How the packaging industry is embracing a new era of change

Many people will purchase a new kitchen appliance online, pick up a ready-to-go meal from the supermarket or simply buy a pint of their go-to milk choice without thinking about the industry they're supporting. We're not referring to the direct retailer, but the companies that have supplied the packaging. These businesses, and the workforces behind them, make up a $1 trillion-plus industry, and there are no signs of growth slowing.

Additionally, competition is heating up across the globe. Shifting megatrends are threatening to rewrite the rules of economy, business and society at every level. As a result, McKinsey has outlined six prerogatives that all industry players, large and small, must build into their business change strategies if they are to ride the wave and come out on top.

What does this new era of challenges and opportunities mean for business change and transformations executives in the packaging industry, and how can they ride the changing tides?

Why the packaging industry is becoming increasingly competitive

The war against single-use plastic, a growing Chinese economy, industry consolidation, and increasing private-equity ownership are changing the packaging industry before our very eyes. Some prominent megatrends include e-commerce, changing consumer preferences and margin compression. However, sustainability and digital have been called out as the trends set to have the most defining effect on the packaging industry.

Just consider food subscription boxes which are designed to feed the growing demand for convenience and fight food waste. While their business model aims to combat climate change, they rely on packing industry experts to help them deliver the food in the most sustainable way possible. This presents CEOs with the task of commercialising sustainable packaging alongside other objectives, such as using new technologies for digital printing and designing ship-ready packaging. Having an experienced change management team is the cornerstone of successful organisational transformation and will be the key to delivering these effectively.

The sixth industry-defining trend

Though McKinsey has outlined five megatrends, another force has left a mark on the industry. Covid-19 uprooted almost every element of human life, from how people interacted socially to how businesses operated. For the packaging industry, it saw food safety and hygiene move up the priority list, and in some cases, edging ahead of sustainability. Meanwhile, the boom in demand for healthcare products, food deliveries and other online orders created a unique situation. Packaging players were faced with balancing this demand with potential cost pressures as a result of lower household incomes and strained business balance sheets.

Throughout the pandemic, supply chains were consistently pushed to new limits, and the major challenge for packaging CEOs and their teams was ensuring they could still provide well-functioning and cost-efficient materials. Despite these challenges, packaging grew from a $900 billion industry to a $1 trillion giant.

Why packaging is an industry that will never stand still

The pandemic is not the industry's only survival story. As recently as 2008, businesses felt increasing pressure to use more plastic in their packaging as an answer to rising costs. Despite the global recession, the industry proved its resilience and attracted a growing number of private equity deals.

While it may be an industry that operates behind the cover of direct retailers, packaging professionals know first-hand the significance of these businesses, which, in the US alone, generate 659,817 jobs.

How can change and transformation professionals ride the changing tides?

Though the industry is undergoing a fundamental transformation, this creates new opportunities for businesses to innovate and emerge stronger. Six principles that should underpin any strategy are:

1. Invest in sustainable materials and processes
2. Reallocate resources to key growth areas
3. Implement category management
4. Price in response to inflation to capture margins
5. Attract, retain, and retrain the top talent
6. Seek more digitisation opportunities

Implementing change is never easy, especially in a fixed-term contract role where you could find yourself working in a team made up of new faces. That said, there are many reasons why a fixed-term contract role could be the right career move.

Do you want to be a part of the new era of change for the packaging industry?

The industry is at the beginning of its most influential era of change. Digital and sustainability are charting a new path for businesses, while external factors such as Covid-19 continue to highlight just how resilient packaging is.

If you want to make your mark, we can help. We've built relationships with multinational packaging businesses, and our consultants are committed to understanding what you're looking for in your next role, whether that's benefits, location or flexibility.

Get in touch with our change and transformation recruitment team, and we'll reach out to discuss the next step of your change management career. Alternatively, if you are a business searching for talented professionals, please don’t hesitate to reach out.