The packaging market during crisis: A course towards safety

The novel coronavirus has introduced the concept of personal food safety. In March 2020, we saw a significant increase in demand for products in long-term packaging as well as interest in heat-treated products: canned food, cereals, dry mixes, porridge flakes and instant soups. This change is naturally influencing production. For example, in March, the Federal State Statistics Service recorded an increase in the output of canned meat – by 27.2% compared to March 2019 and by 45.4% compared to February 2020. Overall, in the first quarter of 2020, 154 mio conditional cans were produced, 11.1% more than last year.

How customer preferences will change

According to a recent forecast by Nielsen, which explored the moods, expectations and new behaviors of Russian consumers, a lot is going to change after the pandemic. Buyers will continue to want heightened security even after the virus. Household consumption will continue to grow, but people will opt for convenience stores around the corner. The quality of goods will matter more than ever – the quality-to-price ratio will change. Although the price will still be important, consumers will become even more demanding with regard to quality.

Buyers’ behavior is unlikely to return to old patterns after the self-isolation orders are lifted. Many people have abandoned frequent shopping and have developed a habit of buying huge packs “for future use” instead. This means the demand for long-term storage products will continue to grow, but at the same time, consumer demands for their taste, looks and cost will grow, too. To meet the demand, producers of durable goods will have to work continuously on improving the quality of their packed products.

For example, our clients Proxima, Podravka and Uvelka are already improving contents by adding top-quality ingredients. Customers are becoming more careful about packaged food. When it comes to groats and frozen mixes, they want to see a structured mix that can be easily divided into ingredients. If we speak about ready-made soups, customers expect a steadily even flavor that will be close to their expectations (for example, if we compare home-made borscht and borscht from a can or pack). Therefore, the market is moving even further towards quality food made of expensive ingredients, in safe and practical packaging.

By safety we mean no risk of breaking the package. It must be hermetically sealed, convenient, hygienic and customer-friendly. For ready-to-eat foods, customers like it when they don’t need to open the package to heat the food or can even eat right from the pack. An example of such packaging is stand-up pouches used for baby food.

Packaging equipment trends

The major trends in the industry were shaped long before the COVID-19 crisis. They only became stronger during the pandemic and after as manufacturers are seeking ways to optimize their production and reduce costs.

1. Increasing productivity and cutting expenses in food production

Manufacturers understand that they need to drastically reduce production costs. Many companies have expenses related to losing packaging material, excess weight or shortage in weight and equipment downtime. These expenses amount to 35% of the standard production volumes, which may be between several thousand and several million rubles per month depending on productivity.

Our client made calculations for two of their packaging machines, one made in China and one in Poland, which were supposed to be producing 50 packages per minute each. The client assessed the efficiency of the machine for a period of one week according to the following formula: ‘a full 8-hour shift, including breaks,’ ‘repair, maintenance and readjustment’ (the declared 50 packages per minute) * 60 min * 8 hours (50*60*8 = 24 000 packages) / the number of manufactured packages in 8 hours (7.2K packages) * 100%). As a result, the average capacity was 15 packages per minute, which is 30% of the machine’s efficiency. The losses happened due to frequent stops, for 5.6 hours in total (repair, maintenance, material replacement, accidental stops).

The client calculated the amount of defective packages with regard to both change of the format and losses of those not sealed properly, as well as poor quality, view and excessive proportions. As a result, the average amount of defective packages was 12% in terms of materials, and 24% in terms of the wrong proportions.

The weekly cost of work was the following: underproduction: 65% (of the expected efficiency of 95%), which is RUR 840K ($12K). Losses of material (RUR 4 for zip lock packages): RUR 17K (with the 15 packages per minute capacity). Losses of product (spices mix): RUR 345K. The weekly losses totaled RUR 1.2 mio ($17K). The yearly losses will be RUR 57 mio, or €721K.

Precautious producers will search for new solutions to lower the expenses and improve the machines’ efficiency.

2. Maximum flexibility and prompt reequipment

The manufacturer needs to have the opportunity to easily change the size and volume of packages, as well as of the products inside. It will allow them to readjust for market demands.

3. Greater industrial automation and digitization

The trend will intensify following the COVID-19 pandemic. Everyone used to believe that manual labor is cheap and convenient, while today a large number of people gathered together poses possible sanitation issues as well as dependence on manual labor efficiency and the amount of laborers.

Russia has been moving towards automation for six years. The current lockdown has convinced food business owners that the entire packaging process from the package itself to palletization produces profits through a drastic personnel reduction. Our clients in Germany and France launched production automation long ago.  

The COVID-19 pandemic has made it obvious that enterprises with the minimum number of employees and maximum automation have not decreased their production volumes and even managed to reduce their personnel’s working time through the use of digital technology for monitoring and control of the process work without any loss of efficiency. These companies have also managed to instantly raise their production output due to available extra capacity of automated lines through increasing the number of shifts and effectiveness.    

Enterprises that utilized a lot of manual labor, both in Russia and abroad, have got stuck in a loop as raising production output required more workers, which led to sanitary and epidemiological problems. Production capacity grew by 20% while the number of laborers increased by 60-70%. This is particularly evident in China, where enterprises with a large number of workers had to shut down temporality for two months, while global giants’ manufacturing facilities continued operating at maximum capacity.  

By Anatoly Shirlin, Head of SN Maschinenbau Russia

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