The post-COVID economy may unlock new demand in the $900 billion global packaging industry. 1 The resumption of postponed product launches, the continued evolution in consumer preferences, and a greater emphasis on safety could stimulate an abundance of opportunities for alert and aware converters.

Amid the pandemic, plastics provided sorely needed tools to society to mitigate the pandemic’s impact. For example, single-use packaging enabled sanitation and safety for carry-out meals that kept customers fed and small businesses open. Such packaging also helped sustain growing demand for socially distant ecommerce.

“Overnight, plastics went from public enemy No. 1 to consumers asking for everything to have as much packaging as possible and to be single use,” said Matt Dusi, sector manager for food and agribusiness industry advisors for Wells Fargo Commercial Banking. 2

Plastic was the only segment of the U.S. chemistry industry to grow in 2020, and the American Chemistry Council expects plastics will be the fastest-expanding part of the chemicals sector through 2030. 3

Prepare for Growth in Tamper-Evident Packaging Demand

Converters may want to consider establishing or expanding their presences in the tamper-evident packaging amid robust demand. Brands are more concerned about safeguarding their products against tampering and ensuring protection from contamination. A recent market study by Growth Market Reports expects CAGR of 12.1% in the coming years, hitting a total market value of $27.9 billion by 2027. 4

Induction seals -- closures lined with a heat seal foil cover, often seen on pill bottles -- alone expect to see 12.3% CAGR through 2027. 5 Such seals are in broad demand because of their compatibility with glass and all types of plastic containers. 6 Other common tamper-evident products include film wrappers, blister or strip packs, bubble packs, and more. Substantial demand growth is likely for such packaging in food and beverages as well. 7 It is also popular with cosmetics and personal care products.

The availability and cost-effectiveness of plastic make it a popular choice for use in tamper-resistant packaging. Plastic held a 52.9% value share of the market in 2020. 8

Scale To Meet Delayed Product Launches

After a pause in new product launches in 2020, an explosion is expected going forward, requiring converters to be ready for a demand surge. Some categories in 2020 were showing signs of released pent-up demand. Up to a 50% boost was seen in some major food categories like soups, sauces, fruits, and vegetables, driven by remote work and a growing health-and-fitness trend. 9

McKinsey expects increased consumer optimism as pandemic mitigation continues, similar to the rebound from 2008’s Great Recession. That shopper confidence should spur and sustain the pace of new launches in the coming years.

Shell’s market analysts can help converters stay ahead and aware of market trends so they can prepare for opportunities. And our new polyethylene plant in Monaca, Pennsylvania is designed with supply chain reliability in mind to give coverters a reliable strategic supply option to be able to meet demand surges.

Create More eCommerce-Specific Packaging

The pandemic helped accelerate society’s ongoing and lasting shift to online shopping, driving a growing need for more shipment-friendly packaging in that segment that converters should expect to feed. Ecommerce expects to grow to a $1.6 trillion market by 2025. That will represent 23.6% of all retail activity and is up from $933 billion in 2021. 10

McKinsey expects that many existing packaging formats will have to be redesigned to better fit ecommerce and shipping, with an emphasis on preventing product damage, minimizing transit costs, and improving user experience. 11

Adjust for Changing Consumer Behavior

COVID changed how Amercians shop and search, and the expectations they have about commerce. About 75% of Americans tried a new shopping behavior because of the pandemic, with online shopping driving much of the 35% increase in credit/debit card spending from 2019 to 2020. 12

Plus, consumers are increasingly demanding sustainable packaging. More than 50% of American consumers say they are highly concerned about the environmental impact of packaging. 13

Grow Sustainable and Lighter Product Offerings

Far from just being a consumer want, lighter packaging can create value at all levels. There are the benefits of lower energy use for production & transit for converters and brands. Brands also will face less complexity, labor, and warehouse space for packaging assembly. And such packaging lets consumers leave less food waste and get more appeal.

Converters don’t have to go it alone in transitioning to such packaging niches. We can help you prepare to enter new markets in ways that minimize costs and maximize profits. That helps you evolve your product line so that you do more than survive, but thrive amid change.

Emphasize Packaging UX

In a world where experiential value matters, a packaging experience that plays beyond mere convenience is becoming more important. McKinsey suggests that packaging companies respond to changing behaviors by developing containers that can help to address Gen Z and millennials’ preferences for purpose, quality, and novelty. 14 An example could be recyclable, transparent packaging that highlights the freshness and looks of organic foods.

Then there is the growth of so-called “Smart Packaging.” That can entail packaging with QR codes or featuring interactive Augmented Reality (AR), allowing consumers to glean more product information and access interactive scenarios using their smartphones. Other advanced packaging types can pair with smart appliances and enable product expiration detection.

