17th Annual Packaging Trends Survey: Big Demand for High Performance

April 15, 2003
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Today’s packaging solutions must do it faster, safer, cheaper and with more accuracy.

The effects of September 11 and the struggling economy have made this year unlike any other, as the results of Food Engineering's 17th Annual Packaging Trends Survey attest.

The fluctuating economy has led food and beverage companies to lean a little more on the conservative side when budgeting for new packaging equipment and materials, while trying to get the most out of existing equipment. Food safety, always consistently ranked as one of the top food packaging issues in FE's Packaging Trends Survey, has also taken on added importance.

Despite the fluctuating U.S. economy and talk of a possible double-dip recession, half of the survey respondents said the economy has had no impact on packaging equipment and material upgrade plans this year. However, a closer look at capital equipment budgets reveals a different story.

Twenty-three percent of survey respondents said that less than five percent of their capital equipment budget for 2002 was designated for the purchase of packaging equipment and 39 percent of respondents said their companies plan to spend less than $50,000 for packaging equipment purchases in 2002. Among the light equipment spenders are those in the meat/poultry/seafood, confectionery, and flavors/ food ingredient segments. More than half of the respondents in each of these three categories indicated they plan to spend less than $50,000 this year on packaging equipment.

In contrast, beverage company spending remains strong. Thirty-six percent of respondents in the beverage category plan to spend $1 million or more on packaging equipment this year and 32 percent indicated plans to spend $5 million or more on packaging materials.

A study by market research firm ACNielsen supports the beverage category growth trend. Last year three of the five fastest growing food and beverage categories in the global marketplace were beverages, led overwhelmingly by prepared alcoholic beverages, according to the study. Water and drinkable yogurts were also cited as top areas of growth.

The Packaging Machinery Manufacturers Institute's (PMMI) annual U.S. Packaging Machinery Purchasing Plans study revealed modest growth for machinery sales as the year progresses, with U.S. capital spending for packaging machinery predicted to increase 1.5 to 2.5 percent this year to an estimated $4.992 billion. The food products segment, accounting for 40 percent of the total expenditures for packaging machinery, is estimated to spend $2 billion on equipment, while the beverage category is estimated to spend $899 million, according to the PMMI study.

Excess capacity is one reason for the reduced spending on machinery, although the food industry wasn't as effected by excess capacity as much as some other industry segments, said Richard Kitrosser, president of Industrial Research Associates, the firm that produced PMMI's purchasing study. Kitrosser stressed that food and beverage firms' purse strings are closely attached to economic recovery and growth. "Many of the end users said that if the economy improves and their company's profits improve, then they'll spend. However, until they see a definite sign that things are getting better, their budgets are being held very tight," said Kitrosser.

Long wish lists

Increased demands for flexibility and productivity on packaging lines are the main drivers behind equipment purchases, according to FE's study. "The ability to maintain the equipment with little to zero amount of downtime," is an important factor according to one food company respondent. "[We] want the most efficient and safe machines on the market," proclaims another. "We need equipment that is reliable and fast to change over, easy to clean, and safe," adds another respondent.

Of course, cost and return on investment is still of vital importance when purchasing packaging machinery, as survey respondents made loud and clear. "The project must have a payback of less than two years or it is very difficult to get approved," said one respondent. "Costs of capital equipment have risen substantially in recent years, prolonging the payback period from productivity savings," says another.

While cost and operator safety are the number two and three rated factors when purchasing packaging machinery, accuracy topped the list of factors considered for the second year in a row. "Inaccuracies in bag weights when filled" was one respondent's concern. Another respondent said his company had installed scales for accuracy and to decrease product give-away.

In addition to accuracy, cost, and safety being top of mind when purchasing packaging equipment, automation plays a key role. Improved packaging line automation was rated fourth in a list of 17 food packaging issues which will affect business operations in the next two years and was repeatedly listed as an area where respondents felt their company's packaging line effort falls short. Respondents indicated the "need to reduce labor" as a reason for needed automation. One respondent said his lines "need automation. The line [is] too slow. If more productivity is needed, we always have to add more people." Another respondent replied, "Our packaging lines are too labor-intensive. [We are] looking into increased automation such as case packers."

PMMI's purchasing study also uncovered automation as a main driver behind machinery orders. Machinery will be installed to reduce labor costs and to expand automation, rather than to expand capacity, says the PMMI report.

The need for more packaging line automation also correlates to the need for faster packaging line speeds, which was ranked as the third most important issue in food packaging, according to FE's research. "Speed falls short. [We need to] replace older equipment or add more automation to packaging process," voiced one respondent.

"We cannot package as quickly as the production equipment can produce the goods," said another respondent in the bakery category.

Safe and secure

Product safety was ranked as the number one issue in food packaging that will most affect business operations in the next two years. Product safety is always at top of mind, but has taken on new significance in the post-September 11-environment and increased threat of security breaches along processing and packaging lines.

In a new question to the survey, Food Engineering asked how security considerations have effected packaging line operations. Thirty-nine percent said their companies have not implemented any new security measures, while 24 percent said they have considered, but have not yet implemented greater packaging security features.

Earlier this year, Lockwood Greene Senior Consultant Patrick Helm participated in PMMI's one-day program on packaging line security and noted a similar response from food and beverage manufacturers toward increased security.

Helm said he does not think food and beverage processors are looking more closely at security issues along their packaging lines since September. 11. "I have done several presentations on the risk management topic and it seems the farther we get from September 11, the more interest dwindles and it is business as usual," says Helm. "Complacency will become the norm until an attack comes in the food industry. If it costs money, companies will try to avoid it."

