CPG brands expect to shell out even more on packaging

25 November 2021 Consulting.us 3 min. read

Consumer packaged goods (CPG) brand owners expect to increase spending on packaging in the next two years, well in excess of inflation, according to a recent report from L.E.K. Consulting. The strategy firm surveyed 425 CPG brand managers and packaging decision makers in its fourth annual “Brand Owner Packaging Study.”

Even though more than half (56%) of CPG firms said they increased spending on packaging since 2019, a further 65% expect growing their spending in 2022 and 2023. A full 78% of Tier 1 firms – those with more than a billion in a revenue and an international presence – expect to increase their packaging spend in the next two years, with one-third increasing spend by more than 6%.

Four major trends are driving increased spending on packaging in the CPG sector, according to the L.E.K. report: evolving sustainability goals, an accelerating shift to e-commerce, competition on the retail shelf, and SKU proliferation.


Reaching sustainability goals broadly means higher investment and added costs, in packaging as in other areas.

Approximately 74% of CPG brand owners have set sustainability goals for 2025. To advance those goals, most firms are focused on materials, with the top criteria for sustainability being recycled content (42%), biodegradable materials (30%), compostable materials (28%), and materials manufactured with sustainable energy (28%).

Though three-quarters said they have some access to sustainable packaging materials today, the capacity of material recycling facilities remains insufficient to meet demand, suggesting greater supply shortages in the future.

CPG brands expect to shell out even more on packaging


With the pandemic pushing more consumer purchases to e-retailers, half of brand owners said they use e-commerce specific packaging, and 56% have increased their spending on e-commerce packaging relative to other areas. E-commerce packaging concerns tend to focus on performance, which can negatively impact sustainability initiatives. The report found that 29% have redesigned packaging for automated environments and 29% are increasing protective packaging to avoid damage in transit.

“Players in the packaging industry that are able to work with sustainable materials without sacrificing performance — or design packages that reduce weight but still provide robust product protection for ecommerce — will find themselves with a unique competitive advantage,” said Thilo Henkes, L.E.K. managing director and co-author of the study.

Shelf competition

With intense competition on the retail shelf for consumer share of wallet, brand owners view packaging a high ROI tool to drive differentiation and win consumer awareness and sales.

“While overall spending levels are a response to competitive demands, they’re also a good sign of a healthy industry,” said Amanda Davis Winters, managing director at L.E.K. and co-author of the report. “Opportunities abound for packaging converters and investors, as long as they can rise to the occasion and meet the challenges.”

SKU proliferation

The pandemic caused SKU growth to slow as the supply chain constrained brands and forced them to focus on core products. SKU count is expected to increase in the future though, according to the report, and to resume pre-pandemic growth rates.