Key Growth Drivers in the Packaging Industry for 2024

Sustainability initiatives driving packaging growth

Sustainability initiatives are significantly driving growth in the packaging industry, as companies like Sonoco and Graphic Packaging emphasize their investments in sustainable solutions. Rising customer demand for circular and functional packaging is creating new market opportunities, positioning these firms to capitalize on this trend effectively.

"We also continue to invest strategic capital and innovation to support organic growth and sustainability initiatives. At the recent environmental packaging live event, we" --- (SON, earning call, 2024/Q2)

"Our customers' interest in and commitment to packaging that's more circular, more functional, and more convenient continues to rise, and the investments we have made to be the global innovation leader in sustainable consumer packaging are paying off." --- (GPK, earning call, 2024/Q2)

"As customer demand for sustainable packaging continues to grow, we will be well positioned to capture this increased market opportunity. And now I'll turn the call over to Andy Silvernail." --- (IP, event transcript, 2024/04/16)

"So the investments we're making, driving sustainable packaging across Europe and paper, investing in stacked chip capacity outside of North America is performing exactly as expected." --- (SON, earning call, 2024/Q2)

"The decrease in Net Sales is partially offset by innovation sales growth driven by conversions to our sustainable consumer packaging solutions and favorable foreign currency exchange." --- (GPK, sec filing, 2024/Q1)

Technological innovations and smart packaging solutions

Technological innovations and smart packaging solutions are pivotal for growth in the packaging industry. Companies are leveraging data to enhance sustainability, integrating advanced technologies for efficiency, and continuously improving processes to meet evolving consumer demands. This focus on innovation is driving significant opportunities in the market.

"The global consumer packaged goods (CPG) market will witness growth opportunities owing to the rising rate of innovation in terms of packaging solutions." --- (PKG, press release, 2024/07/17)

"All that info helps the model predict the more sustainable packaging to use while still protecting the items." --- (AMZN, Twitter, 2024/04/22)

"Cartoners from our sister company, ESS Technologies, are designed for pharmaceuticals, nutraceuticals, and cosmetics and integrate easily with automatic case packers for a complete end-of-line packaging solution." --- (PKG, Twitter, 2024/04/16)

"We seek to invest efficiently in numerous areas of technology and infrastructure so we may continue to enhance the customer experience and improve our process efficiency through rapid technology developments, while operating at an ever increasing scale." --- (AMZN, sec filing, 2024/Q2)

"And so this technology, the engineering group is not only working on capital investments, but they're working on process efficiency, process improvement on a real-time 24/7 basis, and that will never end." --- (PKG, earning call, 2024/Q1)

E-commerce growth and changing consumer behavior

E-commerce growth is a primary driver for the packaging industry in 2024, with companies like FedEx and UPS noting significant increases in demand and revenue linked to online consumer spending. Walmart also highlights a shift in customer behavior towards e-commerce, emphasizing its impact on business dynamics.

"And in the age of e commerce, make sure that the end consumer gets the value by getting increasing predictability and reliability." --- (FDX, conference, 2024/05/29)

"We expect revenue growth to continue in the second half of 2024, with anticipated increases in e-commerce demand driving higher volumes and rates." --- (UPS, sec filing, 2024/Q2)

"But when the e commerce opportunity for us is growing at 20% year on year consistently, we're just seeing a lot more customers that are coming to us in a manner that they haven't historically, where maybe historically we were more of a brick and mortar business." --- (WMT, conference, 2024/06/12)

"A vast majority of growth in the parcel market is now driven by e commerce." --- (FDX, conference, 2024/05/29)

"Business-to-consumer volume increased 4.8% in the quarter (up 1.6% year to date), due primarily to the addition of e-commerce customers noted above and stronger online consumer spending." --- (UPS, sec filing, 2024/Q2)

Regulatory impacts on packaging industry growth

Regulatory impacts on the packaging industry are significant, with companies like PCA and GPK highlighting how legislative requirements, particularly around environmental matters, can affect costs and operational strategies. The shift towards recycling and sustainability is also influencing market dynamics and trade flows, emphasizing the need for adaptability in regulatory environments.

