How much differentiation and innovation can you really add to a cardboard box and a few ounces of Styrofoam peanuts? This existential question makes up the foundation of the packager's dilemma. Their product is often seen by customers as an easily replaceable commodity. When cost of raw materials increases, the packager must either absorb those costs and decrease margins, or lose the CPG customer to a competitor.
According to a market report by Smithers Pira (smitherspira.com), by the year 2022, the value for packaging services will reach $50 billion, seeing a compound annual growth rate of 9.5 percent. But this lively market still relies on traditional materials. Every CPG manufacturer needs packaging – but for the packager, success and growth will be increasingly dependent on being able to combat the perception of their product and the entire packaging industry as a commodity market.