KEEPING CONSUMERS ON THEIR TOES Trends in Beverage Packaging Thorsten Hartmann, Director of Consulting Canadean EMEA 1
Topics The forces influencing packaging innovation Adapting to the consumer Premiumization 2
Topics The forces influencing packaging innovation Adapting to the consumer Premiumization 3
3 overall themes are impacting packaging innovation. Commercial Trends Consumer Trends Demographic Trends 4
Which play out in different ways CONSUMER Changing Demographics DEMOGRAPHIC Aspirational Sustainability Health & Wellbeing Cost Reduction Use & Convenience Logistic Efficiency Customisation Legislation Connectivity COMMERCIAL 5
What does the consumer see as important? Canadean Consumer: European Consumer Perception of Packaging Features: Top 5 Transparent /Clear Surface Texture Unique Shape Interactive Packaging Bright Colours 11% 7% 6% 4% 4% 13% 16% 22% 16% 20% 35% 32% 39% 25% 41% 59% 55% 67% 45% 65% 6
To aid brand impact and shelf presence manufacturers and brand owners need to focus packaging innovation on targeted areas of significance and consumer desire Matrix of Brand Impact & Shelf Presence Use & Convenience Health & Wellbeing Brand Impact & Shelf Presence Connectivity, Smart & Customisation 7
Topics The forces influencing packaging innovation Adapting to the consumer Premiumization 8
The rise in refined sugar content awareness, and the prospective health implications, has had an impact on soft drinks, specifically carbonated soft drinks Health & Wellbeing Product 9
Where should the change come from and how can packaging aid this? Portion control Reduced portion size: reduce portions of high-calorie beverages Eliminate supersize items from menus and product ranges Reformulation Stealth product reformulation: Beverage producers deliver small, incremental reduction in the caloric content of beverages that consumers do not notice Alternative Sugar Sources: Introduction of natural alternatives to the norm Labelling Government / Industry mandates front-of-pack engaging format nutritional information plain labelling engaging labelling Smart Tech Aggregate basket calorie labelling Retailers provide traffic-light rating of basket contents at checkout Smart Tech Pack Types Enabling the consumer to track the calorie basket count 10
Portion control amongst the traditional drinks has led to a rise in small pack types with some success Portion control packaging innovation enhances the product mix and consumer purchase rate WHAT? A mini-pack giving permissibility to soda consumption Coca Cola s Mini-Can has emerged as an occasions growth driver, and a catalyst for creative marketing campaigns. The sleek looking smaller pack, containing approximately 150-200ml of CSD, is sold individually and in multi-packs in various markets globally. WHY? Consumers are rethinking their soda consumption Countering the negative consumer perceptions towards the high calorie and sugar content of CSDs is paramount in reversing the trend of falling sales. The Mini-Can is an "uncompromised indulgence" by providing buyers a smaller serving (with fewer calories) of their favourite regular soda. It reduces waste and commands higher margins than conventional Coke packs. TAKE- OUT A big future for smaller CSD packaging formats Portion control packaging represents one of several "innovation platforms" that can be used to enhance the permissibility of CSDs to combat declining category sales. In combination with formulation advancements (especially sweeteners), portion control packs will be used to make CSDs brands more desirable. 11
Coke s Mini Can Super Bowl 2016 Ad Packaging Innovation as Brand Magnet? 12
Enticing consumers to the carbonates category requires helping them to address their "goal conflict" Health Indulgence Craft & care Convenience Novelty Tradition 13
With a similar movement within beer as a focus on alternative occasion becomes an appeal to different consumer segments Reducing pack unit size of these alcohol drinks adds value to their proposition, rather than diminishing it. Smaller packs often appear more elegant (and more manageable) to female consumers, infrequent drinkers, and those in single-person households. Heineken beer mini 150ml bottles Small bottle format extends consumption opportunities for the Heineken brand suggesting for it to be consumed as an aperitif. Adverts feature people drinking from the bottles in situations not usually associated with beer drinking, such as at the opera or a fashion show. 14
Others like Nestle are repositioning flavoured sparkling water brands as a substitute for diet and light sodas moving away from traditional PET May 2015 October 2014 15
New entrants are utilizing the need to highlight product benefits to out maneuver the competition 16
whilst some brands are opting to focus on innovative closure systems to preserve the value added ingredients Functional Cap Technology This packaging innovation is changing the functional market Protects ingredients from degradation 73% of consumers said a "fresh" claim makes them think a product is more nutritious Activate "Fresh vitamins" "Stop vitamin cruelty" 17
Brands are challenging the norm to create new packaging for established categories The Norm The Challenge Iced Tea Juice Carbonates Wine Water 18
with emerging sub-categories providing new avenues for packaging innovation and development Breakfast Drinks and Value Added Dairy, enhanced with Energy or Fibre and a move to RTD 19
whilst new category presence and consumer demand also opens avenues for packaging innovation TEAM SKY BREAKFAST High Protein Smoothie with Fruit Concentrate 20
Convenience and use are also important factors driving packaging innovation Convenience & Use 21
Water enhancers have seen great success off the back of the consumer shift for healthier products and innovative pack types that enhance use and convenience Share of novel squash/syrups launches in squeeze bottle packaging, 2010-15 Evolution of innovations 30% 25% 20% 15% 10% 5% 0% 2010 2011 2012 2013 2014 2015 Mio Started the water enhancer trend Robinsons Squash'd Capitalized on pack innovation Press'd Branched into new sectors 22
whilst others opt to innovate through a sense of made for me packaging targeted at consumer segments occupied by parental spending power Innovative pack designs which target the user Ergonomically designed for small hands Bright eye catching designs coupled with relevant to audience joint ventures. 23
