On this episode of UnPACKed with Packaging World, Editor Matt Reynolds takes a step back from reporting on and analyzing the details of the latest packaging trends and provides a more holistic view focused on the year 2020. After a time unlike any other, Reynolds discusses the two biggest influencers on consumer behavior — COVID-19 and societal values — and how these two drivers changed the way consumers purchase and experience packaged goods. In turn, Reynolds reinforced his belief that packaging reflects society at large.
Hear Reynolds with ”Marketplace” host Kai Ryssdal to discuss how COVID-19 has impacted packaging trends. Listen to the full interview.
To subscribe and find more unPACKED podcast episodes, visit pmmi.org/podcast.
|Read the full transcript below|
Matt Reynolds, welcome back to the podcast.
Thanks for having me.
We're always covering trends, and there's a lot of trends that are going on right now. And we're always covering them from the lens of very close to a specific application, one company, one brand, one pack style. But with all of the change that we've seen happening, we kind of wanted to take a little more of a holistic view of what's going on and why we're seeing all these changes. Whether it's sustainability, or pack style, or whatever it might be. And it all seems to ratchet up to not really one single trend, but a year. And that's 2020.
Obviously you can't mention 2020 without saying COVID-19, that was the big 1A influencer on consumer behavior. And then 1B, I think not far behind, would have been social responsibility and societal values coming into the fore. And how packaging as a reflection of society at large has to adapt to meet its consumer where its consumer is. So those are two trends that it's not really a causal relationship, it just so happens they both landed in the calamitous year that was 2020. And kind of orbit each other, and both had some affect in changing the behavior and the attitudes of the consumer. And we'll just want to look at how the attitudes changed and how that affects brands upstream, and then from brands to their suppliers, and just the ripple effect that the year 2020 had on consumer packaged goods, and food and beverage and packaging.
That's an interesting summation, and a great way to position this. So obviously, it would be a complete dereliction of my duty as a respected podcaster in the industry to not talk about COVID. It's impossible not to. Hopefully it'll get to a point where we're not talking about it, but unfortunately it's a thing and it's been a thing for over a year. And the biggest thing from our point of view and for our industry is it basically, it blew up the supply chain. And anyone who went into a store could see that. You went down the paper goods aisle, and the toilet paper section was empty. I guess to touch on that for a bit, we'll use that as our, I don't know, our CPG example. For the people out there listening, why couldn't Kimberly-Clark, or whatever company that was in charge of making toilet paper, crank out more TP? What was the big issue?
Well, I think we'd gotten too good at producing products in the precise volume and timeliness that... Basically we were doing everything just in time. Nobody was keeping any inventory of anything, because inventory can be seen as waste. You want things moving through the system, not waiting for use. And we got so good at it and we got so efficient, and by we, I just mean the supply chains in general. Going all the way back up to forestry, right on down to Kimberly-Clark, and then as seen by consumers in the retail setting in the toilet paper aisle. But I think going forward is that taught us a lesson, and we're going to see more slack built into the system to be able to withstand these shocks and jolts to the supply chain. I mean, that's, I think, the 1A lesson that we see coming out of COVID-19 is just a preparedness that we may not have had before.
Riley: Do you see that beyond borders, for example? Is that a reshoring of sourcing of materials? Is that having warehouses?
Yeah, it can be. I think it's certainly the closing of the borders was a lesson to begin with, particularly China, which is such a massive supplier. India, secondarily. But I think just the reliance on single sources in a supply chain is... I mean, that's been disrupted in the sense that you no longer want to have all your eggs in one basket as the sole supplier of fiber, or the sole supplier of aluminum, or whatever it might be coming from one specific region. That's a regional way of looking at it. But also from companies, different companies that are multinationals, you're not going to be necessarily doing business with only one single company based on, what if their paper mill has a outbreak of whatever the pandemic du jour might be? Well then, does that shut you down? Or do you have an option B, option C?
