Innovation in Food and Beverage Packaging:

Unwrapping the External Environment

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Report Contents

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Executive summary 

Key takeaways 

Section 1: Sourcing materials

Section 2: Reactions to consumers

Section 3: Planning for the future

Looking ahead

About Industrial Physics

Methodology and demographics 

 EXECUTIVE SUMMARY

Industrial Physics’ Innovation in Food and Beverage Packaging research series reaches its conclusion with our final report on the external factors influencing innovation. Our final report lifts the lid on the external environment – showcasing that many factors impacting the ability to innovate in packaging are coming from outside of the organization. External factors such as energy costs/availability; inflation; geopolitical tensions; delays in the wider supply chain; and changing consumer expectations are all shaping how companies are developing their packaging strategies.

The series was developed to deepen the insights gained from close relationships with our customers and understand how a variety of factors have influenced the true levels of innovation seen in the packaging industry today. 

Within the third edition, we explore how food and beverage packaging professionals are responding to these factors, and whether they are proving a blocker or facilitator of innovation in today’s landscape. Are external pressures proving an incentive for an innovative approach and driving companies to act more quickly? Or are they introducing too much uncertainty to decisions that require significant time and budget to implement? 

To answer these questions, we surveyed 380 packaging professionals in food and beverage across the UK, US, Germany, India and Malaysia. We also discussed the findings with a selection of technical experts – both within Industrial Physics and from the wider industry - to learn how well the data mirrored their own experiences. In analyzing the data with these experts, we gained a more comprehensive picture of operations today and the role that partners such as Industrial Physics play in supporting manufacturers to leverage opportunities and reap the benefits. 

The first report, titled Unwrapping the internal environment, explored the impact of the factors within a company’s control relating to its operations, including skills, tech, and agility. This was followed by the second report, titled Unwrapping the testing environment which examined the testing developments believed to hold the most opportunity for quality control, R&D, and operations experts. 

KEY TAKEAWAYS​

Global events and the subsequent market conditions over the last few years have impacted many industries, including food and beverage. Throughout our 2024 research, respondents agreed that supply chain delays, energy costs and availability, inflation, and geopolitical tensions have all played a significant role in how their companies have performed or been able to innovate when it comes to packaging.  

Almost half agreed that they had been negatively affected by each of these factors, with those in the USA hit hardest. However, the factor that came out as the highest overall was challenges in sourcing materials, with 53% agreeing that they had been negatively impacted by this, and almost 1 in 5 strongly agreeing. 

Steve Davis, Industrial Physics’ Global Director of Product Management, explains that challenges in sourcing materials could be explained by the obstacles that the country has had in developing a circular economy for packaging materials.

Challenges in 
sourcing materials

The desire to achieve a circular economy is particularly evident among those working primarily with paper packaging.

Agreeing with this point, Chris Freshman, Director at Industrial Physics, at Industrial Physics explains: “We have seen a supply chain issue in the transportation of metal, too. The biggest bottleneck in this industry was an inability to ship products from global plants due to the crises happening worldwide, which has resulted in packagers choosing to expand lines in more local sites rather than single plants that supply the whole world.” 

Challenges in sourcing materials have led some professionals in food and beverage packaging to increase the stability of their supply chain with local material suppliers. But for others, the challenge has accelerated innovation at an operational level. Our Unwrapping the Testing Environment report, which launched earlier this year, revealed that 50% of professionals in food and beverage packaging agreed their company had made positive changes to the packaging testing environment in the last five years. 

The testing developments believed to hold the most opportunity were automatic process control, 100% inspection, and non-destructive testing methods. One thread of commonality that exists in each of these approaches is the ability to reduce waste and ensure more efficient use of materials across the packaging production process. This suggests that some packaging professionals may be exploring opportunities to reduce the strain on material sourcing, while also increasing the overall efficiency of their operations. 

Greg Frisby, Director of Strategic Global Alliances at Industrial Physics, explained that use of real-time data and monitoring of processes can increase the efficiency of packaging material utilization. 

