Can we learn a marketing lesson from craft brewers? Marketing by packaging.

The craft brewing scene is booming also in Sweden with a big number of small brewers and glass bottles are the dominating pack type. Glass bottles represents tradition and premium, two of the impressions that you as a craft brewer work really hard to convey to your consumers.
When you are selling a product at a price three times above your industrial brewing competitors, you have to work hard on your image. But something is happening…

What is it with craft beer and cans? I have noticed an increased interest in beverage cans from the local craft brewers, or microbeweries, here in Sweden.
One after the other launch new products in beer cans, not in glass bottles. Glass bottles used to be the standard for this premium beer segment.

The craft brewing scene is booming also in Sweden with a big number of small brewers and glass bottles are the dominating pack type. Glass bottles represents tradition and premium, two of the impressions that you as a craft brewer work really hard to convey to your consumers.
When you are selling a product at a price three times above your industrial brewing competitors, you have to work hard on your image. But something is happening…

The power of glass
The beverage can is in many consumer’s eyes a packaging used for mass production that does not necessary contain very sophisticated brews.
The craft brewers have mostly been true to glass bottles for their precious drops, and that for a few sound reasons.

  1. A craft brewer with self-respect have a large number of creative varieties of beer available and need flexibility in production. To use only one container and vary the label is efficient in a low volume production of several product varieties.
  2. It is also cost effective as you can get away with rather basic equipment when filling bottles on a small scale. And it is often also simply impossible for a small brewer to purchase the amounts of decorated cans needed to reach the lowest order level.
  3. Last but not least, the positioning of the product. Glass stands for quality, premium and tradition. These are images you very much want to reflect on your craft brew.

Incredible growth
Most of the above is still valid but the trend is clearly towards using more cans for the most premium products and for very small product batches.
The numbers speak for themselves, in 2019 the volume craft beer in cans increased by 2.5 times, for the second year in a row!
An increase from 8% of the craft beer volume to 17% in three years. In 2017, 12 brewers made 35 beer products available in cans. In 2019 70 brewers offered more than 400 products in cans. That’s an improvement!

Why is this?
The trend is clear and seems unstoppable. The movement is founded on a few obvious facts and some a bit more hazy.

* Some of the craft brewers have simply expanded their markets and volumes and are ready to invest in cans and a can filling line.
* Others have managed to get one single and specific product on a national distribution and can take the leap with that one product.
* Some who not yet have those volumes use blank cans and attach a unique label to maintain the flexibility.

Then it helps that the suppliers of cans have spotted the opportunity in craft beer and are lowering the bar for the smallest order.
Finally, but not least, consumers appreciate the product.

Environment and quality
All brewers I have heard comment on this argue the environmental benefits and the improved quality of the product. A sealed can is an airtight space and it is completely dark inside which maintains the quality. A can is easily recycled in this country with an efficient deposit scheme in place. As a matter of fact, 85% of the distributed cans are returned and recycled.

Marketing by packaging
They just do it! And they do it within the very narrow space that is left due to the current and very strict regulations around all alcohol promotion.
They build their brand using the means that are available, except from the product itself what is left is basically, the website, the shop and the bar.
At the point of sales there is nothing else you can use than the packaging itself. This is a clean case of marketing by packaging. The pack type, size, design and decoration are key to positioning and sales of a beer product in this market.

They utilize the packaging very well with brilliant graphic design, creative fonts and inspirational product names. And of course, a great product with a high and stable quality is very helpful when you want to convince consumers. 

An inspiring industry
This is a small scale industry with very limited resources that is constrained by square and rigid laws. They have still managed to turn the opinion and make something considered as a very basic packaging into a premium container. And successfully claiming a price three times the “normal”.
This is quite an achievement and well worth to celebrate. Why not with an unfiltered, hoppy and hazy beer? From a can, plenty to choose from…

We want less plastic! And more of… what?


Yes, what do we want instead? We can’t always replace plastic with a renewable material. Then what about recycled plastic, more sustainable plastic that is efficiently recovered and that comes from an organised collection system? Does that sound a bit better?

Coca-Cola is in the news with their new line of bottles entirely made from recycled PET. Fantastic! Coca-Cola Sweden is during 2020 switching to only use PET bottles with 100% recycled material for their leading brands, Coca-Cola, Fanta, Sprite and Bonaqua, 40 SKUs.

