New European Packaging and Packaging Waste Regulation (PPWR) is set to usher in a substantial amount of change in the European packaging market. This represents a huge opportunity for many brands and packaging companies, with the potential for new solution types to create space for innovative players to enjoy market-beating growth. As with any major change of this type, there is also plenty of risk. As brands’ sustainability agendas begin to incorporate this regulation, material replacement and packaging removal programs are likely to accelerate, causing some packaging categories to shrink, while others may disappear altogether.
However, the shape of the change to the landscape won’t be simple to decode or predict. For example, winners and losers are unlikely to be defined by their existing material specialisms. Here, we’ll explore three areas of risk and opportunity that the PPWR presents, and will share our views on what is set to define who the resulting winners might be.
Recyclable Solutions: Risks & Opportunities
Risk: The prioritisation of increased packaging recycling is set to raise the bar for multi-material solutions and hard to recycle flexibles. While exact nuances of this are set to be laid out in secondary legislation, we know that packaging will need to be at least 70% recyclable, and where multiple materials are used the PPWR favors solutions where materials are separable, and where each component can be recycled individually. This creates risk in certain categories, particularly food and liquid primary packs.
Opportunity: There is a world of opportunity here for those that innovate to produce acceptably separable and recyclable solutions for food and beverage, particularly those that do so in a way that prioritises conveying the brand’s message on shelf. Single material solutions, or solutions with barrier technology that falls within acceptable limits, are set to grow.
Opportunity also exists within compostable plastics, which are exempt from minimum recycled content targets, and in multipack collation: shrink wrap will be banned, forcing brands to choose between offering single cans or bottles only, and looking at recyclable collation options. Those that prioritise the development and sales of credible, cost-effective recyclable collation solutions could be setting themselves up for growth.
Packaging Minimisation: Risks & Opportunities
Risk: In some categories, the PPWR’s ambition to reduce the overall weight and volume of packaging could lead to non-essential secondary packaging becoming a thing of the past. We already see this happening in categories such as toothpaste and premium spirits, but other brands will also be exploring removal opportunities, and carefully assessing the extent to which secondary packaging is core to a product’s popularity and positioning.
The PPWR also aims to clamp down on larger than necessary ecommerce packaging, mandating a maximum empty space or void filled ratio of 50%, creating challenges for players that currently are not able to right-size packaging to an ecommerce order.
Thirdly, the PPWR also encourages removal of single use plastic packaging in some cases, e.g. for unprocessed fruit and vegetables sold in volume of under 1.5kg.
Opportunity: All of these cases create areas of opportunity as well. Where secondary packaging is being removed, there is an opportunity for primary packaging providers to innovate to fill the space, conveying brand image on the shelf. In ecommerce, there is opportunity as much for machinery players as packaging manufacturers. Creating solutions that select the right sized packaging for an ecommerce order is not altogether simple, and innovators that can successfully do this while minimizing cost outlay for e-retailers could stand to gain here.
And in the case of single use collation of fruit and vegetables, there are two main opportunities. Firstly, compostable solutions are exempt – brands like Natoora have already made this move, and this is surely a market that is set to grow. Secondly, there is an opportunity for reusable solutions in this space, as explored in our third focus area.
Moving from Single to Multi Use: Risks & Opportunities
Risk: The PPWR’s focus on moving to multi-use packaging is set to hit two sectors the hardest: foodservice and ecommerce. Across restaurants, cafes and other food outlets, single-use plastic containers/ packets will no longer be an option, and this extends beyond cups, plates, and containers to single-serve condiments too. Within a restaurant, reusables are mandated, and for takeaway food and drinks, there is a 10% reuse target by 2030. All of these points signal big changes for foodservice. While outlets like McDonalds have already moved to reusable solutions in some geographies, including France, the challenges of implementing such initiatives at scale, and for smaller brands, are clear. For CPG brands, innovation around single-serve condiment packaging will be key to protect sales in this higher-margin category, and avoid outlets moving to a large format dispensing model.
For ecommerce businesses, large-scale changes will also be required. At least 40% of packaging will need to be reusable by 2030, and 70% by 2040. While cardboard boxes are excluded from reuse targets, manufacturers of plastic mailer bags could be hit hard here, without a successful pivot.
Opportunity: In the case of foodservice, the innovation opportunity to provide convenient alternatives to single-use plastic collation is clear. The same is true for fruit and vegetable packaging, where single use plastic wrap will be banned. In the absence of a consumer coming prepared with a container from home, a ‘bag for life’ equivalent will likely be required, creating a middle-ground multi-use solution.
Returnable ecommerce packaging is currently in its infancy, but organisations like RePack are working through the challenges to get workable returnable solutions moving. Taking this kind of solution to the mass market could offer big rewards for a first mover, if they are able to pick their way through the barriers. Our next blog will explore these further. Equally, given that cardboard packaging is exempt from reuse targets, there is an opportunity for paper-based packaging to replace plastic solutions within ecommerce, even within categories that have previously resisted this change (e.g. fashion).
Conclusion & about White Space:
Major regulatory change on the scale of PPWR clearly creates a new set of dynamics that can feel uncertain for major, established players. However, with uncertainty comes opportunity for those who are prepared to be dynamic in their approach to handling market changes. Players that get their approach right could see huge growth between now and 2030 (and beyond). We expect the winners to be defined by their openness to innovation, engagement with market and consumer perspectives, and depth of understanding of different applications. Winners will be those that innovate to fill gaps, leverage deep brand relationships, and that actively pivot away from high-risk categories, leaning into growth areas instead. And they’ll also be those that do all of this quickly, harnessing the potential for first mover advantage.
White Space Strategy has been assisting businesses in preparing for a future influenced by the PPWR. If you’re facing challenges with future planning in light of these regulations, our Paper & Packaging lead, Sophie, is here to help. Feel free to reach out at Sophie.herring@whitespacestrategy.com for support.