2023 packaging trends – what the experts predict for the coming year

A common thread across almost all businesses towards the latter part of 2022 was an increasing focus on sustainability. And this is only likely to intensify in 2023.

Businesses are placing significant emphasis on ensuring their packaging is sustainable. This changing approach is likely to see companies looking at size-optimised packaging to reduce emissions in transit, the increased use of recycled and recyclable materials, and even many considering reusable and returnable packaging options.

Besides this, companies are also increasingly looking towards solutions such as FSC® certified packaging.

Whilst this focus is in response to strong consumer demand, businesses genuinely seem to be waking up to their responsibility to the environment.

Interestingly, many sources also predict that true sustainability will begin to encompass many other facets (beyond just packaging and logistics), including ethical supply chains, fair workplaces and greater transparency.

Historically, many organisations were guilty of focusing only on sustainability when times were good. The same businesses would more or less forget about sustainability during challenging trading periods and recessions.

As the UK and the wider world face a period of economic turbulence, it should be fascinating to see how cost pressures are balanced against consumers demanding more sustainable products and packaging.

Of course, the two can work together. Optimising the size of your packaging, for example, reduces costs through improved transport efficiency and less material use. Both these benefits also result in fewer CO2 emissions.

2023 could be the year when taking steps to reduce costs and improving sustainability go hand in hand.

The final prediction for 2023 is that of dual-use packaging. Particularly eCommerce shippers that businesses use for the initial delivery and any potential returns.

Although eCommerce growth is slowing, returns are still a huge problem for retailers and customers alike.

Many online sellers are likely to believe that reducing friction for shoppers is a crucial way to foster loyalty and capture repeat business.

As such, packaging that allows for easy returns is almost certain to increase in popularity. Whether this is pre-printed return labels or double tear strips to allow for easy resealing, returning unwanted items could be about to get easier for consumers.

It may seem strange to say that eCommerce may slow down in the coming 12 months. After all, in 2021, more than 81% of UK people made at least one purchase online. But with the UK facing its highest inflation rate for 40 years, the cost of living crisis could cause severe headaches for both omnichannel and pureplay eCommerce businesses.

Another challenge for many businesses is the growth in Marketplaces. Big players like Amazon in the UK and Alibaba in China are slowly squeezing out smaller competitors.

But what does this mean for packaging?

Firstly, expect the unboxing experience to become even more refined (and competitive), with brands using this to create seamless online and offline experiences (and foster loyalty amongst consumers).

Secondly, how sustainable a company’s eCommerce packaging is could also become a deal breaker. This advantage could be particularly pronounced where differing retailers offer similar prices and service.

In short, packaging is likely to become increasingly important in winning and retaining customers.

Another area where brands may look to enhance their packaging in 2023 is by making it more interactive.

Achieving this could include greater adoption of QR codes similar to how Lego, as one example, is already embracing this.

QR codes may also allow consumers to quickly download product instructions, setup guides, special offers and promotions, and even for cross and upselling similar products.

Packaging may also become more integral to specific product offerings, such as providing ongoing storage of items. This type of value-added packaging could become another point of difference in particular sectors.

The final packaging prediction for 2023 is a shift towards more subtle branding.

This trend is already happening in specific markets, where brands are replacing full-colour, litho-printed packaging with one or two colour designs on natural-looking materials.

Companies are using this aesthetic to communicate increased sustainability of their packaging – and by extension, their business – by creating a more organic appearance. In many cases, this type of print also reduces production costs.

There has been much noise regarding inflation – driven primarily by material shortages and the conflict in Ukraine driving up energy prices.

However, one of the key factors affecting price pressures is labour availability – and in turn, its costs.

Many businesses, including packaging suppliers and manufacturers, struggle to recruit and retain staff. The knock-on effect is that companies are willing (or sometimes forced) to pay higher wages to retain talent in their business. And this is before the increase in the minimum wage is introduced in April.

This increased labour cost feeds directly into the cost of products, including packaging. These costs inevitably are passed on until they reach the end consumers. So whilst material and energy costs show tentative signs of falling, labour costs are still pulling in the opposite direction.

The other consideration is that labour shortages can lead to inefficiencies and missed deadlines. As such, service levels of under-resourced packaging companies could suffer moving into 2023.

Retention of key skills is a critical business strategy moving forward.

The potential for ongoing supply chain challenges ties in with increased labour costs. Lack of workers, ocean freight bottlenecks, inflation and warehousing shortages could all impact businesses’ success in the next 12 months.

Of course, the packaging industry is not immune to any of this.

But, a more detailed analysis reveals that packaging may have to survive longer within the supply chain (an excellent recent example is Royal Mail strikes and scores of eCommerce packaging held in warehouses and depots across the UK).

