Two key factors driving priorities for CPG processing and packaging needs

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Two key factors driving priorities for CPG processing and packaging needs

30 Sep 2021

Joanie Spencer

Since 2008, Joanie Spencer has covered the retail and wholesale sides of the baking industry.
Serving associations such as the American Society of Baking (ASB) and BEMA, Joanie is also in demand as an industry presenter on bakery operations and trends. She holds a bachelor’s degree in communication from Rockhurst University and a master’s degree in journalism from the University of Missouri.

When she’s not running or playing soccer, Joanie spends her time with her husband and 11-year-old son.

LAS VEGAS — In the midst of the pandemic’s upheaval, perhaps no other aspect of manufacturing felt the impact more than consumer packaged goods (CPGs), and suppliers of packaging and processing technologies, as store shelves were depleted, especially in the bread and baked goods aisles.

At PACK EXPO Las Vegas, held Sept. 27-29, Jorge Izquierdo, VP of market development PMMI, which owns and organizes the show, outlined his findings on the impact in the association’s state of the industry report. Findings included insight of trends stemming from the changes that happened in 2020.

“Last year was a crazy year, especially for CPGs,” Izquierdo said. “It was run, run, run.”

However, out of the chaos came growth: Izquierdo noted that the US packaging and processing industry experienced a 14.4% increase over last year.

“That’s a record number in terms of growth,” he said. “Normally in a good year, we’re used to five to six percent. And many of our members are having record years. Last year ended with the biggest backlog I’ve seen since I’ve been tracking the industry, which is about 27 years.”

Izquierdo identified consumer behavior and labor shortages as the key factors driving packaging and processing growth in the food and beverage space.

“People were buying more and more products in supermarkets and consuming less in restaurants or at hotels and events,” he said. “The demand for packaged food products increased significantly. Demand, in general, was unbelievable.”

Although the shrinking workforce is not a new problem — it began about 10 years ago and picked up momentum in the past five years — the pandemic has exacerbated the problem.

“The past year has been unbelievable in terms of challenges for the workforce,” Izquierdo said. “There’s a level of investment in automation needed just to keep up productivity when you’re running with 60% of labor.”

In early 2020, PMMI polled CPG manufacturers on their biggest priorities, and the pre-pandemic results included things like flexibility for changeovers. By mid-year, the priority had shifted to the health and safety of workers and maintaining operational productivity.

“The past year has been unbelievable in terms of challenges for the workforce,” Izquierdo said. “There’s a level of investment in automation needed just to keep up productivity when you’re running with 60% of labor.”

Today, the top priority for CPG companies is workforce, followed by automation and with productivity in third place.

“When we talk about workforce, we know it’s here to say,” Izquierdo said.

In addition to workforce challenges, automation, productivity, growth and supply chain rounded out the top five priorities for CPGs in 2021.

“These priorities will continue for the foreseeable future, framing an environment for accelerated investment in packaging and processing technology,” Izquierdo said.

As the needs continue, PMMI predicted that packaging machinery shipments could reach $12.8 billion in 2026, growing at a CAGR of 5.2%.

PACK EXPO attendance accurately represented the research showing that CPG companies are actively seeking automation solutions. Registrations surpassed 22,000 on opening day.

“Now more than ever, it is critical for companies to keep up with the new innovations in our industry,” said Jim Pittas, PMMI president and CEO.

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