative methods. This shift has helped corrugated achieve further growth.
However, it is this hyper-competitive, non-plastic future which experts believe will lead to corrugated packaging’s decline in growth. Over the last few years, companies have happily relied on this as something that is available now and has proven value. In the future, when more options are developed, the drawbacks of corrugated will come to the fore.
One of the main disadvantages of corrugated is its sizing. Due to its unique nature, corrugated packaging is hard to produce in the exact size required for a product. Whilst this is acceptable in bulk deliveries, this can become an issue for smaller individual goods. Corrugated production also requires high investment due to the technical aspects of the packaging.
The market for single-use plastic replacements is expected to be sizeable, and there are many companies already creating alternatives. Plant-based plastics are growing in popularity, whilst paper – which has also seen substantial recent growth – is another option for retailers. As the choices available to businesses increase, costs for options other than corrugated will also fall. This competition is why many expect corrugated to lose its growth as we enter the future of packaging.
That being said, there are still plenty of options right now for companies to reduce their packaging expenses. Here at Expense Reduction Analysts, we’ve been helping businesses across industries save on their procurement strategies. Our specialist team can work within your structure and point out areas where you could be saving money. With the packaging industry entering a period of increased competition, there are ample opportunities to create more capital for your business. If you would like to know more about what we do, why not get in contact with us today?