Market Update | Q2 2023

Market Update Overview

The global food and beverage industry is facing a number of challenges, including inflation, supply chain disruptions due to raw material prices and Brexit, and labour shortages. These challenges are putting pressure on margins and profitability and are leading to some consolidation in the industry.

Inflation is a major concern for food and beverage companies, as it is causing the cost of raw materials, packaging, and transportation to fluctuate significantly. This is forcing companies to raise prices, which could lead to consumer backlash. The global supply chain is still struggling to recover from the COVID-19 pandemic and the uncertainty of Brexit, and this is causing shortages of key ingredients and materials which is leading to delays in production and delivery. This is also impacting supply of certain products. Labour shortages are making it difficult to find and retain workers, with the added pressure of industrial action like strikes taking place globally. This is leading to overtime pay and other costs, which are further impacting margins.

Despite these challenges, there are some positive trends in the food and beverage industry.

“The food and beverage industry is in a state of flux, with rising costs and changing consumer preferences putting pressure on businesses. Those that are able to adapt and innovate will be the ones that succeed in the long run.” – Andrew Dickow, Managing Director, Greenwich Capital Group

Raw Material Prices

Over the past 18 months, the fluctuating cost of raw materials, such as cardboard and plastic, has put pressure on transit packaging prices. This is forcing FMCG companies to find ways to reduce their packaging costs, such as by using lighter materials or by optimizing their packaging designs.

If you would like help optimising your packaging operations, get in touch to arrange your free packaging audit where we will work with you to uncover savings, not only to your packaging costs but also to your plastic waste and CO2 footprint.

Sustainable Packaging

There is still a huge push for more sustainable packaging solutions. As such, Lindum are proving that recycled content films are becoming increasingly popular among FMCG companies who wish to show their commitment to the environment and achieve their sustainability goals without a huge change to their packaging or costs.

Using recycled content pallet wraps can help you to reduce your reliance on virgin plastic and make your transit packaging more sustainable. This is important because the production of virgin plastic requires a significant amount of energy and resources. By using recycled content pallet wraps, you can help to conserve these resources and reduce your environmental impact. Recycled content pallet wraps can help you to reduce your waste. When you use virgin plastic stretch film, it is often not recyclable. This means that it will end up in a landfill, where it can take hundreds of years to break down. By using recycled content pallet wraps, you can help to ensure that your stretch film is recycled and that it does not end up in a landfill. If you are considering using recycled content pallet wraps, we encourage you to do your research and find a supplier that offers a high-quality product. Recycled content pallet wraps can be a great way to improve your sustainability and save money, but it is important to make sure that you are choosing a product that is right for your needs. For more help making the right decision, get in touch with our packaging experts.

Pallet Stability & Movement In Transport

We are seeing more and more cases of poor pallet stability among the beverage industry in particular. Pallet instability and movement in transit can be very costly. Poorly palletised products can shift or even collapse during transportation resulting in damage to the products and the pallet itself. The result is additional costs which for some companies could be product replacement and re-delivery.

The costs of pallet stability don’t just mean damaged products, however. Added to this are the unseen costs – the potential cost of injury or even loss of life, the downtime, clean-up costs and the environmental impacts of this and the impact on customers of delays in delivery. The need to improve pallet stability and movement in transit should not, however result in excessive packaging which itself will only add to costs and have a negative environmental impact. Pallet stability optimisation includes selecting the optimal carton size and strength, pallet stack-pattern, inter layer stabilisation, corner protection and pallet-wrap.

By taking steps to improve pallet stability and movement in transit, you can help to reduce costs and avoid damage to your products. If you would like to test the stability of your pallets, check out our Mobile Pallet Stability Test Lab.

EPR

Extended Producer Responsibility (EPR) is a policy approach in which producers are held responsible for the environmental impacts of their products, even after they have been sold. This can include the cost of collection, recycling, and disposal of packaging.

EPR is becoming increasingly common around the world, and it is having a significant impact on FMCG companies including increased costs, new regulations, changes to business practises and opportunities for innovation. EPR can lead to increased costs for companies because they are now responsible for the cost of collecting, recycling, and disposing of packaging, which can be significant. New regulations can affect the design, materials, and labelling of packaging and changes to regulations can include the way packaging is designed, manufactured and distributed.

Companies need to find ways to reduce the environmental impact of their packaging, whilst also meeting the needs of consumers which is encouraging innovation. It is important to be aware of the potential impacts of EPR and to take steps to adapt to these changes.

Brexit

The implications of Brexit on supply chains, exports and imports and borders are still being felt in the UK and Europe. Implications such as increased paperwork and bureaucracy mean that businesses that trade between the UK and the EU now have to deal with more admin and documentation. Customs checks mean that goods traded between the UK and the EU are now subject to be checked at the border before entering or leaving a country. This has led to delays in shipments and increased costs. The UK and the EU now have different rules on data protection which has made it more difficult for businesses to share data across borders. Product standards and rules have also changed as a result of Brexit which is making it more difficult for businesses to sell in both the UK and EU markets. The ongoing uncertainty surrounding Brexit has made it difficult for businesses to plan for the future. This has led to investment delays and job losses.

In conclusion, the food and beverage industry has faced and is facing a number of challenges this year. However, there are also some positive trends that could help companies overcome these challenges. Companies that are able to adapt to the changing market conditions and focus on innovation are well-positioned for success in the years to come.

For further help with innovation and overcoming these challenges, contact us on info@lindumpackaging.com or drop us a line on +44 (0) 1469 574480.

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