Packaging insights 2023/2024: unwrapping trends

The onset of a new year is always a prime opportunity to reflect on the past 365 days and to analyse which developments and challenges will have a lasting impact on the industry. Hence, in this post, we delve into the factors that left a significant mark on the packaging industry^[1] in 2023, as well as the prospects and opportunities on the horizon for 2024.

Influencing factors in 2023

The year 2023 was primarily shaped by three external factors that significantly influenced our industry. The first factor was the aftermath of the COVID-19 pandemic and the changes in consumer behaviour as well as in the entire supply chain dynamics. Many businesses had stocked up on cartonboard, some even more than necessary, to ensure a continuous supply. Gradually, however, this surplus of cartonboard was reduced, and stock levels should now have returned to normal.

The second factor was the high inflation rate, which noticeably affected consumer buying behaviour. Promotional goods and high-priced products often remained on the shelves – saving was the order of the day. This, in turn, had a dampening effect on overall economic growth, while rising interest rates increased the financial burden on the industry.

The third factor was and still is the conflict between trade and brand. When brand manufacturers attempted to pass on a portion of the increased costs to the retailers, they were met with significant resistance. The result: manufacturers were delisted, and their products in the shelves were replaced by retailers’ own brands. Although this conflict was less problematic for WEIG due to both own brands and branded products requiring packaging, we view this development as misguided. For customers, this means having to make do with what is available in stores, even if they are willing to pay a higher price for a branded product. Such a degree of customer coercion was previously unheard of.

An additional – internal – factor for the WEIG Group was the integration of the Buchmann cartonboard factory in Annweiler, which has made us a far more interesting partner for our customers. This is because we now offer a larger product range and – thanks to the two sites – greater production capacity. Another advantage of having two factories is that if one is out of action, the other can step in. This provides additional supply security and growth opportunities for our customers.

Evergreen trends: these trends are here to stay

Which of these developments from 2023 will continue into the future, especially for us as a company? One certainty is a structural change driven by consolidation activities. This affects not only us but also other players in the packaging industry, as other companies merge in a manner similar to Buchmann and WEIG. For instance, consider the announcement from Smurfit Kappa and WestRock of their intention to merge. The same is happening on the customer side. This market consolidation should strengthen both suppliers and customers alike. Additionally, there will be a greater focus on deglobalisation, i.e., regional production. This means smaller batches – and thus potentially higher costs for the customer, as fixed costs such as machine maintenance, storage, and administration will then be distributed over a smaller quantity. The cost of production will probably never be as low again. Nor, consequently, will the prices for the product.

Also here to stay is the topic of “sustainability”. More than that, it is gaining in importance. On the one hand, there is a trend away from single-use plastic packaging towards fibre-based alternatives. And consumers expect such a switch from manufacturers. On the other hand, sustainability also extends to the social realm, as commitment to the environment, employees, and society increasingly comes to the forefront. For almost ten years, we have expressed this through our slogan “driven by care”. By the end of 2023, we even took a step further and anchored sustainability in a new area of responsibility: alongside the commercial department as well as production and technology, “Sustainable Market Orientation” is now a third pillar of our executive management.

Last but not least, the trend of “overregulation” is unfortunately one that will continue to stay with us. While there is certainly a willingness to reduce bureaucracies, in reality, we are moving in the opposite direction. Instead of reducing regulations, there is a sense of growth. We experienced this over the past year with various regulations, for example, the EU Regulation on Packaging and Packaging Waste (PPWR), the EU Deforestation Regulation (EUDR), or the Supply Chain Due Diligence Act, which is even being extended to small businesses.

Looking ahead: innovations in 2024

In 2024, we can look forward to new and surprising packaging solutions made from fibre-based materials, surpassing the expectations of consumers, retailers, and brands for sustainable packaging. Also, we anticipate a shift away from “cheap products” towards more durable and robust items offering added value that are increasingly sustainably packaged.

Our personal conclusion

Integration the Buchmann cartonboard factory in Annweiler into the WEIG Group was a significant milestone for moving forward together. We’ve always believed that medium-sized, owner-managed companies like these become stronger and more powerful when they pool their resources. Moreover, this allows us to offer a more solid future for our employees. Nevertheless, it was challenging to pass on our costs to customers to the extent and intensity necessary to ensure the company’s long-term survival – and to continue serving our customers as a supplier.

All in all, we’re looking forward to an exciting 2024, filled with innovations!

This text is based on the interview with Roland Rex, Managing Director Sustainable Market Orientation at WEIG, published in packREPORT (issue of 04.12.2023).