2021 packaging industry trends: GWP experts’ predictions analysed

What this [increased demand caused by COVID-19] did however, when combined with supply problems brought about by national and regional lockdowns, was to lead to material shortages. Whilst the hope is that the picture will improve, this is not looking likely before the middle of 2021 at the earliest.

It turns out that David was right to focus on material shortages, with this being a key theme throughout the year.

Arguably the only point that was slightly off – and there is no fault in being optimistic – is that the issues would begin to stabilise and improve by the second half of the year.

In fact, material shortages, whilst improving, are still ongoing. Lead times for certain grades (and other materials such as Correx®) can still be as long as 8 to 10 weeks.

Fortunately GWP has been able to mitigate the worst of these shortages, thanks to clever stock management systems, JIT supply for customers, and a strong focus on planning. But the situation shows little signs of improving just yet.

The rules of supply and demand of course mean that with less material available and demand increasing, costs will also go up. As such, paper mills across Europe and the UK announced they would be increasing prices at the end of 2020 – with these changes coming into effect from the beginning of 2021.

Very sound predictions again, although what nobody could have predicted was the scale and ongoing nature of the price increases being seen on paper and corrugated material.

Partly fuelled by the factors set out in the original article – of supply not keeping up with increased demand – a number of other considerations have come into play.

Labour shortages and wage increases, transport difficulties, pressure on supply chains, and the soaring cost of energy, are all inflationary factors contributing to the ongoing price increases being seen on material (and by extension, corrugated packaging manufactured from them).

Although it was happening anyway, the shift to ecommerce for the vast majority of businesses was accelerated considerably by the Coronavirus pandemic (even those with traditional shopping habits). It has ultimately meant higher demand for corrugated packaging that only looks like it will continue to grow throughout 2021 and beyond.

Coming off the back of a Christmas where ecommerce sales in the UK had risen by 56% compared with the preceding year, it could be argued that highlighting an ongoing shift to ecommerce was a fairly safe prediction.

However, it should be remembered that many were expecting a bounce back in bricks and mortar sales activity once lockdowns and other restrictions ended.

Whilst this has happened to a degree, the gains made by online retailers show no sign of abating. Coupled with many large high street retailers still struggling (or closing completely – such as Debenhams) it has, as also predicted, led to increased demand for corrugated ecommerce packaging.

With the decline of the high street and physical retail, an organisations’ ecommerce packaging is in many cases the first physical interaction that consumers will have a business or brand. As such, the next 12 months is likely to see an increasing focus on print quality and graphic design

An excellent prediction this, although it manifested itself in slightly unexpected way.

The move to online sales and ecommerce packaging did indeed see businesses focus on the packs used for delivering items to customers, and in particular the printing applied to these.

However, a key focus has been having both inside and outside print on ecommerce boxes. This is often a fairly simple and function one colour print on the outside of the box, but with a bright, detailed, and aesthetically striking design on the inside.

This focus on the “unboxing“ experience has led to many companies reviewing their packaging artwork, and investing significantly in improved print and design.

With consumers placing higher volumes of orders – and expecting next or even same day delivery in many cases – the strain experienced in fulfilment centres is likely to increase as well. This includes the need for well-equipped warehouses – utilising picking bins and pick face walls – as well as easy assembly packs.

Whilst there has been perhaps less focus on improving efficiency through easy assemble packaging (with customer experience seemingly trumping this), an area that has seen growth and investment is that of warehouse organisation and picking locations.

A huge number of businesses have re-evaluated their fulfilment operations, with products such as Correx® picking bins, pick face walls and stacking bins all (significantly) increasing in popularity.

Although there is light at the end of the tunnel, the ongoing Coronavirus pandemic, and the government restrictions to control it, are likely to pose businesses serious questions until at least the middle of the year – and possibly beyond. Whilst the packaging industry is seeing very strong demand at present, this has the potential to drop off if more and more businesses begin struggling due the economic situation.

The first part of Ruth’s prediction is incredibly accurate – in that even as we approach the end of 2021 there are still restrictions regarding testing, isolating and other safety measures that are still in place.

Whilst – thankfully – vaccines have made the severity of illness much less, having staff members isolating for prolonged periods has (and continues) to cause disruption to huge numbers of businesses.

And whilst the second part is also fairly accurate – in that many businesses (in particular high street retailers) have struggled and even ceased trading – the pent-up consumer demand and savings accrued during lockdowns has meant that demand for consumer goods has remained stronger than most would have expected.

Arguably, the issues now are rising inflation, a mismatch between supply and demand (i.e. shortages of certain goods), and a labour / skills shortfall in key areas.

2021 has the potential to see more businesses switching to returnable totes (such as those manufactured from Correx®). Whilst this may partly be driven by shortages of cardboard material, it is equally likely to be because businesses reassess the economic and environmental benefits of doing so.

On the surface, this looks like one of the few predictions that haven’t come to fruition. Certainly if you only read the mainstream media.

However, sales of returnable packaging at GWP have increased significantly. Whilst this is partly due to many businesses being forced to find efficiencies due to ongoing supply chain difficulties (as well as corrugated cardboard shortages), many companies are waking up to the fact that returnable packaging can have a lesser environmental impact that single trip equivalents.

