At the beginning of 2020, the packaging industry's primary focus was sustainability. The trends revolved around the circular economy, driven by both political pressure and consumer perception regarding waste accumulation. The solutions being pushed focused on replacing plastics with sustainable materials, decreasing overall packaging use, and increasing reuse options. However, as with all other industries, the pandemic changed the trajectory of packaging, driving single-use packaging to an all-time high. At the peak of the pandemic around April, the only focus for packaging was hygiene and safety; products had more packaging added so consumers could remove external layers and feel safe using the product's core packaging.
While we are still in the midst of a pandemic, consumer paranoia has settled, and the focus on long-term sustainability has returned to the fore. Against this dynamic backdrop, we highlight the top trends that impacted packaging during 2020 and make predictions for 2021.
Paper (virgin hardwood and softwood fibers) and pulp (recycled and waste fibers from various sources) packaging types have emerged as strong contenders to replace plastics for food and beverage packaging applications. In the food and beverage industry, brands are shifting away from both glass and plastic to adopt paper- or pulp-based solutions. As single-use packaging increased in 2020, alternative materials for plastics, such as paper and pulp, gained significant momentum.
Many companies launched designs and partnerships to release pulp packaging by 2021:
- Johnnie Walker spirits will be packaged in 100% plastic-free, pulp-based bottles starting in 2021 to replace glass bottles. The joint venture formed to produce these pulp bottles is also partnered with Unilever and PepsiCo to expand into noncompeting industries.
- Smurfit Kappa and Patani Global Food collaborated to develop paper-based cold-chain packaging, but this announcement raises questions about paper materials' capability to compete with plastics' superior properties.
- The Australian branch of Mondelez has launched a trial of 100% recyclable paper packaging for its Cadbury chocolate bars. Unlike many existing paper-based food wrappers, the company claims that the material used in this packaging does not contain any laminates, foils, or plastics and is fully recyclable, making it one of the more promising pilot tests for paper replacing plastics.
While companies are becoming aware of issues with sourcing paper packaging and partnering with organizations to ensure sustainability, paper packaging is a short-term solution and will simply shift the burden for packaging problems, such as limited feedstocks, lack of circularity, and overall resource wastage. Pulp packaging that is derived from waste fibrous feedstocks is more likely to continue growing and become an alternate for plastics and paper packaging alike.
Others are focused on producing and using "better" plastics – non-petroleum-derived plastics like recycled, bio-based, and alternate polymers might be the better alternative for incumbent plastics. Some of the issues with current plastics are the lack of circularity and nonrenewable feedstock sources. Alternative plastics can resolve some of these issues but have a long way to go for mass adoption.
While alternative plastics are not new, they continue to gain traction, with more brands making announcements for projects going into effect in either 2020 or 2021:
- L'Oréal, LanzaTech, and Total launched cosmetic plastic bottles made from industrial emissions. The polyethylene (PE) produced by carbon emissions is structurally the same as petroleum-derived PE and would be an ideal drop-in replacement for its fossil counterpart, but there are still unanswered questions in terms of the carbon footprint, energy consumption, and waste of the production process.
- Bacardi to PHAse out conventional plastics with Danimer Scientific partnership. PHAs are higher-cost than incumbent plastics and are not accepted in current recycling streams, but Bacardi is prioritizing fossil-free carbon inputs and is betting that the demand for plastic alternatives and the ability to market new materials outweigh such drawbacks.
- SABIC's TRUCIRCLE solution will be one of the first demonstrations for recycling packaging films. This project highlights the complexity and cross-value chain collaboration that are required to successfully recycle plastic packaging, especially difficult form factors like films.
The unanswered questions in terms of the carbon footprint, energy consumption, and waste of the production process surrounding these announcements will determine the success of the materials. The next steps for each of these projects should be to scale commercially and establish proof of performance and the economics – like the overall carbon offset value, price premium, and end-of-life prospects (critically, can it be recycled in existing infrastructures with petroleum plastics?). The companies should also conduct a thorough life cycle analysis to demonstrate sustainability and partner with more brands to expand adoption.
