Most CPG brands planning to increase spending on packaging

24 July 2019 3 min. read
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A L.E.K Consulting survey of 250 consumer packaged goods (CPG) brand owners found that 75% expect to increase packaging spending over the next year.

That represents a significant increase from 2018 and 2017, when 65% and 40% said they expected to increase spending, respectively.

A third of CPG brands said they would bump up packaging spending by more than 10%.

According to L.E.K, the growing emphasis on packaging reflects brand owners’ appreciation for its ability to help them adapt to fast-changing consumer preferences.

"CPG brand owners recognize consumers want more convenience, and companies are looking to packaging to help provide it. This will entail some major changes to packaging, and CPGs are responding and investing," said Thilo Henkes, managing director at L.E.K. Consulting and coauthor of the 2019 Brand Owner Packaging Study.

Fifty-seven percent said they’re developing easier-to-open packaging, while 51% said they’re working on more single-serve packaging.

Most CPG brands planning to increase spending on packaging

Premiumization has been a strong driver of brand growth, and has likewise affected a shift in packaging – with alterations to packaging format, printing and texture, and other areas to convey a product’s “premium” status. Forty-two percent of survey respondents said they expanded their premium offerings, with 35% also changing their promotional strategies.

Customization, health and environmental focus, and ecommerce expansion have also impacted CPG packaging, according to the study.

With technology making product customization feasible, consumers have taken to specialized products. A majority of brand owners said they had increased product personalization in the past two years, and they said they plan to launch 15&+ more SKUs in 2020 versus 2018. Differentiated packing will be central to these efforts, according to L.E.K.

Sixty percent of brand owners said they introduced all-natural or non-processed products in the past two years, while 53% said they introduced health-focused products. Bringing in these new products to sate consumer demand for healthy products has required altered packaging to communicate the changes.

Likewise, CPGs have made a play for more environmentally-friendly products, which respondents viewed as a top growth source in the next two years. Eighty-five percent said they made a significant change to packaging substrate material, mostly towards easier recycling of packaging materials.

Finally, with the continuing consumer shift to ecommerce, brands have been adapting packaging to handle multiple channels. Fifty-five percent said they entered new digital channels, while 47% implemented mobile on-demand ordering. CPGs will have to look at enhancing packaging to better protect against breakage, maintain freshness during delivery, and keep a consistent look and feel, according to L.E.K.

"All indications are that brand owners consider ongoing investment in packaging to be critical to their brand's success," Jeff Cloetingh, managing director at L.E.K. and report coauthor, said. "By conveying both valuable attributes and a potent brand message, packaging continues to have the unique capacity to make products stand out in a crowded marketplace."