Companies in the packaging industry deal with most of the same trends, regulations, and legislation as manufacturing companies and must meet the challenges of rising prices for raw materials and shortages of materials and staff.
The clearest trend is demand for alternatives such as biodegradable packaging and films, as consumers become more beware of plastic pollution and its effect on the world’s oceans. Other innovations include replacing plastic parts or printing with better inks.
As well as strict EU regulations regarding compostable packaging, UK companies have been faced with a new Plastic Packaging Tax (PPT) designed to reduce the use of virgin plastic. This can involve time-consuming data collection for importers and manufacturers, or to claim an exemption. And the situation is not straightforward: food and drink products can’t always be wrapped in recycled plastic, demand for recycled material could push prices higher than for taxed material, and it will not always be possible to pass on extra costs to customers.
But given stricter regulation, the willingness of consumers to pay more for green alternatives, and demand from retailers, sustainable packaging is likely to have a significant impact on M&A in the future.