Zhenglu Consulting: Ten Trend Insights in the Packaging Industry

First, the development of the packaging industry outline

From the perspective of market development trends, the traditional packaging industry has entered a mature period of development, according to the data released by the China Packaging Federation, the overall compound growth rate of the packaging industry in the past three years has remained in the range of 1%-3%, and only the plastic film in the high-end field has shown a strong momentum of development, with a compound growth rate of 12%, highlighting the huge potential and growth space of the high-end market.

From the perspective of policy-driven development, the state has repeatedly issued environmental protection policies such as "plastic restriction orders", and at the same time encourages packaging companies to implement intelligent packaging production, strengthen pollution control in a green and dual-carbon way, limit excessive packaging, and promote green environmental protection and sustainable development of packaging.

From the perspective of industrial chain integration, upstream packaging materials and packaging equipment determine the industry level, midstream packaging production and products, from decentralized to large-scale, centralized direction, downstream packaging application fields are scattered and diversified.

From the perspective of business model changes, leading enterprises are gradually developing from a single "production + service" to providing one-stop solutions.

From the perspective of industry competition pattern, the trillion market is growing steadily, the industry concentration is low, the entry threshold is low, the competition is fierce, the industry profits are decreasing year by year, and the leading enterprises are entering the high value-added products.

From the perspective of customer demand feedback, consumers have higher requirements for quality and stronger environmental awareness, especially in the increased demand for interactive experience.

From the perspective of industry technological innovation, smart labels, RFID and near-field communication (NFC) chips, 3D printing design and other technologies make packaging a multi-functional carrier of security and anti-counterfeiting.

2. Insight into the packaging industry

01. Industry integration is accelerating

In 2022, the operating income of enterprises above designated size will be about 1.2 trillion yuan, and the number of enterprises above designated size will be 9,860, and in 2023, there will be more than 10,000 enterprises above designated size. The market competition in the industry and subdivision track is fierce, the industry is under great pressure to develop due to the environment, and the market concentration of enterprises is in a lower state than that of developed countries, and the future industry integration is the general trend.

02. Development of the whole industry chain

The packaging industry will be more closely integrated with new materials, creative design, intelligent production, logistics and supply chain, and realize the intelligent management and optimization of the supply chain through Internet of Things technology and big data analysis.

Case 1: A leading packaging company, a leading packaging solution provider in China, has entered the blue ocean market of paper and plastics, extended the integrated layout of the upstream and downstream of the industrial chain, and the raw material layout of the upstream pulp board factory has gradually shown results, ensuring and improving the stability of the company's raw material supply.

CASE 2: A WORLD-LEADING CONSUMER PACKAGING COMPANY, ACTIVELY LAYOUT THE WHOLE INDUSTRY CHAIN, RESERVE TECHNOLOGY, PACKAGING INTEGRATION, TO PROVIDE CUSTOMERS WITH TARGETED AND UNIQUE PACKAGING SOLUTIONS, IN THE FACE OF THE ESCALATING MARKET DEMAND, ON THE BASIS OF PLASTIC-BASED, PAPER-BASED (AMFIBER™), ALUMINUM-BASED (AMFOIL™) PRODUCT LINES, THE DIVERSIFIED PRODUCTS HAVE BEEN SORTED OUT AND COMBINED, AND NINE SOLUTIONS HAVE BEEN LAUNCHED.

03. Diversified business portfolio

The overall packaging solution has become the development trend of the global packaging industry. The leading packaging company has diversified its business layout and adopts an operation model of a complete set of services such as packaging products, packaging design, procurement services, logistics and distribution, and inventory management. The overall solution shifts the focus of packaging suppliers from the product itself to solving the actual problems of customers, and provides the overall solution of packaging materials and packaging supply chain services to customers as value-added value of product sales. The business model transfers the management and control of the packaging supply chain to a single packaging supplier, effectively reducing the operating costs of downstream customers in the traditional business model of the printing and packaging industry, and improving efficiency and convenience.

Case: A leading packaging company, focusing on consumer electronics packaging in the early stage, and transforming to a diversified packaging layout in the later stage, is to successively cut into the fields of consumer electronics, catering environmental protection packaging, expanding flexible packaging and soft material product manufacturing, while focusing on high-quality packaging, enriching the product portfolio, looking for high-quality targets in the case of sufficient cash flow, in 2022, in the objective environment of sluggish demand for consumer electronics, completed a number of acquisitions, collaborated with customer resources, and improved integrated services for customers.

