Manufacturers and the packaging industry are now confronted with issues that go far beyond how to preserve food, establish a brand and take market share, as Yvette Murphy reports. Dramatic changes in the retail environment have wrought an equally big transformation in the range of products available and their presence on the shelves. And over the last decade in particular, the consumer has moved from being an almost passive observer to being the driver of innovation. While food packaging has long been required to protect, preserve and of course, promote, the environmental pressure of waste reduction has been added to the list of requirements it has to satisfy. Lifestyles dictate that these considerations must be continually addressed and updated through the interaction of preserving methods and packaging that salves the collective environmental conscience. But packaging is required to achieve more besides preservation and protection - it must differentiate a product on-shelf as well as communicate inherent product characteristics to consumers. According to chief packaging consultant at Pira International, David Shires, judging by the briefs they receive from clients, this requirement is not purely graphics led. "It is directly related to packaging technology and the creation of new types of packaging, using new materials," he explains. "Take widget technology and the revolution in canned beer - the marketing benefits are clear. What Guinness started, others have adopted in droves. The unit cost of cans with widgets is significantly higher than other cans, and the strength of cans is critical in distribution performance." But the technology has provided an opportunity for premium-priced line extensions, he says. For Guinness, who initiated it, there is an opportunity to reaffirm brand values in the retail market and increase share. "Effective packaging research can help to identify these types of opportunities, and the benefit of such overt product differentiation cannot be underestimated," says Shires. At the other end of the spectrum, ongoing research can directly reduce the cost of packaging, and overcome any tendency for manufacturers to overpackage for protective purposes. This is seen as particularly relevant now, in light of increases in raw material costs after a long period of remaining static. "These increases must be viewed in the context of the increased requirement of packaging to be multi-functional," suggests Pira's packaging technology manager Ben Parsons. "Investment is critical to retain competitive advantage. The consumer makes judgements about the product on the basis on the practicality of the packaging, its design and its environmental characteristics." However, James Jensen, director general of the Packaging Federation, puts it rather differently. "Faced with the most volatile period in raw materials prices for many years," he says, "the packaging manufacturers' margins have been squeezed by their inability, in many cases, to recoup the cost of such increases from their principal customers. "Although it is a highly fragmented industry, with too many operators claiming very small market shares, packaging companies are faced with customers who have increased their buying power and are generally more powerful than the converters. As a result, the industry's profitability, traditionally not robust, has been further eroded." While Jensen admits that the packaging producers - plastics, paper, board, metal and glass - have made "significant strides in the more efficient use of raw materials through minimalisation, and in forming longer term partnerships with a core of key customers", he is also quick to point out that imported packaging, particularly from countries with low labour costs, has provided strong competition. Yet another factor has entered the cost/price equation with legislative moves within the UK to meet the packaging recovery targets laid down in the EU's Directive on Packaging & Packaging Waste. The industry is waiting for the government's proposed regulations, following agreement between packaging suppliers and John Gummer in late 1995 on a shared approach to producer responsibility. However, not everyone sees it as harmonious. "In the middle of 1995," explains David Eggleston, environment manager for Linpac Plastics, "the packaging industry was in complete harmony on the preferred way forward to meet recycling targets in the EU directive. Governmental intransigence shattered that fragile consensus and divided the packaging industry as never before." There has also been some hesitancy at some stages of the chain, and caution on the part of the retailers, many of whom have asked why they should shoulder the responsibility for, and the costs of, recycling. "It is particularly disappointing that the major food retailers chose not to work with their partners in the packaging chain within the framework of V-WRAG (see panel on page 47)," says Eggleston. "This gave the impression to some that the retailers were not prepared to acknowledge that they had to share the responsibility for managing the challenge of packaging waste. "Linpac Plastics has invested millions of pounds in building and operating recycling plants and in supporting programmes which are collecting used packaging. "If the entire packaging chain had matched this commitment, the recycling targets for 2001 would have been met already." From Jensen's point of view, the current more unified approach is expected to lead to a greater "division of labour", and a national scheme for funding the recovery and recycling programmes will be introduced. He points out that while this will lead to higher consumer prices for packaged goods, "companies supporting the shared approach are clearly committed to the principle that costs will be passed down the chain and on to the ultimate consumer". "The precise impact on costs of recycling legislation will not be apparent for some time," he continues, "but it is likely to have growing significance in the overall cost of packaging materials, and provide an additional inflationary input. The Packaging Federation will continue to press for the industry's best interests to be safeguarded." Meanwhile, at centre stage, new products