The COVID-19 pandemic has brought about a significant change in the packaging industry as demand for certain packaging types has increased, but fallen for others.
Verdict has conducted a poll to assess the impact COVID-19 pandemic had on packaging sales.
Analysis of the poll results shows that the impact of COVID-19 on packaging sales has been negative.
As many end-use industries are on the rise such as Personal care, Pharmaceutical, Healthcare, and Cosmetics, it is anticipated that the future of the Composite Packaging market is prominent and the market will grow substantially in terms of value as well as volume during the forecast period. Over recent years, the horizon of consumers is shifted to online shopping which also expected to create a lucrative market for Composite Packaging.
The global packaging sector is a vast and relatively mature market. While some segments are growing faster than others, the overall industry growth rate tends to broadly track GDP in the long run. In the decade that followed the Great Financial Crisis, we witnessed strong growth across multiple sectors of the economy and investors, seeking returns on their capital, naturally favored assets that could access this growth.
Although the link to GDP makes packaging companies somewhat cyclical in nature, they do tend to operate in less-discretionary end-markets, such as food and pharmaceutical products. Because of this, the industry has historically been seen as having relatively defensive characteristics. As we enter a period of heightened levels of uncertainly, investors may place greater value in businesses operating in more ‘resilient’ sectors, such as packaging. We have already seen demand for packaging materials spike in recent weeks in areas such as food packaging, and especially shelf-ready packaging for the grocery industry, driven by retailers’ need to meet rising consumer demand and to restock shelves quickly.
In the immediate term, everyone is braced for challenges in their supply chains. Huge numbers of workers will be away from their places of work as a result of sickness, quarantine, and state-imposed self-isolation policies. Meanwhile, everyone still needs to eat, drink and wash. The packaged goods value chain will play a critical social role over the coming weeks and months simply by finding ways of maintaining productivity.
Packaging companies that serve these more resilient sectors are likely to do well in the current environment, with stockpiling, changing demand patterns and government measures likely to lead to an increased demand for certain products.
Infiniti Research advises packaging companies to consider implementing recovery strategies to include a mixture of financial resilience and plans for restarting operations at packaging plants, plus strategic customer-focused moves “such as understanding the impact of Covid-19 on consumer packaging choices”.