Ceepackaging

Analysis

Metal packaging sector claims that it has solution for own label in economic slowdown

By CAROLINE ARCHER REED
Published: June 17th, 2009
Related tags: ecological, metal, private label, recession

Cautious consumers around the world are tightening their spending in the wake of the global economic downturn. And who can blame them? Record stock market losses, dwindling retirement accounts, falling house prices and rising unemployment have put a chokehold on spending. But as an economist friend of mine said recently: “People still have to eat.”

 

So while the news will continue to be challenging in the months ahead, consumers will keep shopping in grocery stores. They’ll just be more price-conscious and aim to stretch their household budgets.

 

Retailers will be looking to meet these needs by growing their private label offerings. To spur consumer interest, they will be turning to their supply chain partners to develop economical packaged goods that build brand loyalty with high quality, high impact package designs, unique in-store branding opportunities, and strong sustainability platforms.

 

In Europe, the private label market for fast moving consumer goods (FMCG) is valued at approximately €200 billion, a staggering 26 percent of all sales, with the UK retaining its traditional leadership role due to the influence of such early private label pioneers as Tesco. The trend toward more affluent UK buyers of private label is also seen in the U.S., Germany and France, as the quality and range of house-brand goods increase.

 

Retail heavyweights Aldi, Wal-Mart and Target are leading the way, but are far from alone in continuing to develop their own brands and sub-brands to include lower-cost as well as premium choices. Food, beverage and personal care are three categories being targeted for expansion, all of which can be well served with metal packaging.

 

Continued growth and competition in the private label market have placed exacting demands on packaging in terms of performance, quality, convenience, product protection and great value for money. No material better meets this broad range of needs than metal packaging.

 

 

Affordability and Efficiencies

Metal packaging balances premium feel with good economics, adding excellent retailer value.

 

In the beverage industry, for example, metal packaging affords faster filling speeds than other packaging formats with greater cubic efficiency. Its durability facilitates easy product stacking and reduces the risk of product breakage. Factor in the inherent benefits of lightweighting and distribution and shipping savings follow.

 

Experienced supply chain partners allow for parallel product development processes, speeding time to market.

 

 

Brand-Building through Innovative Design

Traditionally, consumers have associated cans with convenience, familiarity and comfort when purchasing cupboard staples. Technological improvements mean that metal packaging can offer greater value to brand owners, including lending a premium feel to products. Metal itself is the ideal platform for showing off private label brands. The latest decorating techniques and printing technologies enable sharp images that help products stand out on the shelf.

 

Shaping and forming technologies offer another avenue for distinction. Unusual and eye-catching forms impart a premium feel to such categories as bakery and snack foods, a private label growth sector. Due to the intense brand loyalty demonstrated by consumers in this heavily advertised, heavily marketed brand segment, the lucrative personal care category stands to benefit greatly from these package design technologies that help products stand out and compete on crowded store shelves.

 

Even in the current downturn, customers will continue to demand convenience. For consumers seeking an economical alternative to chilled ready meals, canned prepared food is an ideal option. With innovations like peelable ends, consumer demand for portable, nutritional meals can be met handily in the private label market. In addition, the buying power of society’s older consumers speaks to a potential for growth in demand for easy-open packaging.  

 

Sustainability Benefits

Metal packaging enjoys a sterling environmental record. The ability to recycle both steel and aluminum again and again and again, with absolutely no loss or alteration in quality, is the highlight of the sustainability of metal packaging.

 

For retailers pursuing an overall “green initiative” with consumers, metal’s excellent sustainability profile can be easily added to support their pre-existing programs. With a successful and time-tested infrastructure in place across the EU and the U.S., metal remains the number one recycled material in the world.  Current statistics from the Association of European Producers of Steel for Packaging (APEAL) show that steel cans have a 66 percent recycle rate in the EU, and 58 percent of all aluminum cans are recycled in the EU, according to the European Aluminum Association (EAA).

 

Recycling metal also leads to significant reductions in raw material and energy consumption. For instance, each ton of recycled steel saves 1.5 tons of iron ore and 0.5 tons of coal that would be used in producing new cans. Aluminum recycling saves 95 percent of the energy that is needed for primary production.

 

These significant energy savings translate into coveted greenhouse gas (GHG) emission reductions. Each ton of recycled steel saves 1.875 tons of CO₂ (according to IISI) and each ton of recycled aluminum saves 10 tons of GHG emissions measured in CO₂ equivalents (according to EAA).

 

These compelling facts, among many others, can be easily highlighted by retailers in promotions to drive demand for their private label products. And, compared with 20 years ago, aluminum beverage cans are 28 percent lighter; steel food cans are 33 percent lighter; and tinplate aerosols are up to 18 percent lighter.

 

Those of a certain age might well remember a bumper sticker popular in the 1970s: Tough Times Never Last, But Tough People Do. Confronted with our own unique set of economic challenges, the same could be said for today’s global retailers. To “Tough” I would add “Savvy.” Savvy retailers will be turning to expansion of their private label offerings to help cash-strapped consumers fill their carts and baskets while building customer loyalty that can pull them through these dark days and well position them for future growth.