Regional Insight: Flexibles' rule rolls on Down Under

Packaging News, 02 December 2009

 

This month, our analysis of regional trends from across the globe focuses on the Antipodean packaging industry, comprising mature markets that are home to some of the world's biggest packaging companies

 

 

Australia and New Zealand are home to some of the world’s biggest packaging groups, including Rank, Amcor and Visy. They are also mature consumer markets.

 

Nevertheless, more than 8,000 new products were launched in 2009, according to Mintel’s Global New Products Database, with bakery products – mostly packaged in flexibles – topping the list. Yet this has not always been the case; in 2007, colour cosmetics and skincare products were the two biggest sources of new launches. Perhaps the recession has put the brakes on these higher-end markets.

 

For packaging types and materials, flexibles have been the top choice for a decade. Materials-wise, Mintel’s statistics show a move from board-based and metal packaging in the past three years towards plastics.

 

Soap stars soak up eco-dividend

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From washing powders that perform at lower temperatures to liquid super-concentrates that save on transport emissions, detergent manufacturers are eager to impress consumers with their concern for the planet’s well-being. This emphasis on sustainability may surface in the multinational brands’ advertising, but is it an important consideration when it comes to their choice of packaging? The general rule so far seems to be that environmentally responsible changes, such as the switch to smaller packs for the same number of washes, will be made where there is a cost benefit for the brand owner. Cutting the number of trucks on the road may reduce CO2 emissions, but clearly it also reduces the company’s transport bills.

 

Last year, according to research firm Mintel, the laundry detergent sector was worth a bubbly £1.2bn in the UK alone. On this scale, even small adjustments to the supply chain can translate into potentially massive savings. But growth of only 4% since 2002, partly determined by fierce price competition between different brands and retailers, means that the marketing benefits of any particular innovation are unlikely to be so important.

 

Plastics converter Alpla claims to have the biggest market share in these types of household product. According to Mike Taylor, sales manager at Alpla UK, the choice of more traditional materials, such as HDPE, costlier options, such as PET, or newer grades, such as contact clear PP, will still usually be determined by relative pricing.

 

Every three or four years, says Taylor, most brands undergo a review where decoration techniques as well as basic pack formats will be reassessed. “So from in-mould labelling, which was popular several years ago and designed for long product runs with few changes, there has been a move to labelling and sleeving. It tends to go in cycles,” he says. “Now direct printing is coming back.”

 

In the conditioners market, says Taylor, the growth of clear PET has been strong, just as it has with washing-up liquid, although some premium products will opt for a pearl effect on HDPE.

 

Among Interpack exhibitors with an interest in the sector, carton manufacturer Mayr-Melnhof provides packaging for the leading brands of powdered detergent. Like Alpla in plastics, it has its headquarters in Austria, but boasts a network of converting operations across Europe that closely shadows its multinational customers.

 

Detergents business unit director Georg Rau outlines some of the trends. “Powder will become more concentrated and compacted, both for environmental and cost reasons,” he says.

 

Rau cites the use of laminated silver foils, UV printing and clear windows among recent enhancements to detergent cartons. But he explains that innovation has been relatively modest, even where there may be good reasons to justify it in terms of shelf stand-out and convenience. “This is mainly due to the difficulties in running such packaging efficiently on production lines,” he says.

 

The cost of differentiation could be another deterrent. Rau explains: “In Europe, a complex of recycled grey board, PE and white paper is generally used for bigger detergent packs.” Recycled content can be as high as 95%, but this is unlikely to be for sound sustainability reasons. Asked whether long-fibred kraft board is ever used for strength, he says: “Kraft board is possible, but not very popular due to the higher cost.” Rau points out: “Customers would like to omit PE from the structure, but there is no real alternative for providing a moisture barrier of the same efficiency.” The PE component does not affect the packs’ recyclability, because it is below 5% of the total weight, according to Rau.

 

Another physical requirement is high compression strength. On their own, the short fibres of the recycled board are unlikely to provide this, Mayr-Melnhof explains, so brands tend to use a corrugated inlay for their larger cartons.

 

One of the companies providing the various grades of corrugated inlay is DS Smith Packaging. Sales director Mike Alvis explains: “The carton converter could probably provide the service of combining the board with the inlay. But it is more cost-effective to deliver the cartons flat to their destination and complete them in a local assembly operation.” That is one logistics saving that is less likely to appear in a detergent brand’s consumer advertising.

 

The dishwasher detergent market has more sparkle than either laundry or hand washing-up products. According to Mintel, its value grew by 12% to £199m in 2006 alone, up 50% on the 2001 total. With its Electrasol, Finish and Calgonit brands, Reckitt Benckiser dominates internationally and has some 50% of the UK market. But Procter & Gamble’s (P&G) Fairy brand has challenged the market leader and now has a 16% share in dishwasher detergents.

 

New products, same packaging

Brand owners have experimented with new formats in the detergent itself, from standard powders and liquids, to gels and multi-function composite tablets. They have also, as in the laundry detergent sector, spawned a mass of ancillary products, from rinse agents and dishwasher cleaners to glass corrosion protectors. But the packaging around those products has remained, by and large, fairly conservative. Packing line optimisation could again be the key here.

 

In industrial and commercial dishwashing powders, Interpack exhibitor STI Group has introduced a four-sided corrugated pack to replace cylindrical drums. It has integrated a child-proof closure, which requires pressure on four separate pressure points for opening.

 

Mayr-Melnhof says it can provide child-proof closure options, such as the Z-Klick system, but says there is currently no demand for such mechanisms.

 

If it wanted to, the detergents sector could put on much more of a show of environmental responsibility. Alpla’s Taylor says the company is already putting recycled content into PET and HDPE bottles. He adds: “It is becoming more of a focus, but brands are not pushing it too hard. And of course, if everyone decided they wanted recycled content at the same time, we simply wouldn’t be able to supply them.”

 

But the sector could turn a deeper shade of green, given sufficient determination and a huge amount of supply-chain co-operation. Alpla supplies Ecover with some PET, but principally HDPE with a touch of masterbatch to give it a distinctive cloudy translucence. Own-label sub-brands such as Sainsbury’s Cleanhome are trying for a similar positioning and appeal.

 

However, it is not Ecover’s packaging as such that is attracting the most environmentally aware consumers. Unlike the bigger labels, the brand owner offers them the opportunity to refill their detergent and washing-up liquid bottles at independent stores. The company says they can be reused up to 50 times.

 

The day when P&G persuades Sainsbury’s or Tesco to install in-store tanks and dispensers for its liquid detergents may still be a long way off. But the day when brands and own-label products are more actively differentiated on environmental as well as convenience criteria could be a lot closer.