Market trends and packaging innovation FDIN Seminar, Putting Packaging at the Heart of NPD April 2009

Today’s presentation Key packaging trends globally Implications of local and regional trends Packaging innovation: Art versus functionality Step change or incremental Complexity versus simplicity What works, and what doesn’t

Innovation New brand, new product, new variety, new pack… Estimated 80-90% of all introductions globally are merely tweaks of flavour or fragrance or package size... Are companies playing safe? Is there a dearth of innovation? “Where has all the great NPD gone?” Very few products or packs are truly innovative... …but lots are innovative in one aspect

Market trends Until recently we spoke of three major trends that impact all markets: Health & wellness Convenience Indulgence But these trends evolve and change over time And we now add a fourth trend: Ethics and the environment Look at innovation in the context of those four trends Identify how companies around the world are developing new packs to meet those trends

Health & wellness Low-in claims remain important, but “dieting” and “weight loss” are outmoded and marginalised Portion control is emerging as a key trend, with significant impact on packaging Focus now is on “natural” nutrition: fresh, wholesome, nutritious – values that can be delivered via package design and technology Technology driven solutions provide new delivery systems for health & wellness benefits But clear communication of the health & wellness message is still critical

Health & wellness: portion control Usage of portion control packaging, USA “...The 100 calorie snack package, an industry that went from $0 to $200 million in a three year period...” “The concept of the 100 calorie package is a winner. Portion control, convenience, familiar and favorite foods, all in one (slightly expensive) package add up to a dieter’s best friend” Source: Mintel Inspire trend report, “Portion Control” Source: Mintel Oxygen report – “Food & Drink Packaging Trends - US - April 2008” 100 Calorie Packs, USA 100 Calorie Packs, Europe Kraft pretty much pioneered the 100 calorie pack segment in the US back in 2004, with products like the one shown on the left. The idea was picked up by other brands in snacks, ice cream, soft drinks, etc. The concept worked v well in the US but not so smoothly elsewhere. The Cadbury Dairy Milk Under 99 Calories failed in the UK because (a) consumers thought it would be low calorie/artificially sweetened chocolate so didn’t buy it, (b) thought it was too small for a chocolatey treat, and (c) it was too thin so didn’t have the right mouthfeel. Mars has had more success in the UK with Little Bit Of… (smaller sized bars, with no overt ref to calories etc) The Milka line is fairly new in Europe (France and NL - see ID 993872) from Kraft; they also have Toblerone 100 Calorie Packs (e.g. ID 1020501)

Health & wellness: freshness, naturalness Freshness: See the Goods ConAgra’s Healthy Choice Fresh Mixers, USA Innocent Tasty Veg Pot, UK Preserving Natural Goodness Whether we like it or not, consumers see freshness and naturalness as part of the “better for you” picture. “Freshness” values can be well communicated by package design - transparency (literally and in the Inspire context!) Note that the Innocent Veg Pots have visible layers of ingredients topped with parsley leaves or similar. Note that the Healthy Choice line (ID 978612) is called Fresh Mixers (it’s shelf-stable),needs v simple prep and microwaves in the pack (has built in strainer to remove the water used to cook noodles). And it’s a $10m brand. Technology can also come into play, e.g. with steam microwave cooking. Marks & Spencer was an early pioneer of this with its chilled private label meals in the UK - now sold under Eat Well sub-brand. Steam microwave also strong in frozen (but again the brand name on the Birds Eye product is Steamfresh). See ID 969107 Marks & Spencer’s Eat Well Steam Cuisine, UK Birds Eye Steamfresh rice, USA

Health & wellness: new delivery systems Rising Beverage’s Activate functional drinks, with vitamins and herbal ingredients stored as a powder in a moisture-resistant chamber inside the cap, released into the water when the cap is twisted, USA Oenobiol slimming drink concentrate, sold as a concentrated mix in a cap to fit any standard PET bottle of water, France

Schwartau’s Fruit2day juice drinks, Germany Health & wellness: clear communication Fruit2Day is in several markets now. Example above is Germany (ID 807072). Trimform ID 805705 Schwartau’s Fruit2day juice drinks, Germany

Convenience Hectic modern lifestyles (“jigsaw” lives) encourage the development of instant solutions: no mess, no fuss, no measuring, no clean-up Growth in smaller households, and the decline of the formal family meal occasion, lead to expansion of individual or portionable solutions With today’s more mobile society, consumers spend more time away from the home – need for portable solutions Technology allows for greater convenience, but note the counter-trend: For the over-optioned consumer, convenience=simplicity Simple to understand, simple to use, product and package

