Sustainable Packaging: Food Industry Often Leaves Potential Untapped
3/31/2024 Insights Retail Sustainability Article

Sustainable Packaging: Food Industry Often Leaves Potential Untapped

A recently published study by Strategy&, the strategy consulting division of PwC, provides insightful findings on how the food industry can position itself more competitively through more efficient and sustainable packaging solutions.

A pile of packaged food products The GHG emissions from food packaging result in particular from the upstream value chain.

The study entitled "Mastering food and beverage packaging" reveals that food manufacturers could massively reduce their costs and significantly improve their carbon footprint through sustainable packaging. Jan-Philipp Loch, Senior Communications and Though Leadership Expert at PwC, explains how food manufacturers can utilise this enormous potential – and what companies are still lacking at the moment.

Mr Loch, what important insights did you gain from your study?
Our latest study shows that the food industry could save up to 30% of costs and reduce its greenhouse gas emissions by around 25% by comprehensively optimising packaging processes along the entire value chain. Despite this impressive potential, many manufacturers are lagging behind the political requirements and even their own sustainability targets, particularly in the area of waste management. There are many reasons for this, including the complexity of the changeover and the initial investment required. However, the opportunities presented by optimising packaging strategies are too significant to ignore.

Where do the high greenhouse gas emissions from food packaging come from? 
The GHG emissions from food packaging result in particular from the upstream value chain, i.e. from the raw materials and materials used and from the production process, for example through the use of non-renewable energy. Emissions are generated primarily in the production process due to the high energy consumption; glass and aluminium stand out here. Further GHG emissions are also generated during the transport of food packaging. Overarching inefficiencies in the design of food packaging also lead to avoidable emissions, such as disproportionately large packaging sizes.

Why are many companies lagging behind their own recycling and waste management targets?
Only around a third of the companies analysed in our study have officially set specific targets for the proportion of recycled content in packaging. On average, these companies had a recycling rate of 38% in 2022 - a considerable gap to the 50-100% rates proposed by regulation by 2030. However, this gap is not surprising. When it comes to plastic, for example, recycled plastic is still more expensive than virgin plastic. There are several reasons for this, including the scarcity of plastic waste and the high cost of recycling processes, which is further exacerbated by high energy prices. On the other hand, increasing the recycled content in metal packaging can help to reduce costs and GHG emissions. This is because the remelting of metals such as steel requires less energy than primary production. In any case, companies need to secure access to recycled raw materials and avoid being left behind when legislation comes into force.

Furthermore, only a quarter of the companies included in our study have set targets for waste management. At the same time, upcoming regulation could potentially mandate a 15% reduction in packaging waste by 2040. However, the economic potential of certain waste streams remains largely untapped by companies. However, it should be noted that the necessary infrastructure is usually not yet in place and would involve considerable costs. With the exception of a few selected pioneers, companies are generally not yet making long-term commitments. 

What strategy do you recommend for companies to make their packaging more sustainable?
In order to fully utilise the possibilities of innovative packaging, retail and consumer goods companies should apply the four elementary levers of Rethink, Reduce, Reuse and Recycle.
Various technologies and innovations will also play a role on the road to sustainable and cost-effective packaging solutions. The key to success will lie in the broad utilisation and interaction of various measures along the value chain. Innovative materials, including those with a biological basis, as well as technologies for reducing energy requirements and greenhouse gas emissions in production will play a major role. 

In addition to the use of new materials, a rethink of packaging itself will continue to be important when it comes to reducing materials. We still see inefficient packaging designs that have potential for optimisation. Together with a packaging agency, for example, we have developed material-saving cardboard blanks, some of which allow material reductions of over 10 %. In this context, it is crucial that recyclable materials are used. 

It is important to understand that such improvements can only be realised in collaboration with the various partners. Whilst long-term planning is important, experience needs to be gained quickly, particularly through selected pilot projects. 

How can sustainable packaging solutions help to improve competitiveness?
The use of recycled or organic materials, recyclable packaging or even lighter materials can help to optimise costs. These approaches lead to lower energy costs during processing, reduced transport costs through more efficient design and lower material costs. Even small improvements in high-volume bestsellers can bring significant benefits.

In terms of demand, claims about sustainable packaging do not lead to a change in purchasing behaviour; this typically only happens when they are, for example, "100% recycled" or contain a similar claim. If companies take the necessary measures to achieve the goal of sustainable packaging, they can gain a competitive advantage. 

Thank you very much for the interview, Mr Loch.