"There are some procedural changes being made on incoming ingredients and materials, but very little with machinery," added Helms. This echoes results from FE's survey in which 33 percent said they have begun requiring tighter verification of shipped-in ingredients from suppliers. "The real effort is in personnel assessment, not to equipment," claims Helms, who cited the fact that some companies are now using outside firms to conduct employee background searches for new hires.

Helm's risk management plan involves four "critical considerations" which include assessing, analyzing, mitigating, and controlling risks and can be applied to any industry. However, he does not currently see an increased implementation of these plans in food and beverage processing plants. "Unless the possibilities of affecting a company's livelihood is eminent, I believe we will see very little movement toward implementing risk management," said Helms.

Because consumers want easy to carry and store containers, Campbell's launched Soup at Hand, a single-serve soup with a plastic lid that has small slots from which consumers can sip soup.

Safety, convenience by design

Even though food and beverage companies are not making significant changes to packaging lines to increase security, of the 46 percent that said their company made changes in primary packaging materials or designs in the past year, more than a few noted changes to increase food safety.

One respondent said, "The trickle down effect to food safety from September 11 has led our search for the most secure package and packaging environment." Another respondent said product safety had a major impact on equipment purchases by way of "added cost for quality control documentation and package design."

Package design continues to take more of a role in promoting and selling food and beverage products, forcing alternative factors to be considered when companies develop new packaging. "Packaging has been looked at as a purchasing problem and a cost of doing business-as an expense item-whereas advertising was the marketing expenditure," said consumer product analyst Mona Doyle during a roundtable discussion on packaging trends hosted by Voridian Company. "We're moving into a world where packaging has equal if not greater weight than marketing. Companies increasingly have to look at packaging as a primary part of their marketing."

This is reflected in FE's survey as respondents rated printing and graphics quality as well as brand image "very important" factors in developing new packaging.

While cost is always the main consideration when developing new packaging, 56 percent rated consumer convenience as the second most important factor considered when designing new packaging.

Consumers want snacks, soups, and entire meals on-the-go and they want them packaged in portable, easy to carry and store containers. The number of launches this year that feature convenience packaging as their main selling point is a testament to the power of consumer's request for convenience. Campbell Soup recently launched Soup at Hand-a new line of ready-to-eat, single-serve soups in multilayer plastic contoured containers with a plastic lid that has small slots from which the consumer can sip the soup. This follows numerous convenience packaging launches in the cookie and cracker segment, including Frito-Lay's line of miniature Fritos, Doritos, and Cheetos snacks in blowmolded containers; and Kraft Foods' Nabisco cookie and cracker brands in resealable Nabisco Go-Paks.

The need for more convenient, portable packaging is also reflected in the fact that 33 percent of respondents indicated their firm had switched from glass to plastic in the last year.

Farming it out

While many food and beverage companies outsource a large part of their packaging operations to save costs, 91 percent of respondents said that their firm has not increased outsourcing of packaging in the past year. One respondent told us his company "moved in the opposite direction and does more in-house [packaging production]."

According to PMMI's purchasing study, over half of the end users surveyed rely on contract packagers for at least a portion of their packaging requirements. However, concerning future plans, 29 percent of the respondents who currently hire contract packagers said they will use them more often in 2002. Twenty-two percent said they will bring more work back in-house.

FE's survey found that use of a contract packager ranks last on the list of options respondents said their companies would most likely employ to decrease time-to-market for a new product. Sixty-three percent said that their firm would most likely modify existing packaging equipment, while 47 percent said their company would automate operations to decrease time-to-market. Forty-five percent said they would add a new packaging line.

Sidebar: Top 10 issues impacting food packaging

Readers were asked to rate the impact of the following packaging issues on their businesses in the next two years (Based on an average rating on the 5-point scale where 5 is most important and 1 is least important)
  1. Product safety 4.07
  2. Cost of materials 3.99
  3. Faster packaging line speeds 3.75
  4. Improved packaging line automation 3.74
  5. Consumer convenience 3.73
  6. Product shelf life 3.56
  7. Increased flexibility/changeover 3.40
  8. New packaging materials 3.32
  9. More customized packaging 3.19
  10. New labeling and coding technology 3.18

Source: Food Engineering’s 2002 Packaging Trends Survey

Sidebar: Top 10 factors considered when purchasing packaging machinery

(Based on an average rating on the 5-point scale where 5 is most important and 1 is least important)
  1. Accuracy 4.26
  2. Cost 4.20
  3. Operator Safety 4.14
  4. Speed 4.07
  5. Ease of use 4.05
  6. Compliance with government regulations 4.02
  7. Flexibility 3.99
  8. Easy changeover 3.93
  9. Supplier technical support 3.93
  10. Ease of integration 3.91

Source: Food Engineering’s 2002 Packaging Trends Survey

About this survey

The purpose of Food Engineering’s Packaging Trends Survey is to evaluate the attitudes and opinions of industry professionals toward food packaging trends. This year’s survey was mailed in June to readers with packaging-related responsibilities and job functions. One month later, 155 usable returns had been received, representing an 11% response rate. A breakdown of the response groups included 34% bakery, grain-based products; 29% meat/poultry/seafood; 16% dairy; 14% beverages; 12% confectionery; 12% fruits/vegetables; and 11% flavors/food ingredients/fats and oils. The majority of respondents held positions in general management, operations/production management, or engineering.

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