Impact of Coronavirus (Covid-19) Pandemic on the Packaging Industry

The COVID-19 pandemic has changed the buying pattern of consumers. Measures such as nationwide lockdown have led panic buying of food and hygiene products. Nestle S.A., a food and drink company, has reported quarterly growth in sales of 4.3% in North America and Europe in April 2020, as against the previous quarter. As per Coherent Market Insights (CMI), this is the highest growth in sales of the company in the past five years, which resulted as an outcome of panic buying. Kraft Heinz Company’s net sales increased by 3.3% in first quarter of 2020 as compared to first quarter of 2019, primarily attributed to the sudden in the segment of packaged food due to the pandemic. This has surged the market for packaging products and solutions.

Measures such as lockdown, and cease in the economic activities has reduced the discretionary spending of a consumer, which has in turn impacted the sales of luxury goods, perfumes, apparel and other non-essential goods. Many packaging solution and service providers have shifted their offerings, and are producing personal protective equipment (PPE) products, with an aim to meet the surge in sudden demand for PPE. In April 2020, Smurfit Kappa Smurfit Kappa introduced the ‘Design for Help’ line of products, which include workplace dividers, protective face masks, and temporary furniture such as tables and shelves. Berry bpi started manufacturing personal protective equipment in its manufacturing facilities based in U.K. and Scotland in May 2020.

Every dark cloud has a silver lining. Coherent Market Insights (CMI) have analyzed and estimated changed in the delivery of the products through e-commerce channel. An increase in the orders for medical supplies, household essentials, and food products as compared to the pre-Covid scenario is a major change across category of products on this distribution channel. Carrefour S.A., a retailer, reported 32% increase in the online business in the first two weeks of March 2020 as compared to the same period of the previous month. Amazon Inc. reported 26.6% increase in net revenue in the first quarter of 2020 as compared to first quarter of 2019. All this change and optimistic growth has positively resulted in rising demand for corrugated boxes, cartons, and other packaging products.

The risk of interacting with a potential Covid-19 carrier is expected to be one of the major factors, which is expected to continue boosting the sales of essentials and non-essentials, through e-commerce channels, for next 5-8 months, as against the brick and mortal business model. This is further complemented by contact-less delivery offered by giant e-commerce players winning the trust vote of consumers. The trend is likely to until vaccines to combat this disease are available.