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This is not a small thing as using recycled material in food contact is a complex mission surrounded by of rules and regulations. The Swedish deposit system really helps here as it makes the recycling stream of PET bottles relatively pure.
Beverage bottles, and cans, are here collected and recycled separately and can in theory be turned back into new cans and bottles. Today around 85% of the distributed bottles are returned and recycled. Normally recycled PET tends to be cloudy due to unintended mixes and potentially tainted by other random plastic in the recycle process. This is avoided in a controlled stream like this.

In a recent report from McKinsey, “The drive toward sustainability in packaging—beyond the quick wins”, this is discussed, among other things. The report concludes that to successfully address the recyclability and waste challenges more collaboration is needed along the value chain. To manage increased recycling new infrastructure needs to be built and more closed system must be employed.

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A closed and dedicated deposit system clearly makes recycling more efficient as it is separate and, closed. The Swedish deposit system is managed by Returpack, an organisation owned jointly by retailers and fillers together. When the deposit system was created also packaging converters were involved which makes it a good example of an efficient recycling structure.

Another brand owner who is blazing new trails in this field is Nestlé. The company is seriously investing in the development of new packaging concepts in their effort to have 100% of its packaging recyclable or reusable by 2025. The newly inaugurated Nestlé Institute of Packaging Sciences is unique and aims to support the process. The Institute is going to do its bit of development of functional and environmentally friendly packaging solutions and to address plastic packaging waste.

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Nestlé is now investing a staggering €2 billion to explore the possibilities to widen the market for food-grade recycled plastics. The Institute will be involved but the main investment will be in driving the market for food-grade recycled plastics by boosting demand and by being ready to pay a premium.
They are now demanding 2 million tons over a period of time and are willing to pay for it, to create a market. Brilliant!

Plastic is at present needed, especially in the food industry to minimise food waste, and it is possible to create a circular economy also for plastics. To get there a system for collecting and recycling plastic must be in place. But there needs to be a corresponding demand as well. Today it is more expensive to use recycled materials than virgin. But with a higher demand and larger volumes the price should go down and thereby generate more demand.
Hopefully a process that creates a virtuous cycle spinning us towards a circular and healthy economy.

These are great examples of steps in the right direction to increase demand for recycled plastic materials. This will also drive the development of efficient systems for processing.
But, in the end, the consumers are going to do a big part of the job. We must not forget to inform and motivate to sort and return the empty packaging through this efficient system.

E-commerce and logistics – room for new concepts!

E-commerce will continue to grow, and that at the expense of traditional retailing. Online shopping will soon be the norm for shopping. The supply chain needs to adjust to this.

One man’s convenience is another man’s stress
One of the consequences of us shopping from home, or on-the-go using the phone, is a stressed logistics system. The result is visible, congested traffic and overloaded bottle necks.
The logistic system supporting online shopping can be divided in two steps. The first leg is from producer to a Customer Fulfillment Centre or CFC. The second is from the CFC to consumer. This is a very different supply chain from the traditional and we have all noticed the growing number of lorries on the roads. New innovative delivery methods are invented and tried out. Robots, drones and electrical vehicles of all kinds, self-driving and not. These solutions are mainly focused on the last mile delivery, that is from the customer fulfilment centre (CFC) to the consumer. This “last mile” transport can be organised in various ways, it can be home deliveries or to a pack-station at offices, supermarkets or in train stations.

Remarkable last mile solutions

Drones
Amazon introduced the concept of drone deliveries in 2016 and shared a few months ago a project update. They are still developing the concept and now showed us an increasingly sophisticated flying vehicle capable to deliver up to 90% of the packages they are delivering today. And safely too.
Wings has a similar solution but with a different spin.  They offer the same service, drone deliveries, but instead they link consumers to a range of local stores. An order is placed, and the drone picks up goods from the specified shop and delivers, all the way home. On trial in Australia, Finland and in the US.

Robots
Some drones are instead found moving around on the ground. In the UK, Tesco has started to deliver groceries using robots. A pilot test is located to Milton Keynes where Tesco is working with Estonian based robotics company Starship Technologies. A low 6-wheeled cart carries parcels, meals and groceries delivering to homes within a 3 km radius.
In the US Kiwibot is doing very much the same, home deliveries using robots, but in this case the 4-wheeled carts are bringing food from local restaurants. Also this is a concept in the building but it is inspiring to see all the creativity coming out to meet the demand for fast home deliveries.