Convenience: microwaveable packaging More Than a regular microwaveable pack… Toro’s microwave chilled meals that “beep” when ready, Norway Masterfoods’ Royco microwave cheese sauce in a 200ml pouch with heat-free handle, South Africa 2-Part Packaging Not so much to say about microwave generally, but the examples shown here go beyond the standard microwaveable pack in one way or another: Toro meal (ID 975276) has a sound chip built into label so it beeps when ready - affordable everyday technology, why don’t we see more of it? Royco sauce (ID 995030) - there are lots of prep sauces now in microwave stand-up pouches. This line, like some others, has a heat-free handle area (where the seal is wider so it doesn’t get hot to the touch), and a spout area that can be easily snipped off to pour. The Uncle Ben’s product (ID 966787) makes a virtue out of the microwave, not just a simple time-saving convenience. The sauce and rice are separate to deliver optimal quality/texture, but the pack is still highly convenient, microwaveable, single-serve. Mars’ Uncle Ben’s Heiss auf Reis rice & sauce in “duo-tub” pack for microwave, Germany

Convenience: single-serve & portionable Single-serve is everywhere - again easy to switch examples according to audience. The top two are simple stick packs, which have grown and expanded into new categories because they are so simple. I included the salt because that’s not an area where you’d normally see single-serve stick packs, and there’s something to say maybe about salt reduction and portion control etc. Crystal Light On the Go - the stick packs and on the go positioning have pretty much reinvented the Crystal Light brand, it seems. The other two are plastic mono-dose products for non-food - snap-off the top, dispense, throw it away. The mouthwash is designed for on the go use, whereas the cellulite treatment is meant for home use, and is all about convenient delivery of exactly the right quantity of fresh product. Cerebos cooking salt in stick packs, France Kraft Food, Crystal Light On the Go, USA

Convenience: resealable Loads of potential examples… The Coke can is still unique - was tested in Germany and the Channel Islands but is no longer around. Probably too expensive for a small can of Coke, maybe something that would work better on a larger volume package (where resealability is more of an issue), and/or higher value (beer?) Coca-Cola in resealable 33cl can, Germany Cross-category application

Trencherman wine in 2 x 18.75cl pack of foil-sealed PET glasses, UK Convenience: on-the-go Ferrero’s Pocket Espresso to Go, 21ml “cups” of espresso coffee with an attached straw, Italy Trencherman wine in 2 x 18.75cl pack of foil-sealed PET glasses, UK

Pears with Ripe Sense indicator that changes colour, Canada Convenience: the role of technology Pears with Ripe Sense indicator that changes colour, Canada Morinaga’s Dars chocolate with thermochromic label to indicate when the chocolate is at the optimum temperature (22°C) for texture and flavour, Japan Top 2 use label technology that’s now well established, although we still see hardly any examples at all… ID 685228 Ripe Sense ID 775772 Dars Self-heating packaging has never really proved to be more than a novelty, and/or something v specialised for camping trips etc. The 2 products shown here are among the more recent ID 1012094 Hotbox ID 923442 Perkett’s coffee - most self-heating coffees have disappeared in less than 12 months, an exception is the Caldo Caldo line which has been around for a few years now in parts of Europe. Battery-powered: do these packs really offer a significant benefit to the consumer? And what about the environmental angle of having batteries to dispose of too? ID 905337 Spinlash ID 845721 Oust

Convenience = simple added value Pfizer’s Children's Benadryl Perfect Measure On-The-Go Allergy Relief, USA Secouettes seasonings in 25g steel packs with magnets, designed to stick to any metallic surface in the kitchen, France

Indulgence Consumers have a propensity to treat themselves, and to buy more high performance, luxury versions of everyday items Brands add indulgence values via packaging, as well as other routes

Indulgence: design elements Godiva biscuits, USA Dorset Cereals, UK Role of colour in premium packaging: Black (or very dark purple etc), gold, silver colours dominate - hundreds of potential examples so can switch to ones appropriate to a particular client White also commonly used to denote “pure” as well as “classy”! So premium packaging tends to be ornate and elaborate (jewels, gold/silver, embossing, ribbons, etc.), or verging on the minimalist - understated elegance e.g. using simple lines, single or little colour, minimalist design. Dorset breakfast cereals are undoubtedly premium and all are in packs of one main colour, often a natural/earthy colour to fit the brand ethos, with subtle silver lettering and windows for all-important transparency