He stated: “Introducing meaningful analytics to your process is a great way of gaining a better understanding of exactly what is required to meet packaging demand, which is why I wasn’t surprised to see data analytics as a top technology area that offers the most opportunity in the first report of this 2024 series. Innovative manufacturing leaders are investing in technology solutions that deliver real-time data because it enables them to optimize their processes and ensure that materials are being used as efficiently as possible.”

This could be the result of perception challenges faced by the paper industry over the last few decades. Rodger Segelstrom, Global Product Line Director at Industrial Physics pointed out that there were long periods in the industry’s history when paper was perceived negatively from an environmental perspective.

This impacted the level of investment made in paper packaging sites, in favor of materials such as aluminum – meaning that the ability to source paper from sites has been considerably tougher. However, in recent years, a more informed understanding of production processes has accelerated the demand for paper packaging.

Rodger stated: “It doesn't surprise me when I hear people say that there's a significant challenge for sourcing raw materials. For many reasons, including transport costs and sustainability objectives, manufacturers want to source paper fibers more locally now. However, due to the previous misconceptions, these suppliers are not so readily available and are creating a sourcing challenge.”  

Steve shared: “Across the globe, the circular economy does not yet exist to the extent it needs to, despite its continued identification as a priority across sectors - recyclability of packaging already appeared within the top innovation goals in our 2023 research. Demand for packaging materials is outstripping the supply, because the infrastructure to restructure, recycle, and return back to the base material to use again is still in its infancy on the whole. There's no shortage of steel, aluminum, or trees – so what we are seeing here is the impact of a lack of infrastructure to get materials back to the manufacturers in a format they can use in production."

Ultimately, it's important that see more innovation that supports the development of the circular economy. Some are innovating with different coatings for paper packaging that can be easily broken down during the recycling process, so a greater proportion of the paper fibers are salvaged and pushed back into supply chain for manufacturers.

Percentage of those that agreed their company had been negatively impacted by challenges in sourcing materials:

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Reacting to consumers

SECTION 2:

Consumer reactions are also having a significant impact on packaging strategies across the globe.

To drive safe, valuable innovation in food and beverage packaging, consumer knowledge gaps must not be overlooked. The research data has reinforced how impactful consumer reactions are when it comes to packaging strategies and the impact this has on innovation, therefore, collaborative efforts must be made by stakeholders across the industry to provide a fuller picture of material advantages and limitations. This will help to mitigate extreme and often misinformed reactions to materials, for example, the current negative perceptions of plastic packaging. 

Chris explains: “One of the difficulties we’ve seen with a number of materials is that information is shared publicly but without the full context, which has led to severe reactions and calls to boycott particular materials or any companies continuing to use those materials in their packaging, e.g. plastic." He believes that if the full benefits and limitations of each material were shared via government communications, industry bodies and education initiatives from the big players in food and beverage, then this would reach the consumer-facing press and more informed opinions could be developed. This would drive the industry to the most needed developments, such as recycling infrastructure.

A similar proportion (56%) agreed that their company has conducted consumer research to inform its packaging innovation decisions. 

Steve Davis believes that demand for paper packaging has increased due to the negative reputation of plastics in regards to the environment. However, he believes that the consumer is driving that narrative and we’re seeing greater demand for more sustainable packaging, forcing companies to demonstrate their commitment via innovation.

However, as Chris Freshman adds, this is a complex process because there is still a disconnect between several critical factors, including how reactions translate to purchasing habits, and information about packaging materials is not always delivered to consumers in enough detail to make informed decisions. 

Planning for the future

SECTION 3:

In addition to responding to the environment in the short term, we are also seeing an industry-wide focus on futureproofing in food and beverage packaging – this encompasses innovation plans that exist in order to offer protection against potential external factors. 

Steve Davis explained how the influence of external factors may be fuelling this innovative approach: “There's more instability on the planet than there's been for years, and that drives people to make sure that they’ve got what they need to continue meeting demand and do what they can to forecast.” 

Futureproofing will mean different things to different companies, but one of the common examples our experts have seen in food and beverage packaging at the moment is the introduction of more automation in the production and testing processes that exists to reduce the level of errors and collect more data which can help with planning and continuous improvement without reliance on significant investment.