With established consumer segments also being targeted through the made for me process Budweiser Bow Can Ergonomically designed to create a better fit for the consumer Miller Lite Grip Can Innovative raised grip feature like a football 24
Consumer Connectivity is another factor in product choice Connectivity, Smart & Customisation Consumers are looking to maximise personal relationships and enjoy experiences together 25
Individuality and a customised experience is enabling enhanced connectivity between consumers and brands As consumers become more demanding even when seeking out everyday groceries they are looking for products that stand out from the crowd or offer something unique 26
Whilst limited additions and special occasion packs also add a new dimension to captivating the consumer 27
With smart connectivity now reaching into areas relating to product content and consumer information a movement beyond a sense of brand marketing 28
Topics The forces influencing packaging innovation Adapting to the consumer Premiumization 29
Premiumization & Indulgence Canadean has identified the following key themes within Premiumization & Indulgence Understanding Premiumization & Indulgence Premiumization & Indulgence Selfbranding Hyperpremium Lifestyle The human desire for "better" drives the trend Premiumization & Indulgence taps into the shift towards hyper-premium innovation and visibility across the FMCG market. The human fascination with "better" means that "buying better" is a core purchase motivator, and is found at the root of many actionable themes within the trend. Time to oneself Gourmet Luxury Treating Buying better Quality Brand service exceeds expectation 30
The concept of Premiumization & Indulgence can be visualized as a luxury hotel visit Product implications Attitudinal implications Gourmet food and drink Opulent surroundings High-end products and services Time to relax Pre-emptive customer service The new premium must go "above and beyond" in terms of quality and brand service Premiumization is taking over the FMCG market through numerous different routes, including convenience, provenance, immersive brand experiences, or "natural" ingredients. 31
The trend is shaped by a number of drivers and inhibitors DRIVERS Personal branding Justifiable indulgence Super-premium growth Education and connectivity Good is enough Back to basics Craft trend INHIBITORS Key consumer needs Which longings does the trend fulfill? "I deserve to indulge myself; I have earned the privilege" Wanting to spend more on products because they can Buying the best; you get what you pay for 32
Moving away from traditional stack it high, sell it cheap in store products is key Product A lot of brands are competing in the same space failing to differentiate their brands mass positioning is resulting in a lack of engagement with consumers Retailer the stack it high, sell it cheap strategy being adopted across the retail industry is leading to a disconnect with the buyer 33
Through innovative and adaptive designs that stand out from the crowd but remain relative to the consumer Artistic packaging reflects an ultrapremium brand message Premium expression of a popular mainstream brand Lager that communicates tasting notes and hop varietals Alkkemist Ultra Premium gin Touting itself as "ultra premium," Alkkemist claims to be the first gin made with sapphire and Muscat grapes. This exclusivity is supported by the striking packaging, which combines artistic edginess and paired-back typography to make the bottle displayworthy. Marketing conveys a complex and delicate distillation process, 1 supporting the high-end positioning. Jack Daniel's single-barrel whiskey Said to be "aged in white American oak barrels in the upper sectors of the barrelhouse [ ] to expose it to the extreme weather fluctuations." Greater communication of production methods and calling out tasting notes align with traditions seen in high-end whiskey expressions. This allows mainstream Jack Daniel's consumers to buy into the premium whiskey segment. Carlsberg Nox lager Using a modern and UV-sensitive packaging design, Nox is a premium lager. Separating itself from Carlsberg's eponymous brand, Nox claims to have a "sophisticated flavor" due to a new cold brewing stage with fresh hops, and the use of new hop varietal Polaris. Such specific product nuances mirror the craft trend, helping Carlsberg fans to trade up and remain brand-loyal. 34
to targeting the consumer through a sense of occasion, with unique and inspiring flavours A delicious clean soda. Hӧpt positions itself as a soda for socialising - Something cleaner. Something rewarding and more sessionable Made in NZ, Hӧpt was crafted by a team of people across Tokyo, Melbourne & Auckland who came together to create something for people coming together. Hӧpt sodas are unique fusions with flavours like lychee, pear, watermelon, elderberry, basil, mint, lemongrass and limeflower. Their unique characteristics make the sodas crisp and refreshing. 35
to a focus on ingredients and design that change the consumers perception of use Inspired to change your relationship with Soda The brand highlights that most mixers are made from unpronounceable ingredients by multinational corporations, sweetened beyond recognition with high fructose corn syrup, and packaged in generic containers - adding nothing to the drinking experience. The products are described as the world's best sodas delivering a clean, crisp, completely ungeneric beverages that enhance the finest spirits and stand proudly on their own. Whilst highlighting the ingredients such as: Organic agave from the Mexican countryside They work with one of New York City's best young designers to develop bottles as beautiful as the liquid they hold. Quinine from the slopes of the Peruvian Andes, Ginger from the fields of Southeast Asia Salt from the Himalayas 36
Where will this trend lead? Future opportunities to align with the Premiumization & Indulgence trend Truly gourmet at-home experiences Health and indulgence blurring Relative opulence The rise of premium ingredients coupled with a sense of new occasion and purpose, normally found in high end establishments, will become an option for in-home The prestige of health and longevity will create strong growth in high-end permissible indulgences: healthful treats will become more gourmet. Differing generational aspirations will be understood: various incarnations of premium products will meet each cohort's expectations. 37
Thanks for Listening 38
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