Waqas Qureshi catches up with suppliers in the rigid plastics sector. Tax, trade rules and Covid-19 are all on the agenda as the sector looks ahead to 2022
THIS MONTH’S INDUSTRY EXPERTS
Describe how your company fared in 2021
Jean-Marc Galvez, Berry Global CPI: The global scale to access leading volumes of raw materials and utilise redundancy in manufacturing capabilities around the world allowed for Berry to adapt to changing demand surges that we experienced in a pandemic-influenced consumption trend. Therefore, throughout the year, we were able to respond quickly and effectively to meet our customers’ changing needs. Sally Molyneux, Klöckner Pentaplast (kp): It certainly wasn’t boring. Starting the year with Brexit and all its complications, in addition to the national lockdown, certainly tested the team. Through rigorous planning in 2020, we were able to ensure consistent supply despite the supply chain issues caused by Brexit. As a result of foodservice restrictions we saw increased volumes through the first half of the year with a volatility in demand mainly influenced by national challenges with labour, logistics, CO2, etc. Helene Roberts, Robinson: Despite a challenging year on many levels, we created a new strategy for sustainable growth, expanded our business in Europe and ensured continuity of service to our customers. Our markets, as in every sector, continued to be volatile and uncertain and like many businesses have been affected by significant external factors. The pandemic has driven many changes and, along with Brexit, caused labour shortages for both temporary and skilled workers. This was combined with almost unprecedented inflationary pressures across raw materials, labour and energy. Fluctuating demand from our customers as the pandemic, and to some extent Brexit related stocks, throughout the supply chain started to unwind. There was a significant decrease in new product development from our customers as they focused firmly on their supply chains. Simon Firth, Macpac: Having all the systems and procedures in place from the first lockdown, which were never lifted on site at Macpac, meant we just continued as normal during the second one in 2021. To this day we are still operating to the procedures, including mask wearing, even though public protocols have been relaxed. Simon Dix, Vetroplas Packaging: We feel very fortunate to have weathered the storm and maintained a good level of business throughout the Covid affected period. It appears that sales of cosmetics, toiletries and perfumes remained strong, with online purchases to the fore. Nigel Coates, LVF Packaging: Given the unusual circumstances in which we found ourselves operating we coped incredibly well; carrying on regardless despite the fact that the management team were split between on-site and home working. Jamie Gorman, Aegg Creative Packaging: Although providing packaging for airline meals understandably dropped, other areas of the business were buoyant. We saw an increase in demand from retailers for premium single serve dessert pots, as consumers were eating in more. Overall, business balanced itself out, as we were able to mitigate affected industry areas with more buoyant ones.
Jean-Marc Galvez: During 2021 we remained focused on our own long-term strategy for growth, in particular the ongoing development of innovative products to help our customers meet their sustainability goals. Sally Molyneux: Trading was good throughout 2021, with volumes reaching expectations. This was in our core area of protein, which saw strong sales across the year. Simon Firth: It was a positive year in terms of turnover and business growth despite a tough period of trading with increased overheads and material costs. Certain market sectors saw turnover drop due to Covid as it did in the previous lockdown, but then other market sectors saw increased turnover due to the pandemic. Online sales for customers became crucial. Simon Dix: Online sales of cosmetics will have driven a lot of business and we continued to supply our existing customer base. We added new customers wanting to break into the cosmetics sector. The timely addition of a new Spanish supply partner for decorated aluminium bottles a couple of years ago is proving very popular. Nigel Coates: On the whole I’d describe 2021 as a very satisfactory year. We didn’t quite hit our sales target but given the continued effect the pandemic was having on some of our foodservice customers, I’m not particularly surprised by that nor am I particularly concerned as all the indications are that growth in 2022 will more than make up for it. Jamie Gorman: Trading remained on track during 2021. Although some areas of the business dropped, such as packaging for hospitality and airline meals, other areas, such as retail, increased. Some of our customers diversified, teaming up with other food producers to offer ready-to-eat boxed up meals to sell into other channels. However, supply chain costs increased, including polymer, energy, and transport.