Indulgence: premium package materials Carrefour Selection mini desserts in glasses, France Göttinger’s frozen chocolate mousse in a multi-layer board “tube”, Austria Generally speaking, much can be done to add value by switching from the “normal” package material, so glass pots not plastic for desserts, or terracotta ramekins not plastic ones, or a glass bottle for a homecare product, that’s good enough to put on display rather than hide in a cupboard. The conditioner bottom right goes the other way, in that the plastic bottle is designed to replicate glass and look very upmarket, without the cost and weight and safety issues that might come from using glass in a (wet) bathroom. The dessert product (ID 926114) is a frozen mousse sold in a spirally-wound composite container, topped with a layer of corrugated card to provide insulation and enhance the artisanal nature of the product.

Ethics and the environment Packaging plays a critical role in environmental concerns The role of packaging has tended to focus on the “green mantra” of reduce, reuse, recycle: Reduction of packaging materials - the largest focus area – important economic + environmental benefits Reuse of the package Recyclability, and the use of recycled materials Renewable materials have been a focus, but with limited impact The whole supply chain comes under pressure to consider carbon footprint labelling, but little evidence of activity yet

Environment: package reduction Sainsbury's milk in two-pint plastic pouches said to use 75% less plastic than bottles and designed to fit a reusable jug, UK Nature’s Path cereals, in boxes that are 10% smaller than the previous package, yet contain the same amount of cereal

Environment: switching materials Arniston Bay wine in a 1.5 litre pouch with an 80% lower carbon footprint and 90% less waste and landfill than two 750ml glass bottles, UK Nestlé NatureNes baby food in microwave polypropylene pots said to use 25% less greenhouse gases and energy consumption than a glass equivalent, France

Environment: reuse Kraft Foods’ Kool Aid Singles in a “refreshingly eco-friendly” reusable water bottle containing 10 stick packs, USA Plup spring water, Finland, in a 400ml refillable and reusable PE bottle

Environment: rethinking the package Pangea Organics’ skincare lines in card boxes embedded with flower seeds, to be planted after use to regrow the product’s active ingredients, USA

The role of packaging... Packaging needs to: Contain Protect Inform But it also needs to help sell the product, especially in today’s increasingly competitive retail environment And it has to be fit for local needs and conditions…

One brand, segmented to many options... Nestlé’s KitKat: Pop Choc balls in a 140g resealable pouch; Singles in a box of 6 x 15g flow-wrapped sticks (Canada); 155g flow-wrapped Tablet of 12 fingers; Editions in a 45g flow-wrap; carton of 16 individually-wrapped mini KitKats (Japan); 210g and 140g gift tins (China)

Local marketing: shape and size... Fanta in 1.25 litre contoured PET and 250ml spherical PET, Europe Coca-Cola in 1 litre single-serve PET, USA; Coca-Cola in 8oz (237ml) 100 calorie cans, USA; in 250ml PET “minis”, UK

On the go snack packaging On the left: premium on-the-go package for PepsiCo’s Cheetos Go Snacks in USA: resealable plastic pack of 71g at $1.29. On the right: value on-the-go package for Cheetos Go Shots in Mexico: flexible pack of 24g at $0.25

Breakfast on the go: Asia Maizhichu instant hot cereal in a 40g board cup with a plastic spoon, China; Crown Cup & Zle cereal in a 52g PP cup with a spoon included, South Korea; Uni-President’s Open cereal with apple flavoured milk, sold chilled in a 240ml cup, Taiwan

Breakfast on the go: Latin America Kellogg's All-Bran powdered cereal beverage mix, in single-cup stick packs of 25g each, Mexico

Breakfast on the go: USA Kellogg's Drink 'n Crunch in a Tip 'n Mix pack, including an inner plastic cup containing the cereal while milk can be added up to a fill line in the outer plastic cup; no spoons or bowls needed (USA)

Conclusions Focus on: Packaging that clearly communicates the product’s key attributes Packaging with improved visibility/transparency Reduced package sizes Functional design for ease of use by all consumers Alternative materials/technologies for stand-out appeal, and to enhance the enjoyment or use of the product

Opportunities Look elsewhere for inspiration Identify key focal points for main trends, and consider what they mean for packaging: Convenient, practical, simple Authentic, exclusive More natural Don’t underestimate the simple, don’t over-engineer innovation Simple = convenient Simple = inclusive Simple = eco-friendly

Think Outside the Category! Salty Snacks Salty Snacks Confectionery Chilled Desserts Sliced Meat Self-Tan Sauce

Email: djago@mintel.com Tel. +44-207-606-4533