The first leg of the supply chain
The above are solutions for shorter distances, the second leg of the supply chain. To get the goods from the producer to the CFCs lorries, train and boats are used, creating traffic overflow. That is until now. Until we heard of Magway.

British Magway has come up with the idea of building a network of pipes around the country. This planned grid of tubes, with a diameter of 90 cm, is supposed to carry goods, beneath and above ground. Instead of using trucks on the road, cargo will be sent around in pods in these tubes fitted with rails and powered by magnetism. An electric current will run through a track in the pipe, creating a magnetic wave that will drive the packed pods at speeds of 80 km/h.

Magway is an example of sustainable new thinking for a new era where consumers want their goods and that immediately. The normal distribution chain with goods-in-cases-and-on-pallets will with increasing online shopping soon not be the norm anymore.
Online shopping means that products are sent on their own or together with random other products. New methods are needed, and Magway has come up with a radical e-commerce delivery system that will reduce traffic on the roads and ease traffic congestion. The system promises reliable and predictable deliveries to CFCs and to a lower cost.

The first route planned is an 80 km route from northwest London to Milton Keynes, where large numbers of distribution centres are located. Already this year a 2 km test track will be built and tested.

This is an interesting period in time when online shopping is growing very fast and shoppers are expecting immediate deliveries. New solutions are really needed to gear up the supply chain for the new needs with lots of room for new thinking and developing of new concepts. All the above mentioned enterprises are going to be exciting to follow and I will absolutely keep an eye on all of them.

Why is blockchain important to the packaging industry?

From volatile crypto currency to a solid system adding value for the supply chain. Blockchain technology can be the key to value chain transparency and a solution to the ever-growing problem with counterfeits.


What is it?

A Blockchain is a database of records, here called blocks. What makes the database special is that these records are interlinked, or chained, using a hidden code. This is useful in a supply chain involving transport and transactions that can be recorded as blocks. Each block contains a cryptographic link to the previous block plus information on when a transaction occurred, who was involved and much more.

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This may sound slightly abstract, but it makes the Blockchain concept decentralised and transparent. A key element is that the process is spread out across multiple computers with the consequence that no one has ownership of the information on the “ledger”. A non-corruptible database!

Using a Blockchain you bypass the concept of a centralised organisation by giving everyone involved a complete and unalterable copy of the register of all transactions.TO MY HOMEPAGEAdd Button

Why is it important for packaging?

Blockchain technology relates to packaging as it can be used to:

  • Provide consumers information regarding a product’s authenticity and origin. The identity of a product can be verified as the packaging is read and recorded to the “ledger” when handled along the transport, all the way to the destination. As the records can’t be altered retroactively, it means that all information on the ledger is by default authenticated, but without the paperwork of today.
  • Track and trace products along the value chain. When the value chain (packaging converters, printers, raw material producers, fillers, brand owners, retailers, etc.) join up in a Blockchain and makes the process transparent they will all share the same picture of origin and handling of products. If a batch is contaminated it can then easily be traced. Traceability is a key aspect and an opportunity, in particular for the food and pharma industries.
  • Ensure brand protection and serve as anti-counterfeit technology. Consumers will be able to tell a fake product simply pointing their phone at the packaging and read the QR code. Blockchain will prove to be a useful tool for building brand trust as a neutral and immutable system.

The demand for transparency and traceability is increasing, driven by counterfeits troubling the pharma industry and recent food scandals that shook the industry. Using Blockchain technology the consumer with a smartphone can simply scan a QR code on the packaging to follow the product journey, from farm to plate.

Who are using it already today?

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It might not be mainstream, yet, but the technology is already in use for mundane items such as milk and coffee. In the lead we find major food suppliers like Arla who are running a pilot project in Finland using Blockchain to provide transparency for milk products. Nestlé recently started up their pilot but in a larger, or even global scale involving milk and oil. Barilla is using the technology in Italy to certify fresh basil.

Also the retailers are also into this. Carrefour is leading in Europe using the technology on a number of categories like poultry, eggs, cheese, milk, oranges, etc. On the other side of the pond Walmart is demanding Blockchain traceability for selected vegetables.

Where is this going?

This is only the beginning. Driven by the main advantages’ security, decentralisation and transparency Blockchain as a tool will gain momentum and develop fast.

The technology might seem complicated to use, but the tools are available and new entrepreneurs are coming in with easy to use solutions. With a straightforward access we can expect to see a rapid adoption rate, with a variety of applications. The packaging industry needs to be ready to handle their part of the chain of blocks. Printing and packaging are keys for success.