What’s your strategy for 2022? Jean-Marc Galvez: Over the past year we have invested in excess of £200m. The incorporation of post-consumer recycled material is a key factor in our design and technical solutions. Two major investments have focused on being able to source internally the highest quality material. Last year Berry Heanor, in Derbyshire, installed the first wash plant and recycling facility in the UK that is able to recycle both flexible and rigid plastics. We also announced the establishment of a second recycling facility with Berry Leamington Spa dedicated to post-consumer PP, which will increase Berry Global’s recycling capacity by a further 50,000 MT in the UK. Sally Molyneux: Our strategy for 2022 centres around the impending plastics tax in April, Scottish SUP ban in June and the EPR implementation in January 2023. We are working closely with our customers to ensure that they are ready and mitigating their exposure by offering 30% recycled content products across our trays, rigid film and flexible film portfolios. However, our portfolio of trays and rigid films in the UK already include up to 100% recycled content and have done for years. This year we are launching a new flexible lidding film with 30% recycled content, which has been certified by RecyClass. Helene Roberts: The substantial uncertainty and volatility experienced in 2021 is likely to continue through 2022, with further inflation in input costs anticipated. We will make the necessary change in our core operations and organisational structures, invest in our business to match market growth and continue to drive for more sustainable growth with our key customers. Simon Firth: 2022 will be a year for machine investment at Macpac. We have already placed an order for a new thermoforming machine which is due to arrive in Q3 of 2022. This will increase our production capacity and give us the capability to punch and die inline by having a second cut station fitted to the machine. Simon Dix: We are looking to add further resource to help with increasing admin work. Thankfully, it appears that things are opening up more and we need to be prepared for all new opportunities. Nigel Coates: Our aim for the year ahead is quite simply more of the same, for example continuing to consolidate the business’s place in the market by delivering excellent quality of product and customer service. We plan to invest in our most valuable asset, our staff. Jamie Gorman: We are expanding our logistics hub at Eye, Suffolk with further investment in our plastics packaging manufacturing capabilities to provide additional capacity for bespoke packaging, from initial design right through to production. We also continue to invest in an experienced workforce, warehousing, and transport fleet. Demand for plastic packaging is buoyant, especially with recycled content.
What are your customers currently demanding?
Jean-Marc Galvez: One essential factor is that packs remain fit for purpose. This is where the skills of both our design and technical teams are critical, for example reducing the weight of products or incorporating recycled material without affecting their functionality in any way. Another growing market sector is e-commerce. Here a major focus is on ensuring our solutions are as efficient as possible, while still providing the required levels of product protection and convenience. Sally Molyneux: Thanks to our kp Tray2Tray initiative, our plastic trays and rigid films can come back time and again as safe, protective, fully recyclable food packaging. As part of our Investing in Better Sustainability Strategy, we are committed to achieving 30% kp Tray2Tray content in all our products globally by 2025. Our goal is to revolutionise the recycling of food packaging, closing the loop and offering contingency of recycled PET. Helene Roberts: Trends from 2020 have continued with an increase in home cooking and healthy eating. The rise in personal care continues in hand wash sales as people maintain consciousness on hand hygiene. We have also seen the 2020 increase focus in homecare cleaning maintained with sales of those categories higher for example with bleach and surface cleaners. In 2021 we saw a decrease in new product development from our customers as they focused firmly on their supply chains. Rising online deliveries demand more lightweight yet higher strength solutions, providing longer product and food shelf life. Sustainable initiatives to reduce the use of plastics, increase recycled content and ensure recyclability for all packaging are at the forefront of our business priorities. Simon Firth: The main question we are being asked is that the material we supply must have 30% minimum recycled content. With the plastic tax on the horizon customers do not want to be caught out by this. RPET material we use contains well over 30% so we can assure all customers who use our rPET that this will not be an issue. Simon Dix: We are seeing a consistent demand for packaging offering sustainable solutions. Everyone is aware of the upcoming UK 2022 Plastic Packaging Tax and this is driving choice as far as those materials are concerned. Nigel Coates: Given the looming implementation of Extended Producer Responsibility (EPR) in January 2023, many of our customers who currently use PET with a laminated polyethylene sealing layer (PET/Pe) for their modified atmosphere packaging (MAP) are looking to move away from this material and into mono PET instead. Under the terms of the scheme, PET/Pe will be classed as non-recyclable and carry with it a liability of £1,000 per ton of packaging introduced to the waste stream by the end user; whereas correctly identified mono PET with a 30% recycled content will attract a liability of only £250 per ton. Jamie Gorman: With the April plastics tax coming into force, demand for packaging with at least 30% recycled content is high. As recycled PP has limited availability, some customers are working with us on light weighting their packaging instead, which reduces the weight and therefore both cost and tax liability of the packaging.