Despite increasing demand for single-use solutions, reusable packaging has also seen continued momentum. The adoption of reusable packaging is difficult to predict, as it requires consumers to move away from the way they currently use and dispose of packaging. But large brand owners are determined to try this approach; many companies are partnering with TerraCycle's Loop, which is leading the way for reusable packaging and expanding to multiple CPG avenues:
- Fast food brands like McDonald's, Burger King, and Tim Hortons are partnering with TerraCycle's Loop to expand reusable packaging. Reusable packaging for fast-food brands makes sense, as they are massive polluters, but post-pandemic, it is unclear if consumers will be willing to adopt shared containers for the sake of sustainability or prefer single-use for hygiene reasons.
- Two winners (CupClub and Muuse) of the NextGen Cup Challenge launched pilot tests in California. Muuse has already had significant adoption in Southeast Asia, but the purpose of the pilot tests in California is to test consumer behavior in different locations, as it will vary in different regions.
- TerraCycle also planned to bring its reusable packaging platform, Loop, to retail stores with Walgreens, Tesco, and other partners. Ultimately, Loop had to delay this step forward due to the coronavirus, but the company still expanded in adoption during the lockdowns, as more people preferred to order groceries delivered home while still supporting sustainability.
It's unclear if reusable packaging is a viable solution to the single-use waste problem – it is highly dependent on consumer behavior changes that cannot be guaranteed or relied upon. But it is a solution that is growing in popularity; brands like Unilever and Nestle are launching projects to see the end results for mass adoption, which will be interesting.
Other trends started strong in 2020 but lost momentum through the pandemic. Monomaterials had a lot of hype in the first two months of 2020, but the pandemic caused many materials companies to close R&D and innovation projects to focus their limited funds on existing core technologies. Most of the announcements for monomaterials have been from brand owner companies commercializing the technologies, mostly in the first half of 2020:
- German packaging company Südpack launched monomaterial solutions for meat products. The company claims that this solution yields a reduction of as much as 60% in material usage.
- Kellogg's launched its new granola in a fully recyclable monomaterial pouch. It took 18 months of R&D and six companies to collaborate to launch the packaging, further highlighting the technical complexity of developing a suitable monomaterial for commercial applications.
- Colgate's new HDPE monomaterial toothpaste tube hits the market. The price of the new tubes is six times higher than that of regular multilayered tubes, which indicates that monomaterials are not cost-competitive yet and need further improvement.
These announcements highlight how challenging monomaterials development remains. Recycling monomaterials and flexible packaging will continue to be a challenge due to sorting issues; if they can achieve the necessary performance, monomaterials will be an ideal alternative to multilayer packaging. There will be delays, as material companies need to resume an innovation focus to develop monomaterials. One major issue with monomaterials is the lack of differentiation and end-of-life solution – while theoretically, monomaterials are recyclable and use fewer materials, there is no way for waste collectors to distinguish them from conventional products, especially when monomaterials are a tiny fraction of overall waste. As a result, monomaterials are likely to have the same recycling rates as incumbents, so without mass adoption or special markers to differentiate them, there is no real improvement to sustainability.
Some brands are changing product formulations to accommodate less packaging, and ultimately removing packaging from products, to minimize the materials in circulation, costs, and environmental waste of packaging.
- Seventh Generation launched powder-based cleaning products in plastic-free packaging. The trend for waterless personal and home care products has seen increased momentum in the past five years, but it still lacks any significant adoption and is only sold in small high-end stores. These solutions tend to be more expensive and require a substantial change in consumer behavior.
