Behavior Change
Consumers Want More Sustainable Packaging But Struggle to Identify It

With the world’s landfills and waterways littered with plastic waste, packaging companies are under growing scrutiny from regulators and consumers to develop more circular solutions.

According to Bain & Company's inaugural Global Paper & Packaging Report, 71 percent of European consumers claim they want to buy sustainable products, and the same percentage of US consumers claim they want to buy products with as little packaging as possible. But while consumers are increasingly concerned, many struggle to identify sustainable packaging: For instance, when presented with single-use plastic vs single-use glass packaging, 75 percent of respondents did not know or chose glass as the product with the lower carbon footprint; only 12 percent correctly guessed it was plastic.

And while most consumer product companies have publicly announced sustainability commitments, many brand owners still do not have a clear view on which packaging materials they prefer across different applications.

"Gone are the days when paper and packaging decisions were made based solely on cost, functionality and consumer experience," said Ilkka Leppävuori, global head of Bain & Company's Packaging group. "Sustainability is now top of mind for everyone. However, when it comes to picking a packaging material — from paper to plastic to metal to glass — there's no clear winner. Paper may have an edge, but the most sustainable option can vary greatly by application and geography. Leading companies are assessing the environmental impact of different materials and taking the full life cycle into account — from resource extraction and production to transportation and products' end of life."

Bain's study reveals the hard choices the sector must make in choosing between materials, each with its benefits and tradeoffs from a sustainability standpoint. For example, while flexible plastics score best on production and transport-related carbon emissions, they are the least circular or biodegradable.

Hurdles to widespread adoption

Many fast-moving consumer goods (FMCG) companies are reimagining their packaging to achieve circularity targets while reducing greenhouse gas (GHG) emissions. But even when they invest in innovations for recyclable packaging, for example, companies often find themselves at the mercy of inadequate recycling and waste-management systems across various markets. In addition to dealing with broad variations in infrastructure and legislation in different countries, companies must plot their packaging roadmap amid the uncertain path of technology advances in everything from materials to recycling — as well as unpredictable consumer acceptance of different solutions, especially new business models. And success requires thoughtful coordination and cooperation with multiple stakeholders across the system — including suppliers, retailers, industry groups and governments.

Despite these roadblocks, sustainability continues to grow as a focal point. Today, 45 percent of the world’s emissions come from making products and consuming them; and the top 10 sources of consumer plastic litter are all from consumer products. The stakes keep rising as FMCG companies target growth in the developing markets that represent the lion’s share of unmanaged waste. In developed markets, it is critical for companies to use more recycled content and to adhere to their sustainability targets.

How is consumer behavior changing?

Bain’s analysis finds that FMCG companies that make the biggest strides toward packaging circularity will invest to understand the trajectory of five fundamentals at play:

• benchmarks and best practices;

• legislation;

• infrastructure;

• consumers and retailers; and

• technology.

On the consumer front, companies need to clearly understand the role that consumers and retailers play in accepting and leading change. Consumers are increasingly aware of sustainability challenges and say they are more willing to act; and avoiding excessive packaging is the action that they say they are most able and willing to take. Nearly a quarter of US consumers can be classified as “conscious consumers,” meaning that they are actively concerned about climate change and environmental sustainability is a key purchasing criterion for them. On the other hand, the US has 32 percent of “conscious non-consumers,” meaning that they express concern about climate change and have several environmentally friendly lifestyle habits but do not buy eco-friendly-branded products.

But a number of important issues continue to prevent consumer behavior change. Although awareness is increasing, many consumers are still confused about what makes a product sustainable and what to do with it after use; they aren’t fully confident in their ability to change their behavior or make an impact and are not always correct when choosing the most sustainable solution (i.e., the glass vs plastic misconception).

How can retailers help?

There’s also the convenience factor — adopting more sustainable practices requires greater effort from consumers. Retailers can make it easier for shoppers to identify sustainable products on the shelf through labeling, for example, and make sustainable options available when consumers are deciding which product to buy for each category (vs separated/dedicated shelf space, for example).

Finally, while many consumers say they would pay a premium for sustainable products and brands, some perceive them as being too expensive. Even of those consumers who say they are willing to pay extra for sustainable products, roughly half will only pay a minimal amount; sustainable solutions are often still much more expensive than the premium conscious consumers are willing to pay.

There is also still a gap between consumers’ expectations and available sustainable options. In general, for FMCG companies to deliver on circularity targets, more consumers will need to make trade-offs by trying new packaging presentations or sensory experiences — everything from concentrated solutions in cleaning, for example, to powders and solid bars in toiletries. They’ll also need to participate in reuse, waste-sorting and reverse-logistics programs, where retailers can have a critical role to play and allow for real circularity.

Importantly, however, packaging can play a key role in positioning a brand as sustainable. When asked to rank elements of sustainability they consider when purchasing products, shoppers ranked sustainable packaging as the second most important element, ahead of the product contributing to animal welfare, being organic or having a low carbon footprint.

Meanwhile, although retailers are at different stages of maturity, their overall level of engagement on sustainability issues is increasing: Bain’s study across 40 global retailers found that nearly three-quarters of them included a sustainability pillar in their corporate strategy. Retailers are also putting significant pressure on brands to use recyclable packaging or packaging with recycled content: Last year, Target launched Target Zero — a collection of products and packaging designed to be refillable, reusable or compostable; made from recycled content; or made from materials that reduce the use of plastic — in response to consumer demand for products with less packaging waste; and UK supermarket giant Tesco has said it will no longer carry brands that use excessive or nonrecyclable plastic packaging.

The moral of the story is, retailers will continue to refine what they find acceptable in packaging ingredients and will redefine shelf space allocation to answer consumer demand for more sustainable packaging solutions — and it’s up to consumer goods companies to continue to innovate to keep pace.