The packaging industry should be one of the least affected by the COVID-19 crisis. The demand for food, personal hygiene, cleaning, and other products that rely on plastic packaging isn’t about to disappear. At the same time, it is impossible that nothing will change. But what? Holland Colours’ packaging experts – John Compton (Americas), Raymond Jongman and Jan Schrauwen (Europe) and Ken Yong (Asia) – share their insights.
The current state of the packaging industry amid COVID-19
John Compton (Americas): The US packaging market will likely stay steady or increase in line with demand for food, pharma, and personal care items. We see that some companies are pushing production for standard products, while many are joining in the COVID-19 fight by making PPE products. One customer, active in the Building & Construction industry, is even making graphic sheet and structures for overflow offsite ‘hospital’ facilities.
Raymond Jongman and Jan Schrauwen (Europe): COVID-19 is having an unbelievable impact on daily life all over the world. So far, however, we are not seeing a reduction in orders coming in – quite the opposite. This is because people are stockpiling food and drink, including UHT long-life products, so the converter industry is running at 100% to make enough packaging to meet this demand. We do expect to see lower than expected demand in the summer as vacation travel continues to be restricted or difficult, and more people vacation at or close to home.
Ken Yong (Asia): In Asia, our packaging business mostly involves food & beverage, so we have seen demand continue as usual – or even increase, because of panic buying. We are starting to see a small drop in rigid packaging for cosmetics, pesticides, insecticides, and industrial applications, as these are mainly regarded as less essential items and not daily consumables.
Emerging trends and their impact on the packaging industry
John: Besides food products, increasing demand for cleaners and sanitizers is an obvious trend that is likely to remain strong. It’s already pushing converters to increase production. At the same time, areas of the market that are currently depressed could rebound fast once the immediate crisis is over. The question for the industry is how quickly we will be able to ramp up production in response. Our goal is to exceed expectations with deliveries and service levels once things improve in the market. More widely, I expect recycling will continue to take a front seat with many customers, both converters and brand owners, so we may see more pushback versus clear packaging, labels, et cetera, and more demand for recycling streams for colored PET/PE.
Raymond and Jan: Another possibility is that the expected economic downturn will be bad for luxury foodstuffs and that brand owners will attempt to cut costs on their regular products. That could impact the use of color, for example. On the recycling front, the ongoing shift from olefins to PET/rPET resins is likely to continue in Europe as part of the general drive to sustainability.
Ken: Assuming no further disruptions, we expect the packaging industry in Asia to recover quickly from the pandemic. The question right now, though, is how big the industry will be. Will all the current convertors survive? The smaller ones? It could be a different kind of industry. As for recycling, with petrochemical-based product now at record-low prices, it is unlikely that rPET will take off in Asia at the moment.
Lessons the industry can learn from the coronavirus crisis
John: First, good communication and genuine transparency are even more crucial in a crisis. Second, companies need to band together internally to help each other through tough times. Third, smart logistics and efficient material supply plans can help mitigate impacts and cope better with downturns (and upturns) in the market.
Raymond: The word “crisis” in Chinese has two parts, “danger” and “opportunity.” The dangers will become apparent in the future. The opportunity for our industry is to do even more to relieve our customers’ concerns. To show we are dependable partners, especially in a crisis, is one of the most valuable things we can do. Customers remember that kind of thing and will appreciate our stability, reliability and the incredible amount of effort we are putting into being there for them.
Ken: Now, in the middle of the crisis, is the perfect time to reflect on what has so far gone right, wrong, what we could do better and so prepare for the next challenge. While it is all still fresh in our minds.
We will keep on providing you with the best possible service - even under these difficult circumstances. We can offer you a wide variety of sustainable solutions for plastic packaging. So please talk to us! Together we will solve any issues you might have.