Warehouse space is also likely to lead businesses to look at how their packaging can help with these challenges. The obvious solution here is a switch to a vendor-managed inventory.

The bottom line? Expect another challenging year in general for businesses.

Although eCommerce activity may be falling from the peaks seen during the pandemic-affected years, this, conversely, could see additional pressures on warehousing and fulfilment.

With reduced consumer spending comes increased competition. In turn, short or even same-day delivery becomes a critical factor in shoppers buying decisions. If an online business does not have robust, reliable order-picking systems, it could quickly fall by the wayside.

Another factor to consider is that stock levels can build up with fewer active shoppers. This scenario is a particular worry for slower-moving lines or those seen as a luxury or big-ticket purchases. Businesses must ensure sound management of this excess stock.

As sustainability grows in importance for most businesses, many consider switching to recyclable options such as corrugated cardboard. Whilst this is a good strategy in many scenarios, there are others where using returnable containers and tote boxes would be a better option.

The barrier many businesses are on the cusp of overcoming is that the simplistic view of plastics is that they are bad. But many organisations now understand that a plastic supply chain tote, used over 100s of trips, can result in less energy use and emissions than a single trip option.

Perception is the main factor holding this switch back – but 2023 could be the year this changes.

The Plastic Packaging tax was finally launched in 2022 – although to little fanfare.

Many businesses – including several packaging manufacturers – took a fairly relaxed approach to the new legislation virtually until its April introduction.

However, the tax has meant that manufacturers are adding more recycled content to a broad range of plastic packaging products and materials.

There is now some indication that this is beginning to drive up the cost of recycled material. So with businesses placing equal attention on both costs and sustainability, it will be interesting to see if there is a swing back to virgin materials (simply due to the economics of the situation).

As such, there may be further changes from the government in 2023 after monitoring the market’s reaction.

Another factor to consider is businesses receiving increasingly costly bills for their tax. This point is when the reality of the amount of plastic packaging they are using hits home. Any increase in the tax cost could drive a further wave of businesses looking to reduce the amount of plastic they use in their packaging.

The defence sector – a significant user of performance cases and foam inserts – is likely to be busy and face substantial challenges in 2023.

The ongoing situation in Ukraine could result in increased spending and activity in this sector, where packaging performance can often be mission-critical. Despite the economic crisis, defence spending in the UK remains above two per cent of GDP (gross domestic product).

This increased demand could place strain on material supply and introduce additional cost pressures. Users of this type of packaging may only avoid these fluctuations if there are wider economic changes. Alternatively, other sectors moving away from foam to what they perceive as more eco-friendly options may also soften any impact.

Regarding sustainability, the case and foam market is one area where sustainability has traditionally been less of a concern.

This indifference is due to a couple of factors. Firstly, businesses use high-performance cases and foam over long periods (i.e. they are not single-use solutions). Secondly, protection is of the utmost importance, particularly for high-value or specialist tools and equipment.

The industry is taking steps to address this, including several cases manufactured from recycled materials. There are reports of several new types of foam material coming to the market over the coming years too.

So whilst 2023 may not be the year that case industry becomes more environmentally focussed, it could be a turning point leading to accelerated change.

Over the past couple of years, material costs and availability have been among the main issues facing the packaging industry.

For example, the massive shift to eCommerce and changes in consumers’ shopping behaviours led to shortages in corrugated cardboard (and subsequent price increases). Oil prices have pushed up the costs of plastic-based materials such as foam and Correx. And this is before considering wider inflation and the legislation (Plastic Packaging tax) feeding into this too.

There is perhaps cautious optimism that 2023 could be the year when these price pressures begin to ease.

The fall in eCommerce activity means that many material producers are likely to have spare capacity later in the year, resulting in gradually falling prices.

However, energy costs for manufacturing and converting these materials remain (at the time of writing) stubbornly high, which could offset some of the price relief.

Despite this, 2023 could be when material prices and availability finally become much less volatile.

Another factor affecting the demand for materials is manufacturing output.

With the industry body Make UK indicating that manufacturing output shrank by 4 per cent in 2022, and forecasting a further reduction of 3.2 per cent in the year ahead, it could result in reduced demand for packaging across the board.

This reduced activity, of course, has a knock-on impact on packaging manufacturers and distributors. Suppliers are likely to come under pressure from customers to help with cost-reduction strategies and programmes.

After the turbulence of the last couple of years, it appears that 2023 may well head the same way.

Predicting the future is difficult at the best of times, and this applies equally to the packing industry.

And whilst there are approaching challenges, there are also enormous opportunities for businesses of all types in 2023.

The result could – and should – be more sustainable, better connected, better optimised and more cost-effective packaging for your business.

If you are facing any particular challenges with your company’s packaging in 2023, please get in touch to see how GWP can help.

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