Online growth and packaging reconsidered

A new and purpose-made design can involve minimising size and weight, leading to concentrates and container reuse.

2019 looks like another big step forward for e-commerce, across categories. The final statistics might not quite in yet and the growth rates might not be as huge as a few years ago but the share of all retail is definitely growing, with consequences for the entire value chain.

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One estimation is that, globally, the total growth of e-commerce in 2019 was 21% taking the online share of total retail sales up to a staggering 14%. The numbers vary strongly between categories and we are looking forward for the dust to settle and to get the final numbers for 2019.

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As brand owner you respond to this shift in purchase patterns and adjust the offer, products and packaging to online shopping. One main consequence from a packaging/logistics point of view is that products are no longer shipped neatly stacked on pallets protected by secondary packaging.

Online shopping means the opposite for a shipped product. It could be sent alone to be delivered at a doorstep or be dispatched together with random products to a pick-up point, probably both. In any case the product will need more protection than the standard primary packaging can provide.

The situation is improved either by adding more and protective packaging, changing material from glass to plastic or why not design the packaging and product for e-commerce, or omnichannel, from the beginning.

A new and purpose-made design can involve minimising size and weight, leading to concentrates and container reuse.

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Unilever has decided to make all their plastic packaging reusable, recyclable or compostable by 2025. To get there they are, among other things, offering shoppers refillable containers. This also works well for online shopping where the smaller sized refill units are saving weight and cost.
Cif household cleaning products are offered as concentrated refill capsules for the original spray bottle. Just add water and hey presto the product is ready for use. Unilever is also part of the Loop initiative where a whole range of products are offered online in refillable containers.


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Another similar product concept from a leading brand owner is Pepsico’s Drinkfinity, also an example of a concentrated product sold in shipping friendly containers. The concept consists of juice-based pods and a reusable water bottle. Just add some H2O. This is probably also a move to meet a shift in consumer demand for more healthy products. Nevertheless Drinkfinity was launched online where the product has an e-commerce site of its own, just like any other direct-to-consumer brand.


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Perso is a L’Oreal concept that takes this a step further. Perso is a device that actually makes personalised skincare products for you, in your home, and is powered by Artificial Intelligence. From the three cartridges contained in the machine it makes unique skincare, lipstick and foundation products, just for you. All personalised as you have fed the thing with pictures of yourself, location and your preferences. This is what you can call reusable and smart packaging.

The concept of concentrated, space saving, light weight products has many positive sides. It saves cost, it is a great way to streamline online sales logistics and maybe it even gives the consumer the satisfaction of a “homemade” product.

We’ll meet again – return to reusable packaging?

The mantra in the packaging industry has for some time been Recycle, Reduce, Reuse. Recycling material is great when there is a demand for the recovered material and reduced use of material is good for both the environment and the budget. Reusable packaging is more complicated in many ways, in particular for food products.

The reuse concept has developed since the olden days of refillable glass bottles and today has an appeal also as an alternative to Single Use Plastics items for the foodservice industry and has a potential to improve environmental footprints for the e-commerce industry. It can also be a great marketing tool for food and beverage brand owners and a way to reach specific consumer groups.
Below a few examples of reusable packaging spotted along the way.

Food service

Hot drink cups with a deposit are now available in several cafés and restaurant, although in a small scale, where you pay up an extra dollar, pound or euro for your coffee, which then is returned when the container is returned at the bar.

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Australian Returnr is taking the concept one step further when offering a series of foodservice containers. Not only cups but a whole range of reusable cups, bowls and lids that are designed for multiple use and also for takeaway. The aim is to support cafes and restaurants to eliminate single-use takeaway packaging. Returnr cups and bowls are, in Australia, free to borrow from cafes and restaurants with a $6 deposit. The deposit can then be claimed back from any restaurant who are working with Returnr. Something that attracts not only local cafés and restaurants but also Deliveroo who are offering Returnrs containers to their customers.

E-commerce

E-commerce as such is developing very fast but is from a packaging point of view there is plenty of room for new ideas.

