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LEAD Innovation Blog

Read our latest articles on innovation management and innovation in a wide range of industries.

Date: 23-Sep-2019
Posted by: Angela HENGSBERGER

Packaging industry: Conflicts of interest along the value chain as a motor for innovation

Daily routine and maintaining the status quo are unthinkable in the modern economy. As a result of current and future continuous change, companies in the packaging industry are under pressure to adapt to changing market conditions and new trends. The Internet influences design, marketing and the structure of retail, information is becoming increasingly transparent and services are becoming faster and faster. This also has far-reaching consequences for packaging; conflicts of interest along the value chain are inevitable.

Conflicts of interest create room for innovation

The term "conflict" is often used negatively in our parlance. However, conflicts of interest can also be seen and used positively: If it is possible to resolve a conflict and balance different interests, something new arises, namely innovation. Every innovation, in turn, has effects along the entire value chain; it makes waves in all directions and triggers new conflicts, which in turn require innovative solutions. Conflicts of interest therefore always create opportunities and scope for innovation.

Trend Collection Packaging

 

Trends as a guide for future innovation projects

Trends show how the market is developing and where conflicts of interest are to be expected in the future or innovations will become necessary. If we now look at the value chain of the packaging industry in a simplified presentation, the main players, in addition to raw material suppliers and upstream production (processing raw materials, machine producers, etc.), are the packaging industry itself, the producers of the end product to be packaged, the trade and finally the consumer. The circle is closed by the waste industry, which also supplies raw materials again via recycling.

 Wertschöpfungskette

The individual players within the value chain are influenced by numerous trends that are relevant for future packaging products and sales channels. Some of the most important influencing factors are mentioned here as examples:

 

Trends for Manufacturers & Processors

  • Digital revolution (digital printing)
  • New and innovative colours and materials are used in the design of packaging
  • Sustainability (organic packaging)

Trends for retail

  • Shelf Ready Packaging
  • Hybridisation of trade (micro-convenience transactions such as the collection of online products in physical shops)
  • Packaging ready for distribution (combination of optimal handling and advertising message: advertising space ready for distribution)

Trends for the end customer 

  • New technologies such as near-field communication, Bluetooth low-energy or RFID radio tags that enable dialogue between packaging and smartphone
  • Natural materials (consumers are opposed to an industrial system that is increasingly toxic and harmful to health)
  • Recycled materials (consumers are increasingly turning to sustainable products)

General trends

  • scarcity of resources
  • Regulatory legislation (consumer protection, data protection, climate and environmental protection)
  • Globalisation (increasing number of potential suppliers to the packaging industry)

 

Conflicts of interest in the packaging industry using concrete trends as an example

Based on selected trends, possible conflicts of interest along the value chain are traced and explained in more detail below.

 

Trend "Design": Clear Communication & True Authenticity

A company's interest in packaging lies in communicating a clear, simple advertising message. As a result, it is sometimes in a conflict of interest with legal requirements that provide for a comprehensive obligation to provide information in the interests of consumer protection. Both are in a conflict of interest with the consumer who wants to be quickly informed about content, origin, risks, etc., but not overloaded with small print in several languages - the customer expects concise information in an appealing design from a packaging.

True authenticity" could be described as another design trend in the packaging industry that demands convincing performance from the customer when using the product. Because more important than an "authentic" appearance is the performance of technical quality and natural origin. "Real" authenticity is in demand, so none that has to be explained first.

High-quality materials, unusual shapes with high recognition value and practicable, intuitive handling (e.g. resealability) are therefore becoming increasingly popular with consumers.

Innovative, user-friendly packaging, however, can conflict with the interests of the bottler, who strives for the smoothest possible filling. Packaging that buckles during filling, for example, can paralyze the entire production process for hours or days. 

Another conflict of interests can be identified in the area of conflict between design and logistics (storage and transport): the ideal packaging is square. Round and especially bulbous shapes create cavities, which reduces the amount that can be transported and stored. The trend towards ready-to-market packaging therefore also has a strong influence on the design of packaging. Further conflicts of interest can therefore be expected with producers, retailers and consumers.

 

"Natural materials" trend

The use of recycled and natural materials as required by consumers may conflict with the interests of the producer, who focuses on shelf life and taste fidelity in the case of food, for example. There is also a conflict of interest with (former) raw material producers and suppliers (processing), who have to fear a loss of turnover. The recycler can also be affected if the packaging becomes compostable.

The filler, in turn, must check whether the material is compatible with the machine. During hot filling, for example, there is a risk that the packaging will soften and the contents will become dirty. Also, natural materials sometimes have different labelling, colouring or labelling properties if the natural material does not take on the colour or the adhesive or changes it undesirably. The multisensory design of packaging can therefore be limited here.

 

"Resource scarcity" trend

Scarcity of resources is creating strong price pressure, which is also having an impact on the packaging industry. Since an increase in price is normally passed on from the bottom up, conflicts of interest are to be expected at every stage of the value chain (also for transport, as it also depends on resources). The use of new technologies or materials, such as natural materials, makes more efficient use of resources and at the same time helps to resolve conflicts of interest.  

 

Trend "digital printing & new colours"

Trends towards new, appealing and eye-catching colours and the use of new technologies such as digital printing and smart packaging usually originate from the end product producer with a view to better marketing the products to the consumer. The packaging industry must create the conditions for this.

In addition, this example shows another fact: different trends can act against each other and thus increase the pressure and intensity of conflicts of interest - but also the degree of innovation: The use of new, bright, eye-catching colours can, among other things, conflict with the trends "ecology and sustainability" and "legislation". For example, printing on a packaging made of compostable natural materials can contrast the desired ecological effect due to the chemical components of the inks. The corresponding conflicts of interest that can arise along the value chain of the packaging industry in waves and counter waves are obvious. 

 

Conclusion: Seize the opportunities for innovation

Every innovation, every change - every trend - inevitably leads to conflicts of interest at different levels of the value chain. As in all areas of life, this also applies to the packaging industry. In a positive view, however, conflicts of interest gain enormously in value as a driver of innovation. By recognizing trends in the packaging industry at an early stage, innovation can lead to profitable solutions. This results in sustainable, user-friendly and attractive products - in other words, what the term "value chain" promises.

Trend Collection Packaging

Angela HENGSBERGER

Born and raised in Vienna. Since 2012 she has been in charge of Business Development at LEAD Innovation with the functions marketing, sales and communication.

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