Price Premium for Sustainable Packaging?

According to a survey by management consultancy Inverto, the majority of consumers are willing to dig deeper into their pockets for more sustainable packaging. However, the consultancy’s study also shows which obstacles still stand in the way of more sustainable packaging.

Sustainable solutions are becoming increasingly important for retailers, consumer goods manufacturers and packaging producers. After all, numerous consumers now view conventional packaging critically. As part of a study, the management consultancy Inverto, a subsidiary of the Boston Consulting Group specializing in purchasing and supply chain management, got to the bottom of the readiness for more sustainability in packaging – among retailers and manufacturers as well as consumers.

First, among retailers and manufacturers: for half of all respondents and even three quarters of packaging manufacturers, sustainable packaging is already very important today. 86 percent assume that demand will continue to rise in the coming years. Currently, most of the participants in the study put the proportion of sustainable packaging in their company at a maximum of 25 percent. According to the survey, at least half of all goods will be packaged sustainably in five years’ time.

High complexity and conflicting goals

However, more than half of the study participants complain about the high complexity of the topic. As Inverto points out, it is not clear, for example, when packaging deserves to be called sustainable. Also, sustainability goals do not always go hand in hand. For example, reusable bottles conserve resources but cause a lot of CO2 emissions when they are transported over hundreds of kilometres. Paper and cardboard are made from renewable raw materials and are easy to recycle. However, if cardboard packaging is coated, for example to make it waterproof, the non-recyclable plastic film remains and has to be incinerated.

For companies operating internationally, the challenge is made even more difficult by different legal requirements. Only 75 percent of packaging manufacturers are confident they have an overview of all available sustainable solutions, and the figures for retailers and consumer goods manufacturers are even lower than 50 percent. According to Inverto, however, this could also be due to the fact that around two-thirds of respondents have limited know-how and capacities in their purchasing departments. Half of the participants sometimes have problems obtaining sufficient raw materials for sustainable packaging.

Who bears the additional costs?

Sustainable packaging is very often more expensive than conventional packaging. According to the study, opinions differ on the question of whether consumers are prepared to bear these additional costs: 50 percent of the company experts surveyed do not think so, while 46 percent are confident that they can pass on at least part of the costs. According to a short representative survey of consumers commissioned by Inverto, however, many consumers are quite prepared to bear additional costs for sustainable packaging. According to the survey, 72 percent of respondents would accept a price surcharge of at least 10 percent. For just under 30 percent, an increase of over 20 percent would be acceptable.

Of the participants under the age of 30, only 11 percent generally reject a price surcharge, while among the age group between 30 and 49, 27 percent do so, and among respondents over 50, as many as 37 percent are not prepared to pay more for sustainable packaging than for conventional packaging.

Defining goals and creating transparency

Companies that want to switch to sustainable packaging or increase its share are advised by Inverto to first define focal points and get an overview of the market. Depending on whether the focus should be on renewable raw materials, recyclability or carbon footprint, the packaging solution will look different. In addition to material costs, cost calculations should also take into account additional expenses arising from new machinery or changes in production speed, for example.

In any case, the time is ripe: “Those who invest now will secure competitive advantages and an enhanced image in the future. In addition, the prices for conventional packaging will continue to go up due to the planned taxes and duties,” Rudolf Trettenbrein, Managing Director of Inverto, is convinced. “So, in the long term, sustainability pays off.”

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