"Among the factors that could cause plans, actions and results to differ materially from PCA's current expectations include the following: the impact of general economic conditions; conditions in the paper and packaging industries, including competition, product demand and product pricing; fluctuations in wood fiber and recycled fiber costs; fluctuations in purchased energy costs; the possibility of unplanned outages or interruptions at our principal facilities; and legislative or regulatory requirements, particularly concerning environmental matters, as well as those identified under Item 1A." --- (PKG, press release, 2024/07/23)

"These risks and uncertainties include, but are not limited to, inflation of and volatility in raw material and energy costs, continuing pressure for lower cost products, the Company's ability to implement its business strategies, including productivity initiatives, cost reduction plans, as well as the Company's debt level, currency movements and other risks of conducting business internationally and the impact of regulatory and litigation matters, including the continued availability of the Company's U.S. federal income tax attributes to offset U.S. federal income taxes and the timing related to the Company's future U.S. federal income tax payments." --- (GPK, press release, 2024/07/30)

"Adjusted for the impact of recycling and reclassification, industrial sales would have increased 7%." --- (SON, earning call, 2024/Q2)

"But just to the extent that it impacts kind of maybe global trade flows or implied values of virgin assets here in the U.S. do you see that putting maybe incremental upward tension on OCC over time as people look to use more in their furnish, or does that not even come into your thought process because you're focused on the U.S. Mark Kowlzan: I'm very familiar with what you're talking about." --- (PKG, earning call, 2024/Q2)

"while many businesses, the competitors may need to have a higher proportion of higher cost recycled fibers, our ability to take a more cross section of recycled fibers into our mix, if you will, is actually better than most, which actually keeps some of the cost pressures that you're talking about a little more minimized, but nothing that I would point to specifically there." --- (GPK, conference, 2024/06/11)

Market expansion strategies in packaging

Market expansion strategies in the packaging industry for 2024 focus on strategic acquisitions, innovation, and targeting high-demand sectors. Companies like Sonoco and Graphic Packaging emphasize enhancing their competitive edge through acquisitions and operational density, while also adapting to market shifts to capitalize on growth opportunities.

"Let me recap the benefits of the transactions. As you've heard today, this is an exciting milestone for Sunoco and the expansion of our metal packaging platform. With Ediosis, we will be the global leader in metal food can and aerosol packaging a significant scale and enhance our competitive advantage in one of our large and important core businesses." --- (SON, event transcript, 2024/06/24)

"From that standpoint, it really shows why the acquisition of ANR and the subsequent scaling out of our innovation activities in Europe is so important to our business because we get those trends, we see them early, we capitalize on them, and then ultimately, we're able to move them around the globe to other areas where we have operations, including our largest market in North America." --- (GPK, earning call, 2024/Q2)

"And so we think the innovation component as well as the density of packaging plants to offer to customers in multiple regions will definitely help our business." --- (IP, event transcript, 2024/04/16)

"Small, but it fits that strategy to find a vein and a big market that you can be successful in. Okay. I guess, dial back a little bit to" --- (SON, conference, 2024/06/11)

"Lower packaging sales in food and household markets were partially offset by higher packaging sales in foodservice and beverage markets. Income from Operations" --- (GPK, sec filing, 2024/Q1)

Global supply chain challenges affecting packaging

Global supply chain challenges in 2024 are influenced by economic uncertainty, inflation, and geopolitical tensions, as noted by FedEx. However, companies like Target and UPS report improvements in their upstream supply chains, indicating potential resilience amidst these challenges. Walmart's advancements in fulfillment also aim to streamline operations, indirectly addressing supply chain issues.