So it puts a lot more emphasis on SRM, or supplier relationship management. Because if you want to be the one getting the packaging and materials you need, particularly in a scarcity environment, wouldn't it pay to have a better relationship with your suppliers than your competitors have? Would it pay for you to adopt a position where you aren't just beating up a key strategic supplier on price, but instead are actively engaged with those strategic suppliers and making a relationship aimed at both supplier and customer better? And not all suppliers, but certainly the ones that are the key strategic suppliers. Instead of chipping away at price, can you create a situation where you're both prepared for shocks to the system, and you're both diversified? And the supplier's supplier, and the supplier's, supplier's, supplier's,supplier. I think those are all lessons learned from the shock, the initial shock to the system. And I think that'll all be implemented going forward.
Interesting. So then, again, using our example of the toilet paper, I went in the store, I couldn't get it. So naturally you go home and you try to find it online, because now you're picking from thousands of places. So clearly that had to have a, I would call it another shock to the supply chain, or another shock to the system. How did that play out?
It was a shock. I would call it an earthquake to the landscape of the omnichannel. So the omnichannel, think of it like... The broadest way of thinking about it would be a three-legged stool, where you've got food service and educational and industrial. It would be one of the legs. So hospitality, food service, that sort of thing. Next would be retail, which we all know there was a run on retail. And then I think at least the temporary and probably longterm winner, if you can claim winner out of any of this mess, would be the e-commerce. And the rate of adoption of e-commerce accelerated. So where we thought we would be in e-commerce in 2030, maybe we'll be in 2025 in terms of adoption rates. Because people who just had been resistant to it for whatever reason, not necessarily just that they're troglodytes, but maybe they just don't need it.
They live in a neighborhood with everything they need within walking distance. Well, when those retail environments either shut down... Food service shut down, retails runs on certain important personal care items. So yeah, you turn to Amazon, you turn to e-commerce. So that was definitely a learning or a teaching moment to teach people who hadn't adopted that already how to use it. But that had some negative ramifications, both in supply chain and also in their relationship to packaging, considering a retail environment or a food service environment. There's a lot of packaging that's happening in the back room that, secondary packaging, shrink wrap, corrugated, 50 pound bags of [tasted] chicken that go to your local chicken fryer shop food service that are kept cloistered from the consumer. Well, with omnichannel a lot of that packaging ended up on people's doorstep.
And what originally was a very strong sustainability movement prior to the pandemic, only accelerated it. It was a hockey stick type of aha moment. I just watched a commercial the other night, it was of the world's strongest man breaking down your Amazon boxes. And basically it brings into focus for consumers who had been happily, blissfully unaware, just how much packaging is involved in the supply chain. So I think it's a long trail of breadcrumbs to get there, but in a way COVID-19 has spurred sustainability in a way that it wouldn't have had that acceleration curve prior to the pandemic.
And there's two interesting things that are popping into my head off of that. And the first one is, you're in Chicago, I'm outside Philadelphia. And it's a thing I've noticed because where Philly is in the Northeast corridor, it's so close to other major cities. They're building these humongous, massive, Amazon warehouses everywhere. That basically goes counterproductive to all these years of warehouses closing down. It's kind of the reverse model that we're used to of these big facilities holding all these goods so that people can pick them and get them to people faster in the mail. Versus 50 years ago, you go to your main street and you have all these stores that offer it, or you go into your big box retailer. It all ties in, but it's playing out very strangely. As it's sort of taking steps backwards even though it's bringing stuff forward.
It's what's old is new again. And when you had your main street general store, you didn't have much selection. You might have three different sizes for whatever it might be. Your tennis racket grip handle. Now I can get down to the eighth of an inch of grip handle for the tennis racket, and the weight and the length of the racket that's basically tailored to exactly what I want and need. And not only is that available to me, basically overnight. But I'm in Chicago, in Indiana on one side of the border and in Wisconsin on the other side of the border, there are these massive facilities that are probably carrying inventory of that particular tennis rack. And that's another example of building slack into a system that had been finely tuned, well running machine so that supply was ramped up right before the holidays. And it would dip down at precisely the right moment after the new year. Well, when you have the shock to the system, then maybe some inventory is necessary. Some slack, some buffer, and that's what we'll see going forward I suspect.