04. Service area networking

The packaging products industry is extremely sensitive to transportation costs, and general enterprises are looking for downstream customers within a 100-150km transportation radius. In order to reduce logistics costs and improve service efficiency, many leading enterprises have built their own national production and service networks through new production lines, mergers and acquisitions, etc. With the trend of internal relocation of the manufacturing industry, many leading enterprises have begun to invest and set up factories in the central and western regions, which will help enterprises better serve the local market, and also help improve the overall supply chain resource efficiency and reduce costs.

05. The products are developing in the direction of mid-to-high-end

With the upgrading of consumption concepts, consumer goods manufacturers have gradually increased the demand for external packaging, low weight, high strength, lightweight corrugated cardboard has gradually become a common requirement of high-quality downstream customers, micro corrugated boxes have been rapidly developed in recent years, and the trend of product upgrading and iteration is obvious. At the same time, the downstream high-end customers' requirements for packaging and printing are also constantly improving, in addition to the demand for storage and transportation, protection, moisture-proof, compressive and other functional functions, the demand for corrugated box product display, brand strengthening, consumption guidance of the value-added role to enhance the carton products gradually to the high-end development, from "simple packaging" to "consumer quality experience packaging".

06. The product materials are environmentally friendly and green

In 2020, "carbon neutrality" and "carbon peaking" were proposed, and in 2023, many countries jointly issued plastic restriction orders, promoting environmental protection to a new height. Biodegradable packaging and films are becoming increasingly popular in catering, medical and other fields, for example, plant fibers, PLA, PHB, PHA, PHA, and other biopolymers to replace traditional plastic packaging. Packaging companies are actively exploring green packaging solutions to meet the market demand for sustainable packaging.

07. Customization of demand design

As consumers' expectations for product appearance and function increase, packaging design tends to be more creative and appealing. Designers use innovative design methods and strategies to showcase product features and cultural brand storytelling to motivate consumers to buy. Considering that consumers in different regions and cultural backgrounds have different preferences, packaging design needs to reflect and adapt to diverse and differentiated markets. Personalise your design by incorporating local and cultural elements and your brand identity. With the increasing demand of consumers for personalized packaging, the packaging industry is exploring the development of interactive, customized, entertaining, immersive and intelligent packaging solutions to provide a richer and more differentiated user experience.

08. Multi-functional composite of packaging products

Modern packaging not only needs to meet the traditional protection and storage functions, but also needs to have specific attributes such as freshness, moisture-proof, ultraviolet protection, etc., to meet the unique needs of different products. Consumers have improved the concept of environmental protection and safety, and adopted measures such as anti-counterfeiting labels and improved sealing performance to ensure the integrity and authenticity of products, providing consumers with additional confidence and security.

09. Digital intelligence of packaging production

The first is to accelerate the innovation and research and development of intelligent packaging equipment, involving mechanical automation, production line intelligence and comprehensive production process data acquisition and analysis technology.

The second is the digitalization of production management, through the integration of cutting-edge information technology, Internet of Things (IoT), big data analysis and cloud computing, the management of the production process is data-driven, more timely and transparent. Real-time production monitoring, optimized resource allocation, and energy consumption all contribute to operational efficiency and a significant reduction in waste in the production process.

The third is digital and intelligent customization, and the production of customized packaging with science and technology has become efficient and cost-effective. Using variable data printing and digital printing technology, enterprises can achieve low-volume, high-change packaging customization to meet the market's demand for diversity and personalization.

10. Technology expands more business scenarios

With the cross-border integration of digital intelligence technology, the application of intelligent packaging and digital solutions is increasing, using RFID tags to achieve product traceability, and using augmented reality (AR) technology to improve consumer experience; Technology provides real-time data monitoring, traceability and management capabilities to improve product stability and logistics efficiency throughout the supply chain. In specific scenarios, smart and AR packaging can show consumers product content, discount codes and video interactions, deepening customer interaction. In addition, the integration of Internet of Things (IoT) devices has given packaging diagnostics and indication capabilities, enabling consumers to know the status of the product in real time, which plays a key role in ensuring product quality and safety in use.

Third, the packaging industry outlook

In VUCA's rapidly changing market environment, packaging is not only a carrier for protecting products, but also often carries multiple functional values such as brand communication, user experience, environmental responsibility and sustainable development. With the progress of society, the development of science and technology, the enhancement of environmental awareness, and the improvement of quality of life, the packaging industry is moving towards a new era focusing on the research and development of new ecological materials, precise personalized design, digital and intelligent traceability, and user interactive experience. Packaging companies need to establish close business cooperation ecological relationships with new material research and development, digital intelligence technology, design research, market analysis, recycling and other institutions.