"The uncertainty of a slowing global economy, global inflation, geopolitical challenges including the ongoing conflicts between Russia and Ukraine and in the Middle East, and the effect these factors will have on the rate of growth of global trade, supply chains, fuel prices, and our business in particular, make any expectations for 2025 inherently less certain. See “Item 1A. Risk Factors” for more information." --- (FDX, sec filing, 2024/Q4)

"A critical factor supporting our reliability is the upstream supply chain where we've been seeing improvements as well." --- (TGT, earning call, 2025/Q1)

"The changes were primarily driven by: • Supply Chain Solutions expense increased $64 million for the second quarter, driven by growth in healthcare logistics and the impact of the acquisition of MNX Global Logistics, as well as volume growth in our digital businesses." --- (UPS, sec filing, 2024/Q2)

"Unboxing New Fulfillment Solutions Walmart continues to leverage its next-generation supply chain and advanced technology to simplify and streamline fulfillment for sellers at some of the lowest rates in the industry." --- (WMT, press release, 2024/08/27)

"How is FedEx positioned in the marketplace to capitalize on that or uniquely benefit from the increasing volatility that seems to be affecting the global supply chain?" --- (FDX, conference, 2024/05/29)

Emerging markets and their packaging opportunities

Emerging markets present significant packaging opportunities, as companies like Sonoco and International Paper emphasize strategic growth in regions like Thailand and North Africa. Focusing on local demand and innovation is crucial for capturing these opportunities, driving profitability and market leadership.

"I guess, Thailand is just now starting up. But other wins that they've seen in the European market with a strategic mindset and focus towards the business." --- (SON, event transcript, 2024/06/24)

"And I guess you're asking about European by country. So international paper, and again, it was maybe hard to see, but on the map that Andy covered on his slide, you can see we're basically focused in the Iberian Peninsula. We have a market leading position in North Africa and Morocco." --- (IP, event transcript, 2024/04/16)

"But that's how we're thinking about it. And of course, we're quite aggressive on trying to make sure that we're capturing all those innovation opportunities that we see out there, and we continue to stay very focused on our ability to do so." --- (GPK, earning call, 2024/Q2)

"It's hard to track specifically some of the codes and importexport data, but it looks like there's some imported filled food cans making their way into the U. S. And on one hand, I think it's probably intended to maybe divert away from some of the import tariffs around template potentially to make it more affordable on the shelf." --- (SON, conference, 2024/06/11)

"It's improving faster right now than the national business, and we know that when you have the capability to match the local demand, it is much more profitable than the national." --- (IP, earning call, 2024/Q1)

Circular economy trends in packaging

The packaging industry is increasingly embracing circular economy principles, as highlighted by companies like DS Smith, Graphic Packaging, and Sonoco. They are committed to innovative recycling solutions, renewable materials, and sustainable practices, aiming to reduce carbon footprints and enhance circularity in packaging solutions.

"Through its purpose of 'Redefining Packaging for a Changing World' and its Now and Next sustainability strategy, DS Smith is committed to leading the transition to the circular economy, while delivering more circular solutions for its customers and wider society – replacing problem plastics, taking carbon out of supply chains, and providing innovative recycling solutions." --- (DS Smith, press release, 2024/04/16)

"The Company is organized to bring the full resources of its global and local innovation, design, and manufacturing capabilities to all of its customers, with the goal of delivering packaging solutions that are more circular, more functional, and more convenient." --- (GPK, sec filing, 2024/Q1)

"With the ISCC PLUS designation, this product line will continue expanding Sonoco's reach and provide access to innovative packaging solutions that are linked to circular materials." --- (SON, press release, 2024/05/13)

""Guided by Vision 2030, our sustainability framework, IP has continuously worked alongside customers and strategic partners to become a leader in renewable fiber-based solutions and to help facilitate a low carbon, circular economy," said Sophie Beckham, Vice President and Chief Sustainability Officer, International Paper." --- (IP, press release, 2024/05/16)

"With this focus, the Company plays an active role in support of the move to a more circular economy and a sustainable future for generations to come." --- (GPK, sec filing, 2024/Q1)