Yeah, interesting. And not to leave the sustainability idea, because I followed a lot of the stories you've written in packaging world, and also watched some of your great Take Five videos that are online, that people should be checking out. Where this idea, and it was at least how I would have looked at it as well, is that the idea of everybody getting everything delivered to their homes, or everybody using single use bottles of water because all the water fountains are closed down because you can't have people sharing water fountains during a pandemic. All the trash from the hand sanitizer, stuff like that. To me that would say, okay, sustainability is taking a back seat. But you've already touched on it, and I guess you can go a little bit further, that isn't necessarily 100% the case. It's sustainability is kind of on the rise. No?
Yeah. Sustainability has ascended, there's no question about it. And there was a certain, I think it was a temporary... I guess reversion is the wrong word, but people did suddenly see the value of that water bottle or hand sanitizer that nobody else has touched, and is their own and they can dispose of and you don't have 10 people touching it along the way. But I think for the wider trends that sustainability really has gotten a shot in the arm from COVID-19. And because of that people are looking at, and this is rightly or wrongly this is just a trend, the perception there is that plastics are the villain in this scenario. And we see brands reacting to that in two ways, one of which is moving away from plastics completely. And some brands can get away with it by moving to, say, aluminum.
Now this is going to be reserved for really high margin brands, aluminum is just more expensive. And there is an argument that can be made that it uses more CO2 to actually produce the aluminum, but then there's so much aluminum that is already within the circular recycling chain that a lot of that aluminum that's being formed into say an aluminum can, already has been recycled two to three times. A certain percentage of it has at least. I don't know what the algorithm is, actually. A Nobel Peace Prize person who could write the algorithm for what is the appropriate or most sustainable pack design in the application, maybe we'll see that in our lifetimes. But in the meantime, it seems to be a quagmire of competing claims. And, I think, undue vilification of plastics in the sense that consumers deal with that at the very end of their single plastic product packaging journey. They've protected whatever's inside that package fo, all the way up the supply chain to get that to consumers freshly and safely.
And lightweight, and with the possibility to 90... And I don't know, 90% is just my term that I'm throwing out, it's not a precise term. But so much of what's used in plastic packaging right now is recyclable. We just don't have the, A, consumer knowledge or willingness understanding how to recycle. And it's so fractured out there. Is, B, it is fractured, there's no two municipalities that act identically. And what's happening in California is different than what's happening in Missouri, and there no national attitude towards that. And I think that's changing, I think the Consumer Brands Association recently came out with a more singular or aligned methodology to address recycling plastics. And I think that's really great. I think PMMI is onboard with this as well. And I know it's a bipartisan thing. Whether you look at plastics as a feedstock that is just another input material in a circular style economy, it's a commodity that can be bought and sold. And is a valuable moneymaker and an engine for the economy.
Well, do you want to achieve circular plastics economy? Or whether you want to keep the straws out of the pelican's noses in the ocean, whatever it might be, then you want a circular plastics economy. So it's [inaudible]. And I'm forgetting the acronym now, but there is definitely a new refresh and interesting push towards recycling that I think we'll see, hopefully on a federal level as opposed to municipality by municipality, to really create some infrastructure. And one last note is that we're doing a lot of good work towards a circular plastics economy, but there's a potential silver bullet out there with chemical recycling. And it's not there yet, subject to Moore's law like a lot of things. Where it's expensive and hard to do at this point.
But as the infrastructure rolls out, this is basically taking plastics, or any material not just plastics, but plastics is the name of the game here in packaging, down to its smallest or most singular molecular level. So that you can take even a multi-layer structure, HDPE with EBOH barrier, whatever it might be, and break those plastics down to their single units, and build them back up to whatever they need to be. And then recycle them again. And again, that's not limited to plastics, but with all the work we're doing towards a circular economy there is this other looming technology that could solve a whole lot of problems.
And it's trust in the science. It just seems like that's a motto that we could have used for the last 16 months, or whatever, that sometimes you just have to trust the science. And it might cost a little bit of money at first, but in the long run it's going to really pay off. I guess, let's pivot then to your trend two. Which, social justice and social responsibility, they were all over the mainstream news. And rightfully so since, in my opinion, it's long overdue. And we saw protests around the country for weeks at a time. And brands kind of had to come home and face the music in a lot of cases. We've seen the Washington NFL team had to literally change a name that they had for 80 years. That it didn't happen yesterday where people thought it was offensive, and it just kept going on and on and on. So I guess for our industry, how did packaging and brands respond to this call for societal justice and social responsibility?