in new packaging continue to launched at an impressive rate. One of the most interesting packs, for its category, to be introduced recently was Carte Noir coffee from Kraft Jacobs Suchard. Obviously aimed at the premium end of the market - an rsp of about 32p higher than brand leader Nescafé Gold Blend confirms this - the dark packs are intended to impart an upmarket, sophisticated feel. The effect is achieved with use of decorative sleeves, produced by a company called, unsurprisingly, Decorative Sleeves. The 50 micron PET sleeve labels are applied on an integrated line at sister company Mailway Packaging Solutions. "This product in particular placed great demand on our packaging suppliers," says KJS senior product manager Maria Surricchio. "The high quality that has been achieved is due to the enormous amount of effort from everyone involved." But are consumers really swayed by what type of pack a product is in? According to Alex von Behr, general manager of Terry's Suchard, they are. In the case of Toblerone, which has been around for a long time, "it is an innately interesting chocolate - add the packs and you've got a perfect gift". "One of the fundamental issues about packaging, from a gifting point of view, is that you need to do a bit with it and be prepared to invest. We are putting Toblerone back on television after 20 years and part of the promotion underway for the brand includes new sleeves. Designed for 'occasions', the sleeves are personalised, cueing the gifting opportunity. People also enjoy the interaction with the pack. "The on-pack design hasn't changed over years, but it is 'tweaked' a little every so often. Our research indicates that people want it to stay the way it is. It is very distinctive. Stacking isn't an issue with Toblerone either - as long as the shelf has a ledge, the bars will stack up no problem." Another area of packaging that's considered very important is the brand identity conveyed by the colour. As Robert Moberly from design consultancy Lewis Moberly points out on page 48, "the red wall of Heinz and the purple of Cadbury are all impossible for consumers to miss". Block colour is something Terry's aims for with Chocolate Orange. When the boxes are block stacked, it becomes evident that they were intended to be this way as the design continues neatly across the front of the boxes. "We portray 'appetite appeal' on the packs," says von Behr. "This is primarily through the colour, which is bright and appetising. The green and orange are lush, the colours of vegetation, while the blue is strong, and contrasts well with them. We are taking the theme through the range. Our latest launch, Siesta, is a flow-wrapped chocolate bar countline. This is quite different because countlines are basic packaging ideas. To make it more interesting, more fun, we have introduced a small easy-peel tab on the back of the bar which features an orange, encouraging consumers to peel it. "The bar itself has thicker chocolate in the shape of an orange segment on top to keep the theme consistent, and this consistency is evident throughout the whole range, from the 'parent' orange to truffles, the bar, mini oranges, Easter eggs and Siesta. "We are identified with chocolate orange, and part of the reason is that there is so little orange-flavoured chocolate around otherwise. The orange pack and the chocolate in the middle are inextricably bound." But it doesn't come cheap. Taking outlay on packaging as part of the overall marketing strategy and budget, von Behr says that Terry's is spending "a substantial amount" of the £15 million total marketing budget allowed across its confectionery range this year. On average £2 to £3 million is being spent on each brand - Terry's Chocolate Orange, Toblerone, Dime, Twilight and All Gold. Two more of the most commonly heard words at the moment when it comes to packaging are openability and reclosability. Polypropylene tubs produced by RPC Containers Blackburn for Del Monte Fresh Produce's selection are claimed to answer both of these. As well as effective presentation for its fresh pineapple chunks, on sale through leading retailers, marketing manager Dickon Poole says they are "well produced quality packs that do not leak". He went on: "Equally important, this quality allows the tubs to be re-used by the consumer, an added bonus. Another valuable benefit is their tamper-evident lid, which is necessary given the fact that product integrity and security will always be an issue now in food markets." Other clever uses of packaging can offer manufacturers additional promotional opportunities. With aluminium, for example, Continental Can Europe has developed "dummy end" cans which allow manufacturers to offer instant prizes. "The can appears identical to a conventional can," says marketing manager Rob Miles. "But it contains a false panel at one end which comes away to reveal the prize when the consumer tries to open it." Smithkline Beecham was one of the first companies to use the dummy end for its Lucozade Sport "Be There" promotion. The winning cans contained holiday vouchers for sporting events around the world, as well as a number of cash prizes. "We particularly liked this new concept from Continental Can," commented a Lucozade spokesperson. "It adds an innovative and different dimension to on-pack can promotions." Some other new packaging ideas, not yet available on this side of the ocean, were unveiled at the Leatherhead Food RA's International New Products Forum held at the end of January (The Grocer, February 3). Paradise Mountain Coffee came in a diamond cut tulc can from Japan's Sapporo Breweries. The "tulc" can is a low pollutant that doesn't require washing during manufacture, and is produced with indentations that lend an overall "jewelled" effect which manufacturer Toyo Seikan says are simply designed to strengthen the can. A new PET bottle also comes from Japan. Produced by Adam and Eve International and natural mineral water producers, Kinei Mineral Water Service for its bottled mineral water, Spec, the bottle is designed to interlock vertically and laterally. This means, says Kinei Mineral Water Service, that the space necessary for storage and transportation is reduced by up to 30%.