As suggested in our testing report in this series, facilitating peer-to-peer knowledge sharing and deepening the understanding of the testing data will help to maintain in-house expertise so that opportunities can be spotted, and quality and safety of packaging is maintained throughout innovation. Although these elements of innovation might not be detectable by consumers, these approaches will help to stabilize operations in the event of new challenges or significant global events including natural disasters.

Almost half (48%) of the respondents agreed that their company has invested in futureproofing, with over 1 in 5 (22%) strongly agreeing.

Geographically:

This could be due to a diverse spectrum of threats that occur across different geographies.

At a material level the results were closer:

Packaging professionals working with paper and organic material the most likely to agree.

Rodger Segelstrom believes that this focus on futureproofing may also lead the packaging industry to accelerate the shift towards a circular economy. He explained: “If we made it easier and more attractive for people to recycle, even if we could gain 10% more recycled material than we're doing now - that's a huge amount of recycled fiber and a stronger supply chain. That's future proofing: Looking at different types of materials and sources of fiber.” 

"Another example of futureproofing would be anticipating the skills shortage which is a growing concern in the sector and increasing the level of training and knowledge sharing taking place within a business. 

Chris Freshman agreed with the importance of focusing on technology and automation for futureproofing purposes: “Geopolitical tensions have disrupted many businesses in different ways. Exporting and importing has become harder with unstable supply chains, so companies are reintroducing checks to increase stability. Yet, they are also focusing on trying to make the process of production less people dependent. We're seeing a big swing from manual to automated in a lot of operations.” 

The examination of external factors in this report has revealed that while respondents may have noticed a negative impact on their company’s performance, in many cases this has led to valuable packaging innovation projects getting the green light – including efforts to futureproof.

Professionals are being forced to navigate uncontrollable supply chain challenges including difficultly sourcing materials, rising energy costs, inflation, and geopolitical tensions. This issue is particularly pronounced in the paper packaging sector, where underinvestment due to previous perceptions has led to local sourcing difficulties despite increasing demand for sustainable options.

However, the pressure on more effective utilization of materials could help to explain the focus on automation and non-destructive testing methods identified in the second report of the series. These methods help to reduce inaccuracies, facilitate waste reduction, and optimize material use, to the benefit of the packaging company and the environment. 

Consumer preferences are also having a strong influence, with a significant number of respondents agreeing that reactions from consumers have influenced their packaging strategies and noting that their company has conducted research with consumers. The consideration of these perceptions is important; however, they must be evaluated within context to get a fuller understanding of whether the investment in a strategy is worthwhile. 

In an effort to address the challenges in this report, and those analyzed throughout the series, the industry is focusing on futureproofing.

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Nearly half of the respondents are investing in measures to mitigate the impacts of global instability. For many, that approach involves leveraging technological advances to facilitate greater efficiencies and reliability throughout the manufacturing and testing processes. By introducing automation and real time data, companies are able to enhance operational efficiency and build stronger resilience – ultimately, safeguarding the future of packaging.

Industrial Physics is a packaging, material, and coatings test and measurement partner.

About Industrial Physics 

Across a family of specialist testing brands, our organization fulfils a critical purpose – to protect the integrity of brands and products for quality, R&D, and operations professionals across the globe.

We’ve been doing this for more than 100 years. By providing high quality equipment, solutions, and services, we’re able to support organizations across a wide range of industries. And our specialist expertise within the world of food and beverage packaging in particular, allows us to deliver a diverse scope of solutions for some of the world’s biggest brands. 

From seam inspection, to leak detection, to burst testing, to headspace analysis, and to label testing, we offer test and measurement solutions across a whole host of packaging and material types across core markets within life sciences, specialized industrials, and packaging. Whether you’re dealing with glass bottles, cardboard boxes, plastic pouches, metal packages, or an alternative type of packaging, we’re here to help. 

You can learn more about the unrivalled expertise offered by the team at Industrial Physics here.

METHODOLOGY &

DEMOGRAPHICS

Industrial Physics surveyed 380 packaging professionals in 2024.

industrialphysics.com