- Nohbo raised $3 million in seed funding for its dissolvable shampoo drops. There are still questions surrounding future growth, especially given the company's main value proposition of reducing plastic waste. Similar to single-use detergent pods, its drops still require secondary housing. This may be problematic if the packaging is more difficult to recycle than traditional plastic bottles, leading to more (not less) waste.
In traditional brick-and-mortar stores, there has been little adoption of these solutions from consumers, as they are likely to remain more expensive than packaged single-use solutions and less convenient for consumers compared to incumbents. But as e-commerce continues to grow in popularity, waterless powder products and more concentrated liquids packaged differently (like detergent pods) will be preferred to avoid spills in transport. For some products, most consumers are unlikely to notice the difference in product formulation or may even prefer it, but for others, there will still be some hesitance. There will be a lot of trial and error to explore for what industries and products consumers are willing to accept new formulation types over incumbents.
Finally, governments around the world had many plans to pass legislation to decrease plastic pollution by imposing either taxes, waste fees, or bans on specific materials – but with the pandemic, a lot of the government resources shifted to handling the crisis, so voting for most nonessential and many proposed pieces of legislation has been delayed to 2021 and beyond.
- The EU will charge all member states fees for plastic waste starting in January 2021. The EU is determined to reduce plastic waste, regardless of the global crisis, by introducing a plastic waste penalty on nonrecycled plastic packaging waste calculated at a call rate of €800 per ton, which will be paid by the member states instead of corporations or individuals.
- The New Jersey state legislature voted to make the state the first in the U.S. to ban single-use paper bags in supermarkets along with all single-use plastic bags in stores and restaurants. The state government hopes to eliminate all single-use bag usage with this regulation and promote more reusable solutions like cotton bags.
- Some pending regulations that could have been implemented this year included Australia's effort to ban single-use plastics, but the vote to pass the legislation has been delayed to early 2021. Meanwhile, the UAE may become the first country in the Middle East to ban single-use plastics in 2021 pending legislation. Germany is also planning to increase restrictions on single-use packaging and plans to ban plastic straws by mid-2021.
Apart from that, there has been less government activity toward preventing plastic waste than in the past five years, as countries have focused a lot more on public safety. It is easy to overlook long-term sustainability concerns during economic crises. Yet, the slowdown is also a reminder of the importance of building resilience. It should furthermore call into question the premises of the economic growth-centric approach, particularly with the climate emergency on hand.
COVID-19 changed the consumer perception of packaging, and the demand for packaging has increased significantly. This has been driven by a historic increase in e-commerce and more complex logistics for products to reach consumers – leading to an increase in the use of flexible packaging instead of rigid packaging. Flexible packaging is better than rigid packaging because it requires fewer materials, has a lower carbon footprint for production, and is easier to use for different CPG products. Brands are likely to increase the consumption of flexible packaging, but it is less recyclable and has no real end-of-life solutions. With this, alternative polymers from nonpetroleum feedstocks will continue to gain momentum and adoption in the next few years because these materials can form flexible packaging like incumbent plastics.
Pulp packaging is an alternative to rigid plastics and will continue to gain momentum for food and beverage packaging but not many other CPG industries. The food and beverage industries have a limited need for flexible packaging, so they need better alternatives for rigid packaging, such as molded pulp. Pulp packaging has a strong case for sustainability, as it is derived from waste feedstocks, has improved manufacturing and performance, and has the potential to be more recyclable than paper or plastic packaging.
One underlying trend, with all the different material and business model alternatives to improve single-use packaging and reduce plastic pollution, is packaging innovations becoming more relevant and integrated into the product development phase rather than being considered at the final mass manufacturing stage. Packaging teams are joining product development teams for both the product and packaging to be designed with strong considerations for a mode of selling (either in retail stores or through e-commerce). Companies are significantly investing in packaging development to appropriately match product development for better cohesion and combined sustainability. Considering all these trends, companies should focus on alternative plastic materials and different business models, expect continued fast growth for e-commerce and in turn flexible packaging, and integrate packaging innovation into product development.