And yet, whilst there is – rightly – an ongoing focus on sustainability, returnable packaging does still look like an under exploited opportunity.

Correx® (corrugated plastic) use has been growing steadily over the past few years – and 2021 is likely to see this trend continue.

The versatility of the material also means it is increasingly being used in other applications [besides returnable containers], such as retail packaging and even POS displays – something I believe we will see more of in 2021.

Whilst the effects of COVID 19 restrictions have, to a degree, inhibited the requirements for POS as suggested, the use of Correx® material has certainly increased over the past year (to such a degree that lead-times are now as much as 3 months on some material grades / colours).

A big part of this is the increase in the use of Correx® picking bins for use in warehousing and fulfilment centres, with the size flexibility allowing for custom solutions that can be tailored to individual business’ requirements.

One of the key uses for bespoke foam inserts is for product presentation. This can either be as part of retail packaging and gift boxes for end users, or for use in sample cases for sales pitches / presentations. With the move to online shopping potentially reducing the requirements for luxury retail packs – and coronavirus restrictions virtually halting face to face sales meetings – the demand for this type of foam is likely to be considerably lower until the middle part of the year at the earliest.

The restrictions regarding Coronavirus – and a shift to remote working – have made sales meeting less frequent than previously, just as predicted. And with the lingering threat of COVID-19, it can be argued that business practices are still not back to the “normal” as we used to know it.

So, with more and more sales meetings being conducted remotely, some areas have seen a decline in the requirements for foam inserts.

Other areas have defied this trend, however. Samples (and by extension the cases and foam to house them) for home improvements (think tiles, blinds, worktops etc.) for salespeople visiting customers have increased, as one example.

Another area of growth has been for protective cases used by service engineers. Efficiency when on site (to limit exposure to Coronavirus) has been a key focus, and meant that well equipped and designed cases with foam inserts have been in demand.

And finally, with retailers hoping that shoppers will return to bricks and mortar stores this year, the requirements for added value packaging that includes foam has also increased. Not to mention foam end caps and similar transit packaging used in ecommerce applications too…

Although the ways in which foam may be used have the potential for change, another prediction is looking likelier by the day – that 2021 will see shortages (and therefore price pressures) on foam materials.

Although thankfully the worst of the material shortages affecting foam seem to be over (for the time being at least), the prediction of price pressures remains valid even now.

However, rather than significantly increased demand (as with corrugated), the supply of raw materials, supply chain issues, and general inflationary pressures, have seen price hikes across a wide range of both high and low density foams in 2021.

It is typical for the sales and revenue performance of packaging companies to be a bellwether for the UK economy. However, despite COVID-19 creating the biggest drop-in economic activity in the UK for hundreds of years, the packaging market has remained buoyant. My prediction? Cautious optimism that the UK economy – and manufacturing in particular – will emerge stronger towards the end of 2021.

Ian was certainly right to be optimistic, with pent up consumer demand and a shift from travel and service-based spending to home improvements and hobbies, meaning that UK manufacturers – including GWP – have (generally) had a strong 2021.

Saying that, there are storm clouds on the horizon that could make the final part of the prediction – that manufacturing will be stronger at the end of 2021 – somewhat shakier.

Shortages of parts, materials, and labour (all of which have contributed to increased costs), as well as the supply chain crisis and other inflationary pressures (energy / fuel prices being the big one) are all growing in significance. This means that there remains a degree of uncertainty over how the UK economy and manufacturing businesses will perform as we move into 2022.

Even with the pandemic, Brexit, and everything else that has happened over the preceding 12 months, environmental concerns remain much more of a focus across our customer base and the industry in general. Ultimately, it seems as though the majority of businesses – and consumers – are starting to make genuine efforts to be more sustainable over the longer term. This is something I predict will be seen more and more over the coming twelve months.

Another prescient comment from Ian here, with huge numbers of businesses – from large multinationals to small start-ups (and everything in between) – doubling down on becoming more sustainable and eco-friendly.

Obviously, packaging can have a significant impact on a business’s environmental impact, so this has seen more and more companies assessing how they pack and ship products, exploring alternative solutions (including reusable / returnable containers), and also looking to schemes such as FSC certified packaging too.

All things considered, the predictions made by the team at GWP proved to be incredibly accurate.

This is all the more remarkable when you consider how turbulent the preceding 12 months have been – everything including restrictive lock downs, withdrawal from the EU, the supply chain crisis, energy prices, material shortages, changing consumer habits, and much more besides.

GWP have also taken great pride in being able to maintain the highest levels of quality, availability, and service even against this uncertain backdrop, and will be delighted to continue assisting businesses of all sizes as we move into 2022.

And don’t forget to keep an eye out for GWP’s predictions for the next 12 months, which will be published shortly!

Packaging Predictions / Trends 2021: UK Expert Opinion

Packaging price increases – 5 simple tips to cope with rises

Manufacturing productivity (11 tips to improve your performance)

Cheap packaging – is it really cheaper? Points to consider…

Analysis: Single trip packaging vs returnable packaging

Corrugated board grades explained: types of cardboard

Packaging Terminology: A glossary of terms and definitions

7 facts highlighting the importance of ecommerce packaging

45+ examples of misleading / excessive packaging fails