Well, I should use the caveat here that this isn't just my anecdotal or your anecdotal evidence on how brands responded. There's a great Take Five up right now that Kim Overstreet did, and she collected or curated content from the Consumer Brands Association, from ISTA, which is International Safe Transit Association. They do a lot with e-com. Smithers, Smithers Pira, and they had a sustainability conference that Kim attended. And then she just amalgamated all of these different trends and predictions that came from these brands associations that are very close to the consumer. And ultimately I think 44% of people, according to this is an ISTA conference, 44% of people are going to buy from brands that actually align with their values. I think this is of a piece with sustainability, because I think sustainability and environmental responsibility is a big picture value, is a social justice issue. But it's also more justice and gender equality and inclusion side of the coin as well.
So both of those are, kind of, they're of a piece. Consumers are telling brands with their wallets that they want the brands to have a stance, to say something, to have an opinion, and to vocalize that opinion in a way that lets them know where they stand. And brands, they can't stand idly by in the corner and sell to both sides of the aisle apparently as easily. But this started with, you mentioned the Washington Redskins. I had the same experience 15 years ago with the Fighting Illini in Illinois. But it's the racially charged imagery that brands, as is their right, as private brand, they're getting rid of these mascots in favor of more inclusive type of brand stance, for lack of a better word. But that's not always a negative thing, it's not always a reductionist thing or reduce or get rid of certain stances.
I mean, we just covered a great story from Hershey, which benefited from the happy accident of their name, of her-she. They ran with a campaign, it actually was Hershey Brazil specifically. But March 8th was International Women's Day, and they ran with a month long campaign featuring art, music, science, packages that are designed to celebrate art, music, and science from women. And that's no easy undertaking considering Hershey's got an iconic logo that's existed for 100 years, and they're doing packages in the millions. The volume is ridiculous. So taking one small sample of one month's worth of runs, and if you look at our story on it online, you'll see this isn't just one shift from one pack to another. There were probably dozens of different artists that were brought in to redesign the package for Hershey and have these specific one-off style packages.
But that's done via digital printing. Digital printing to the rescue because they're able to, instead of having to create a new mold and a dye for each and every pack, suddenly you have the capability to shift on a dime, run a different pack design or a multitude of different pack designs for one month only. And then right back to your traditional, classic Hershey bar. And that's packaging as a reflector, or as a billboard, or as the messenger for a company or a brand's social justice campaigns. But just this week I came across a Unilever project that really is exciting to me, and I'm following up with the folks at Unilever right now, hopefully the story this week or next. But they are launching, it's their brand Degree, which is a antiperspirant deodorant, but they've got a Degree inclusion pack.
So this is aimed at folks with disabilities of the upper arms, upper limbs, where it's difficult to remove the cap and apply deodorant. They might not have the reach capability to go across their torso. This is a really wide group of people. And of course, it's not limited to one race, gender, sex, or creed. It's a cross section of society as a whole that's affected by this. And I think it's exacerbated by the Special Olympics we're seeing this. But the new pack is designed to have a magnetic opening device, so it's a pressure or amount of force that's used to open the pack. It also has an integral handle that's instead of having to wrap your fingers around something to hold it, it has an actual channel in the bottom of the pack that allows multiple different styles of hand or device to be able to pick that up and hold it.
It also has integral, like in mold, I don't have the details on this pack yet but I'm pretty sure it's a molded structure. There's a hook on the top. So let's say for a blind person it can be hanging in the same place in a shower or in a bathroom, and it's easy to find because it's hanging up. And then all that's required is pressure coming down to remove the magnetic closure and then it can be applied. So it's really interesting, now a pack like that with all those bells and whistles is going to be expensive, but the idea here is that it becomes a robust package that has refills that's sent to it. So suddenly what started off as a, let's say a 15, 20, $12, whatever it might be. But then the refills thereafter, and much less expensive, and then this pack can exist for longer.
