Asia Pacific packaging industry reeling from COVID-19

Food and beverage companies that rely heavily on China for their packaging, continue to feel the impact of the coronavirus outbreak on the supply chains of the F&B packaging industry, says data and analytics firm, GlobalData (March 23). 

The firm quoted Jörg Wuttke, president of the European Chamber of Commerce in China as saying: “Packaging industry in China is almost shut down, so everything from plastic packing to steel drums is running out.”

Several Chinese factories are closed, or operating at reduced capacities, and this could result in many manufacturers, and even retailers, suspending their operations as they run out of the key inputs they need. 

Australian supermarket chains have already raised concerns that COVID-19 outbreak could negatively affect food stock due to packaging supplies from China becoming a bottleneck.

Arvind Kaila, Practice Head of Consumer Beverages at GlobalData, observes: “Manufacturers were already searching for alternatives to China for packaging after US imposed tariffs on Chinese products, with the spread of coronavirus more and more companies will start looking for other countries US, India and Mexico for packaging.”

According to GlobalData, beyond supply chain interruption and weakening demand, there are few other factors that are expected to affect packs used in consumer goods. Consumers are displaying a ‘flight to trust’ in terms of the brands (and packs) they purchase and the types of categories they purchase. For example, liquid dairy choices in the APAC region are being affected by perceptions around hygienic dairy production and the safety of final packaging. The result is a preference (if product is available) for trusted brands and pack formats.

The ‘what’ and ‘when’ of consumption occasions and purchasing occasions are altering – changing the most popular pack types chosen in the most affected countries. For example, there is a weakening demand for ‘on-the-go’ type products and packs for foodservice distribution as consumers minimise social interactions and travelling. In contrast, bulk formats and packs suited to e-commerce distribution are growing in popularity.

GlobalData sees these trends to be more prevalent in key APAC countries currently affected by the COVID-19 pandemic.

(Photo of packaging by Walldemarus I Dreamstime)