The changing lifestyles of today’s consumers—eating trends, eating habits and eating occasions—has led to a need for packaging that goes beyond just protecting the product. To drive growth and profitability, consumer packaged goods companies (CPGs) have a need for forward-thinking functionality that fits with the new demands from consumers.
This is why stand-up flexible packaging is beginning to dominate new product releases, growing by 30 percent from 2012 to 2015, according to Mintel. Manufacturers of baby food, yogurt, fruit purees, beverages and many other categories are converting to stand-up pouches to meet evolving consumer lifestyles and position their business for future growth.
Prior to 2009, the North American marketplace for retail liquid pouches consisted primarily of juice pouch products targeted at children. Then in 2009, the spouted pouch was introduced in baby food and shelf-stable fruit categories. Since, the demand for pouches containing liquid or pumpable products beyond the juice pouch category in North America has grown from essentially zero to more than 2 billion pouches per year.
Form and Function
So, what is driving this growth? The pouch was the right package for the right products at the right time, delivering both form and function. Spouted pouches allowed toddlers to feed themselves, freeing mom and dad from the spoon as well as introducing an easy way to reclose the package. If the product wasn’t consumed in full, the rest could be stored easily. Squeezing the last bit of food out of a pouch is much easier than trying to scoop the last bit out of a rigid container. That means less food waste and improved value, which drives market growth.
In 2015, stand-up pouches accounted for 28.9 percent of
all baby food packaging formats. Even more impressive is
that stand-up pouches’ share of packaging formats grew 84.4 percent in one year, while virtually all other packaging formats saw a decrease in share in the category. Unit sales of baby food pouches increased 11.6 percent from 2014 to 2015, according to IRI Data.
IRI Data additionally reports that shelf-stable fruit in pouches also experienced the highest unit sales compared to any other packaging format in 2015, resulting in a 24.4 percent share of the market and a growth rate of 13.2 percent.
Beyond baby food and shelf-stable fruit pouches, product introductions of pouches without fitments for single-use soups, sauces, meals and beverages are also emerging and growing. These products deliver value to on-the-go consumers who live a fast-paced lifestyle but still demand quality and freshness.
Platform for Brand Growth
For CPG marketers, the millennial generation is the prime target audience for stand-up pouches. This dynamic segment, aged 21 to 38, accounts for 24.6 percent of the U.S. population and is projected to grow 2.6 percent by 2020, according to Mintel’s “Marketing to Millennials” study in 2015. Millennials are familiar with pouches since as children, they drank fruit juice from them. Today, these former juice drinkers are becoming parents themselves and are responsible for grocery shopping in their households. In fact, Fortune magazine says 51 percent of U.S. children have a millennial mother.
Pouches provide a platform for brand owners to deliver improved packaging functionality to millennials. A Mintel study shows that 74 percent of U.S. consumer indicate an easy-to-open package is important to them, while 55 percent indicate package portability is important. Additionally, 41 percent would select a product that is consumable on-the-go instead of a competitive offering that isn’t isn’t, according to Mintel’s July 2013 “Food Packaging Trends-US.” Pouches deliver the flexibility and performance that millennials are seeking. In fact, several brands have learned that augmenting their current rigid packaging with a pouch alternative does not cannibalize existing formats; it actually expands the entire market by expanding usage occasions.
Technological developments to extend product shelf life and maintain product freshness, and still allow for increased functionality, have expanded the range and depth of product possibilities for the pouch as well. Recent pouch convenience innovations include microwaveable, retortable, self-venting pouches that double as a bowl.
Innovation among fitments and closures include a wide variety of expanded and improved functions related to easy opening, audible freshness cues, child safety, choke-resistance, controlled pour, tamper evidence and many other features.
As consumer hunger for organic products increases, flexible pouches have allowed brands to highlight product freshness in a variety of ways. Clear film structures allow consumers to view the goodness and product texture through a clear window area where there is no printing. This can positively impact brand profit because nearly 70 percent of food shoppers agree that it’s important to see the food inside the packaging.
Less Can Be More
Interest in all things natural doesn’t end with product quality. It extends to a sincere interest in protecting the earth and environment. Stand-up pouches offer improved sustainability compared to traditional packaging formats for a variety of reasons.
According to the “Study of Packaging Efficiency,” regardless of the materials used to construct flexible plastic packages or the much higher recycling rates of the materials used to produce rigid containers, “the best way to reduce materials going to landfills continues to be through the use of lighter weight packaging materials.”
Because stand-up pouches offer a product-to-package ratio of 35:1, their use helps decrease carbon dioxide emissions versus alternative packaging formats by up to 93 percent due to less pollution from transportation and a reduced carbon footprint. For example, one truckload of unfilled flexible pouches is equivalent to 26 truckloads of unfilled glass jars. That decreased space consumption associated with pouches also carries over into reduced warehousing costs for brands.
Future of Pouches
In the U.S., e-commerce continues to grow at a dramatic pace, putting pressure on traditional retail. According to the U.S. Department of Commerce, the e-commerce channel grew 14.6 percent in 2015 while total retail sales overall grew only 1.5 percent. While online sales currently account for 3 percent of the $795 billion CPG market, the projected four-year compounded growth rate of 18 percent means that nearly half the growth the industry will experience through 2020 will come through e-commerce. (Source Table: BCG, BI Intelligence, Kantar, Morgan Stanley, Bemis Analysis)
While e-commerce opens new doors for brands to grow and increase loyalty as consumers restock their favorite products using this channel, there are risks that need to be identified.
This direct-to-consumer scenario creates opportunities for damage during shipping since packaging designed for pallets is now in corrugated boxes, often with ad-hoc secondary packaging as its only protection. A broken baby food jar or leaky detergent bottle delivered to a doorstep is more of an inconvenience than an advantage to consumers. In fact, 41 percent of consumers negatively associate this with the brand—not the post office or shipping service—according to a 2016 Temando report on the state of shipping in commerce.
Across a wide variety of products, flexible packaging has tested better than traditional formats through the e-commerce distribution chain. Stand-up pouches are emerging as the ideal e-commerce package because they resist shattering like glass, denting like aluminum, tearing like corrugated or breaking like rigid bottles.
Shifting channels, new consumer purchase drivers and technological advances affecting product freshness, taste and performance on shelf all add up to a bright future for flexible packaging and pouches.
Although initially developed to deliver a simple beverage-
and-straw solution, pouches are increasingly proving that they can expand usage occasions, expand categories and enable brands to sell more product to more people for more money, more often.
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