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RePack is an example of this. RePack is a packaging solution made specifically for e-commerce. It is a resealable and durable plastic bag in varying sizes that close with a zipper. It is unique though as it is made for reuse and linked to a deposit system. The reusable packaging itself is made from recycled materials and is space efficient in that it is flexible and adjustable to minimise air, saving money and resources. When the consumer receives the delivery, they return the now empty bag that is designed to fold back into letter size which simply is dropped in the nearest mailbox. The consumer incentive lies in the refund that comes as a discount on the next purchase. Back at RePack’s logistics hub the bag is cleaned and sent out to be used again.

Food and bev brand owners

Online grocery shopping is also growing very fast albeit from a small base and has some catching up to do compared to other segments. One significant example of new thinking is from Loop who promote reusable packaging for grocery and personal care products.

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Loop is an interesting grocery e-commerce concept including a deposit-based refillable packaging scheme. It starts when a consumer order a home delivery where the Loop products arrive in a bespoke crate. With the following doorstep delivery of Loop products the empties are then picked up and returned for reuse. The packaging used is bespoke and made to be returned, cleaned and refilled. Materials used are metal, glass and plastic. Leading FMCG producers like Unilever, P&G and Nestlé have joint forces with TerraCycle an American recycling company to organise the Loop model. It’s in use in North America and in Europe the system is, at present, used by Tesco in the UK and by Carrefour in France.

Reusing containers is intuitively a good thing to do but the entire operation has to be considered, from start to landing. More transportation is usually needed, washing and rinsing using detergents and more material is normally used. When it comes to packaging it is never going to be simple but packaging reuse is definitely a path to explore. Looking forward to following the developments.

It’s the season for Packaging Trends!

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Towards the end of any year we have an avalanche of Packaging Trends and annual summaries coming in through the mailbox. Then at the end of a decade the number of summaries is doubled as we get both the Greatest Hits from 2019 and Top of the Pops from the last 10 years.

Please misunderstand me correctly, I like lists like everybody else, it’s just that the structure doesn’t necessary bring more clarity. The industry is wide and diverse and it’s hard to find the distinct trends, without obvious and significant contradictions.

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First of all it’s not easy to define trends that are so general that they cover the industry, but yet specific enough to be interesting. The packaging industry is a complex one with many examples of conflicting developments and where few lines point in one and the same direction. Some are for example moving from plastics for sustainability reasons, at the same time others are moving into plastics to minimise greenhouse gasses. All depending on perspective.

The below are examples of real trends that are happening right now and are both general and specific enough but even so containing contradictions.


Plastics We can conclude that the main trend is towards using less plastics. There is clearly an increased demand for no-plastic, less-plastic, some-plastic and bio-plastic solutions. The reasons vary and are unfortunately not always fact based. The trend has got quite some media coverage and the SUP directive was recently voted through in the European Parliament to be implemented already in 2021. This is leading to intense activity to find viable alternatives to single use plastic items.

At the same time Amazon makes a shift from fibre-based shippers to plastic bags. A decision that could inspire and set a trend for the rest of the industry. Amazon refers to environmental benefits to back the decision, reduced consumption of energy and natural resources during production, reduced CO2 emissions, and fewer vehicles required during transportation.


Less Packaging The general trend is in one way towards using thinner material and less material, to save both the environment and cost. Some consumers are loudly demanding less packaging, but consumers are also increasingly shopping online.

E-commerce is fast growing on a global scale and is bringing on change for all involved in FMCG trading. One of these changes is that products are often distributed as single units or in combination with random other products. As opposed to traditional retailing when products are safely sent around in a tray or case sitting on a pallet. The result is that products in general needs more and protective packaging to arrive safely to destination.


Recyclable Or reusable or refillable or returnable, or even compostable…? We are certain that we want more recyclable packaging to be used. But first of all, we need the infrastructure to collect, handle and recycle the used packaging. Then it is really up to the individual consumer to use the system.

An alternative to throw away packaging waste is to return and refill the emptied packaging. Just like in the old days and Loop is a new concept on this path. Here a few of the leading global food and beverage manufacturers are joining forces with global recycling organization TerraCycle to create a circular shopping platform. 

Consumers order products that get delivered in a shipping tote instead of a box. Goods arrive in durable, reusable or fully recyclable packaging made from materials such as alloys, glass, and engineered plastics. Once the products are used, customers place empties back into the tote, schedule a free pick-up, and the system makes sure the products get automatically replenished. Brilliant.

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Packaging is a traditional industry, that needs fresh ideas. In contradicting times, in particular, you need a steady stream of fresh ideas. Standing still is probably the worst option.

So, I wish you all a very happy and fast moving 2020.