Have you launched any new pack formats, specifically products and strategies to address the UK Plastics Packaging Tax?
Jean-Marc Galvez: One of our most recent initiatives has been the launch of our B Circular range, which combines our design and engineering expertise to reduce products’ impact on the environment through the development of a circular range of standard products for the beauty, personal care, pharmaceutical, food, beverage, home care and industrial sectors. Sally Molyneux: 2021 was a great year for product launches at kp. Alongside our kp Tray2Tray offering, we have complimentary innovations such as kp Zapora. kp Zapora introduces innovative padless tray technology, cleverly designed to remove the need for absorbent pads for fresh cuts of meat. The special features in the base of the tray capture and retain liquid, which can easily be flushed out, with a ‘non-touch’ experience and helps encourage at home recycling of trays. Helene Roberts: We have commitments to reduce our virgin plastic use, use 30% recycled content, find solutions to use recycled plastics in packaging where existing legislation does not allow, and ensure all of our products are fully recyclable. We want to achieve this without creating any unintended consequences, such as increasing food or product waste. We joined forces with NEXTLOOPP to deliver, for the first time, a supply chain model to close the loop on food-grade rPP. We have had significant customer wins with sustainability credentials such as the 1-litre shower and bath bottle, increasing post-consumer recycled content from 25% to 50% and reducing plastic by 8%, and work continues to improve further this year. Simon Dix: Yes, we have a range of plastic bottles, jars and accessories containing 30% and more of recycled material, both post-consumer and post-industrial. Our tube factory partner can also offer the vast majority of its PE flexible tubes in recycled material with no price penalty compared with virgin material. Nigel Coates: Gravity Tray remains our headline new pack format. The tray features a reservoir in its base to collect the fluids that leak from meat or fish that would otherwise require the use of an old-style soaker pad as currently used by most packer processors. Given that the entire pack is produced from 100% mono PET, it attracts the very lowest EPR liability and so is generating great interest. Jamie Gorman: Our PET heritage and tulip pots are now available in rPET, which fits within the 30% recycled content of the Plastics Tax. Development work is underway to create additional rPET injection moulded products. We are also making big investments in new tooling to lightweight some of our PP packaging, including our tumblers, which will reduce the weight of each piece by up to 25-30%.
What are your expectations and message for the sector?
Jean-Marc Galvez: As the world continues to move towards a circular economy, plastics will be a key part of this and play a critical role in the potential of achieving net-zero greenhouse gas emissions. Berry is actively leading the plastics industry toward circular feedstocks that are either recycled or renewable, and away from fossil-based feedstocks. 2022 will be another important step on this journey. Sally Molyneux: As an industry we have demonstrated time and again our ability to rise to these challenges whilst putting the customer first. We should come into this year immensely proud of our contribution over the last 2 years with more exciting innovations towards sustainability coming soon. Helene Roberts: We need to embrace change, adapting to new ways of thinking and operating to make us more resilient in this ever-changing, extraordinary business landscape. Adaptation and resilience are keys to success for sustainable growth as we continue to strengthen our customer partnerships and provide opportunities for our people to thrive. The strategy we have in place is right – to focus on the customer, to drive sales, and to improve the capabilities of our people through training, recruitment and increasing diversity. Simon Firth: All manufacturers are facing volatility not seen for a long time with rising overheads and raw materials costs compounding the ongoing plastics debate. The industry needs to be flexible and adapt quickly to the ever-shifting landscape we are seeing. Simon Dix: Plastic packaging has a lot to offer. The industry is rightly addressing how plastic packaging is made, from recycled material content, to green sources such as sugar cane derived plastic. Proper disposal and recycling is also coming under the spotlight with improvements being made all the time. For these reasons, I feel optimistic about the continued use of plastic within our industry. Nigel Coates: It often seems the case that the more the odds stack up against we, the more we just knuckle down and get on with things. I hear people talking about when things get back to normal. I’m not really sure what normal is or will be anymore, but whatever it is let’s just embrace it. Jamie Gorman: The plastics tax may well have a destabilising effect on the rigids sector. However, we may see polymer prices starting to ease off (or even reduce) as the plastic tax kicks in. By keeping food fresher, resulting in less food waste; and increased recycled content and light weighting options available, rigid plastic packaging continues to be a viable solution with a growing ‘greener’ message
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