The commercial impact of environmentally friendly packaging
1 minute read
With plastic packaging back in the spotlight, we ask why the ground-breaking solutions developed by the packaging industry are not being fast-tracked all the way to supermarket shelves. In a nutshell, it comes down to cost and the ability to produce, what are currently regarded as niche specifications, at a commercial level.
The lack of consistency and guidance from governments regarding waste strategies is another factor which is driving individual retailers and brand owners to formulate their own environmental policies for packaging.
Comparing cost impact on common packaging materials
This fragmented approach is making it difficult to achieve the critical volumes required to make environmental solutions commercially viable. Film manufacturing, for example, has a global market and requires at least regional volumes, ideally global volumes, to remain cost competitive. Below we analyse the cost impact of substituting environmentally friendly alternatives in two very common materials used in packaging.
The first scenario is a high barrier 12µ BOPET//9µ Alu//60µ PE flexo printed 8 colours, which could be replaced with a recyclable alternative of 12µ BOPET//12µ BOPETalox//25µ BOPETg. Naturally this would apply to certain applications and the weight of the 12µ BOPET outer layer might have to be up-gauged to 23µ BOPET if heavy weights of adhesive are used, noting recycling guidelines state a maximum of 5% non-recyclable content. Ultimately the on-cost ranges from +14% to +47%, increasing as the order quantity increases.
The second scenario is a snack food laminate 20µ BOPP//20µ metBOPP, which could be replaced by a compostable alternative using 20µ cello//20µ cello plus compostable adhesive. The cost comparison for the compostable cello film is, on average, double that of the non-recyclable traditional film. Although excessive, the converters who have developed this technology will have better material prices than the market prices used in this typical scenario. As a result, we are seeing the early stages of large scale volumes being commercially viable with this solution.
Are consumers ready to pick up the extra cost?
The final consideration is packing line efficiencies and material performance. Some environmentally friendly alternatives will, at least initially, adversely impact line performance and therefore packing cost. However, with every environmental specification worked in the past, line efficiencies have been maintained and in some instances improved.
The commercial impact of adopting an environmentally friendly option is increased costs, which would inevitably pass down the supply chain. However, as with all new technology, costs should reduce over time. The question remains, will consumers be willing to pay a premium for environmentally friendly packaging in the short term?
This report has been developed by Wood Mackenzie in collaboration with Benchmark Consulting Global.
Find out more about our flexible packaging reports.