So this social justice minded package design is actually sustainable too. So you see, again, both sides of the same coin. And brands like Hershey, they're not just doing this as a virtual signaling or paying lip service to a certain cause, they chose the Hershey movement personally because 52% of the leadership at Hershey is female. And that stems right up to Michelle Buck, who's the CEO. So we can't look at this completely cynically as a play for consumer dollars, these are things that brands actually do stand for.
Very interesting. So we have gone all over the place in terms of the last year, I think we've had a bunch of issues. I guess the put a button on it, what's next? How do we get from there to the next step? What is going to happen now?
Yeah, good question. Well, I would say that the two examples I just gave are Hershey and Unilever, and those are brands or brand owners with the most resources, with the deepest pockets. And probably entire divisions on R&D. Meanwhile, for most other brands, I would say for the vast majority of food and personal care, CPG product brands, they've been struggling just to keep up, just to make sure product needs are met. SKUs, which had been, obviously we know the trend of SKU proliferation. They'd actually squeezed the number of SKUs at a lot of these brands to concentrate on the highest volume items that they can just keep churning through nonstop. So we actually saw a contraction in the number of SKUs in the industry over the last 16 months or so, that kind of coincided with the homespun feeling of looking for wholesome and nostalgic foods. Can imagine Campbell's tomato soup probably had a good few quarters there.
But what I mean to say is that there's been a certain amount of pent up innovation. These brands haven't been blind to what's going on, either on sustainability or social responsibility trends that the consumers are asking them to address. There just haven't had the capacity on their lines to be doing a whole lot of R&D, and testing new products, and spinning off new SKUs that might hit a new market, or hit well with a certain group of consumers. But I think we're normalizing. I think what I mentioned before, this earthquake to the landscape of the omnichannel is recalibrating in a way that might be somewhat permanent, at least in the near term. And then based on that, you'll see brands that are gradually seeing capacity come back. And with that capacity, ability to start experimenting with new pack designs, new ways to express who they are in terms of what they stand for and the values they believe that will resonate with their customers or their consumers.
And the other factors we haven't had a chance to have in-person events to really connect the dots of what might be available out there. Again, 16 months, we've also seen that people haven't been able to get together and exchange ideas as easily as they have in the past. Just because the packaging shows like Enerpac, Pack Expo Chicago, those are the big ones, just haven't been able to happen for obvious reasons because of COVID-19, because of borders being closed. So the free exchange of ideas, while we've done our best via Zoom, the best collaboration tends to happen in-person and in areas where you can get your hands on a machine. Or use AR, VR to virtually get your hands on a machine at least. But still, what we're feeling is pent up innovation. So we had these thought leaders or early adopters in Unilever and Hershey that are showing what's possible and what might be around the next bend.
But we also have a lot of pent up innovation and brands that are just waiting for an opportunity to make the next shift, because they have been running like gangbusters for 16 months. And as they gain more capacity, then they'll be able to turn their attention to what they want to look like next, what the next version of that brand is going to be. And I think the first event that we're all going to be at is going to be PACK EXPO Las Vegas. I know I'll be there, Sean, and you'll be there. I look forward to that as the first time will I be able to see a lot of these trends that we've been following and been hearing about, but in the flesh and actually in some sort of application going forward.
You need to experience technology in action, you need to see it working. You need to see it producing before you're going to be willing to invest thousands, if not millions of dollars into it. You need to see different versions of packages and feel how they're going to feel when a customer is buying them, versus just seeing a picture of it. And it's another thing that I think people started taking for granted with ideas like trade shows, where that is a huge aspect of it, that actual tactile interaction between a person and the product, or the machinery that they're going to be working off of.
Yeah, I agree. There's an emotional and interpersonal element there that, I'm sorry, Zoom just can't connect to the way that we can in-person.
That's all right, Zoom seems to be doing perfectly fine. And I think that they've made plenty of money this year. I guess on that note, thank you again, Matt. We put a great podcast together for people to listen to that really gives everyone a 30,000 foot view, but then we got in there real deep on some real issues and real things that are happening out there. So I want to thank you for taking all this time to come on here and talk with us.
Yeah, it's been fun. Thanks, Sean.