Leverage Tech to Fill Labor Gaps

Even before the pandemic, the plastics industry was struggling to fill all its roles. A mix of the post-pandemic worker “Great Resignation” and an ongoing skills gap has made that problem worse. Indeed, low labor supply was seen as a contributing factor to plastics industry capacity utilization rate being stuck around 81%, limiting the ability to grow business. 15

The industry is responding by trying to find ways to have machines take over some of what humans used to do. A 2021 survey by Plastics Machinery & Manufacturing magazine found that

nearly half of respondents were planning to invest in automation, with one respondent noting, “it’s getting very difficult to find workers.” 16

Those trends are expected to continue. More use of automation and Industry 4.0 investments are happening as analysts doubt that the workforce’s size will return to pre-pandemic levels. 17 The Robotic Industries Association noted a 51% increase in orders from the North American plastics and rubber industry in 2020, reported Plastics Technology magazine. 18

Shell Polymers Can Enable Your Evolution

Shell can offer converters more than just supply to meet their ambitions in capitalizing on these new market opportunities. To that end, Shell’s new Pennsylvania polyethylene plant will host resources that help customers solve market challenges and capitalize on demand opportunities, including:

  • Our innovation center, geared to help you grow your business.
  • An application hall, where converters can run tests without shutting down their lines.
  • The Polymers Pioneers and Pros. They keep up with industry trends and direction and can help troubleshoot issues.

Shell Polymers can also help you leverage Industry 4.0 tools. The Shell network has been a leader in automation for decades. Our new plant in Pennsylvania will utilize state-of-the-art equipment to ensure quality and reliability, and we’re happy to share our knowledge and insights with customers looking to automate their processes.

At Shell Polymers, our interest isn’t just to provide supply. It’s to give our customers what they need to succeed and thrive, now and in the future.

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References

1 https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/preparing-for-the-flood-how-packaging-companies-can-catch-the-postpandemic-wave-of-new-product-launches?cid=other-eml-dre-mip-mck&hlkid=750742a6b0154bc582ad40f7027d9065&hctky=12549301&hdpid=0cda6eb0-7920-4dff-875b-5a855109da34#

2 https://www.thepacker.com/news/foodservice/plastic-packaging-faces-uncertain-path-after-pandemic

3 https://www.pbs.org/wgbh/frontline/article/the-plastic-industry-is-growing-during-covid-recycling-not-so-much/#:~:text=Production%20of%20plastic%20resins%2C%20the,to%201.2%20percent%20in%202019.&text=Industry%20analysts%20attribute%20American%20plastic's,in%20responding%20to%20COVID%

4 https://www.prnewswire.com/news-releases/global-tamper-evident-on-rigid-packaging-market-expected-to-reach-usd-27-905-1-million-by-2027--with-a-cagr-of-12-1--growth-market-reports-301358875.html

5 https://www.prnewswire.com/news-releases/global-tamper-evident-on-rigid-packaging-market-expected-to-reach-usd-27-905-1-million-by-2027--with-a-cagr-of-12-1--growth-market-reports-301358875.html

6 “The Top Five Cap Liners and Seals in the Industry” PDF, Pres-On, 2016

7 https://www.prnewswire.com/news-releases/global-tamper-evident-on-rigid-packaging-market-expected-to-reach-usd-27-905-1-million-by-2027--with-a-cagr-of-12-1--growth-market-reports-301358875.html

8 https://www.prnewswire.com/news-releases/global-tamper-evident-on-rigid-packaging-market-expected-to-reach-usd-27-905-1-million-by-2027--with-a-cagr-of-12-1--growth-market-reports-301358875.html

https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/preparing-for-the-flood-how-packaging-companies-can-catch-the-postpandemic-wave-of-new-product-launches?cid=other-eml-dre-mip-mck&hlkid=750742a6b0154bc582ad40f7027d9065&hctky=12549301&hdpid=0cda6eb0-7920-4dff-875b-5a855109da34#

10 “Unleash the Power of the Retail Store: Winning the Digital Battle in the Physical Realm,” Gartner, 2021

11 https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/preparing-for-the-flood-how-packaging-companies-can-catch-the-postpandemic-wave-of-new-product-launches?cid=other-eml-dre-mip-mck&hlkid=750742a6b0154bc582ad40f7027d9065&hctky=12549301&hdpid=0cda6eb0-7920-4dff-875b-5a855109da34#

12 https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/preparing-for-the-flood-how-packaging-companies-can-catch-the-postpandemic-wave-of-new-product-launches?cid=other-eml-dre-mip-mck&hlkid=75

13 https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/the-drive-toward-sustainability-in-packaging-beyond-the-quick-wins

14 https://www.mckinsey.com/industries/paper-forest-products-and-packaging/our-insights/preparing-for-the-flood-how-packaging-companies-can-catch-the-postpandemic-wave-of-new-product-launches?cid=other-eml-dre-mip-mck&hlkid=750742a6b0154bc582ad40f7027d9065&hctky=12549301&hdpid=0cda6eb0-7920-4dff-875b-5a855109da34#

15 https://www.plasticsmachinerymanufacturing.com/injection-molding/article/21232208/robots-fill-gaps-as-processors-struggle-to-find-workers

16 https://www.plasticsmachinerymanufacturing.com/injection-molding/article/21232208/robots-fill-gaps-as-processors-struggle-to-find-workers

17 https://www.plasticsnews.com/blog/kickstart-automation-labor-shortages-supply-chain-complicate-2022-forecast

18 https://www.ptonline.com/articles/how-covid-19-did-and-didnt-change-automation-in-plastics