Creating good packaging for packaged goods - The McKinsey Podcast Recap

Podcast: The McKinsey Podcast

Published: 2022-08-11

Duration: 1321

Guests: Ron Delia, David Feber

What Happened

Ron Delia, CEO of Amcor, and McKinsey partner David Feber discuss the future of packaging. They highlight that packaging which is unsustainable and resource-intensive may not have a future. They emphasize functions like shelf life extension and easier distribution as essential roles of packaging.

The rise of e-commerce is changing packaging requirements, making it necessary for packages to be tamper-proof, leak-proof, and easy to ship. In particular, grocery e-commerce has increased significantly, with sales jumping from 3% to 17% and expected to reach 20% in the next five years. This has created new demands for stronger and more protective packaging.

Sustainability in packaging is a complex issue, with consumers being concerned but often confused. David Feber notes that the material with the smallest carbon footprint isn't always the most recyclable. Companies must prioritize different aspects of sustainability based on their specific needs and consumer expectations.

Amcor is taking steps to educate consumers by discussing the carbon footprint of packaging. Ron Delia explains that plastic packaging, while often criticized, can be environmentally advantageous if recycled properly. The goal is to create a circular economy where packaging can be reused efficiently.

Consumer willingness to pay more for sustainable packaging is growing, yet it remains a lower priority compared to price and quality. David Feber notes that while consumers express willingness to pay more, this hasn't fully translated into market behavior. Companies must consider regional differences and generational preferences when addressing this issue.

Ron Delia shares examples of innovation in packaging, such as moving from glass to plastic to better support e-commerce and improve the environmental footprint. He also mentions collaborations with customers to develop convenient packaging options, like single-use coffee systems.

The episode touches on smart packaging, where technology is embedded to track products and connect consumers with brands. Future innovations may include digital watermarks to improve recycling processes and IoT technologies for dynamic pricing based on product shelf life. David Feber mentions an emerging technology for rewritable labels that adjust prices to reduce food waste.

Both Ron Delia and David Feber advise brands to embrace packaging as a core component of their identity and value proposition. Packaging plays a crucial role in delivering fresh and hygienic products globally, and companies should leverage it to achieve both business and environmental goals.

Key Insights

• Packaging that fails to provide essential functions like shelf life extension or ease of distribution may not survive in the future. Sustainable, less resource-intensive alternatives are likely to replace them.
• The e-commerce boom, especially in grocery sales, is reshaping packaging demands, requiring stronger and more protective designs to handle direct-to-consumer shipping.
• Sustainability concerns are multifaceted, with consumers often confused. Companies must balance carbon footprint, recyclability, and recycled content based on their priorities and consumer expectations.
• Innovations in smart packaging, such as digital watermarks and IoT-based dynamic pricing, are emerging. These technologies aim to improve recycling efficiency and reduce food waste by adjusting prices as products near expiration.