Three trends defining the co-packing industry this year
In February 2021, Nulogy CEO Jason Tham had the pleasure of moderating an online roundtable hosted by the Contract Packaging Association.
Earlier this month, I had the pleasure of moderating an online roundtable hosted by the Contract Packaging Association. The focus: to discuss trends and lessons learned by contract packagers and manufacturers after one year of the pandemic.
The webinar was the most highly attended virtual event held by the CPA, with more than 100 registered attendees! There was clearly a desire for insights and experience offered by our esteemed panel, which consisted of: Greenseed Packaging CEO David Gray, Keller Logistics & Packaging President Darryl Logan, and MSI Express CEO Charles Weinberg.
Our panelists delivered a fantastic session covering a wide range of topics, challenges, and opportunities facing contract packagers and manufacturers today. I thought there were a few overarching themes worth highlighting for the industry.
The panel’s consensus was that the conditions of the pandemic had spurred co-packers and manufacturers to a new level of adaptability and speed, in reaction to not only the health risks resulting from the pandemic, but also the ever-changing requirements of the CPG customers who needed to pivot in response as well. From CPGs responding to frenetic retailer and consumer demands, to co-packers reworking their operations to ensure the safety of their employees, each side of the supply chain needed to react and move faster than ever before. Businesses that could adapt were able to capitalize on the incredible demand for consumer products during the pandemic.
Technology has played a key role in connecting supply chain partners more closely than ever before, and those who know me know it’s no secret that I believe there’s vast potential for technology to evolve our supply chains to achieve higher levels of responsiveness and collaboration.
Diving further into the topic of adaptability, it was clear that production capacity was a major factor in the success or failure of external suppliers to meet the needs of CPGs during the pandemic. Many suppliers were overwhelmed by the volatility caused by the pandemic’s demand spikes and shifts, and were unable to deliver the capacity needed by their customers. The suppliers that could pivot quickly enough to increase their capacity, however, found that this market capacity deficit, in fact, presented a significant business opportunity. If they were able to set up new production lines, machinery, and staging areas quickly enough, suppliers could meet CPG customers’ requirements in this tumultuous period and stand out further as suppliers of choice.
If the pandemic has taught us anything, it’s that we can’t afford to be caught off-guard by another “black swan” event. The costs are too great.
The panelists noted that with the pandemic came a sizable consumer shift to basic goods such as toilet paper, paper towels, ready-to-eat foods and other products needed for home cooking. For the CPGs, SKU consolidation and rationalization was needed to meet this macro demand shift, which was a significant pivot away from the major trends of SKU proliferation and product personalization of years past.
These consumer behaviour shifts—to essential goods and direct-to-consumer channels—are further indicators that volatile market shifts are here to stay. For example, there was agreement across the panel that coming out of the pandemic, CPGs would begin divesting from SKU rationalization and start to reinvest back into product customization.
If the pandemic has taught us anything, it’s that we can’t afford to be caught off-guard by another 'black swan' event. The costs are too great.
For veterans of the industry, it should come as no surprise that change is the only constant! Another reason to be prepared for anything.
The panel discussion covered a number of other topics especially relevant to the contract packaging and manufacturing industry. For example, in an industry that is heavily reliant on packaging materials and emissions footprints, sustainability would continue to be an important topic for discussion and action.
It is safe to say our collective experience over the last 12 months could be described as unprecedented and challenging. However, I believe our industry can be proud of how quickly and effectively it’s pivoted to meet those challenges—promising signs that we can be agile enough to meet whatever lies ahead on the horizon.
Special thanks again to our panelists David Gray, Darryl Logan, and Charles Weinberg!