Paper and board packaging has seen its share of the food packaging market rise from 48% in 2017 to 50% and now represents the largest sector. With plastic packaging coming under increased scrutiny, this has benefited paper and board packaging as the material is seen as an obvious natural and sustainable substitute for plastic food packaging.

COVID-19 resulted in plummeting demand for packaging in the hospitality sector, but this was partly offset by a shift to in-home consumption and a surge in demand from food and drink into retail. While the pandemic has shifted demand and disrupted supply chains, the food and drink packaging market has shown resilience.

Sustainability and plastic replacement have become a major focus for retailers and food and drink manufacturers, with many working towards packaging sustainability targets by 2025. Government regulations are also becoming more stringent, with a new tax on plastic packaging with less than 30% recycled plastic to be introduced in April 2022. Thus plastic packaging is set to further lose market share to alternative materials over the coming years.

The rise in grocery ecommerce is set to increase demand for smart packaging, with an increased focus on any technologies that will improve security, transparency and traceability in the supply chain. By embedding digital capabilities in product packaging, brands will also be able to push more information to customers to enhance brand engagement. Intelligent packaging can also lead to improved efficiencies in the supply chain via communication and item-level tracking of products in the factory, through logistics, and distribution.

Key issues covered in this Report

  • The impact of COVID-19 on the UK food and drink packaging market

  • How the increased focus on sustainability is driving innovation across the food and drink packaging sector

  • Key market drivers for food and drink packaging

  • How the market is expected to develop over the next five years

COVID-19: Market context

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. As the case level rose, the government ordered the closure of non-essential stores on 20 March. 

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. It wasn't until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a full month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions. 

On 2 December 2020, England moved into a new three-tier system of COVID-19 restrictions, with most areas classified as Tier 2 or Tier 3. Hospitality businesses in Tier 3 are only allowed to offer takeaways, while those in Tier 2 are only able to serve alcohol with “substantial meals”. Employees across the country are encouraged to remain working from home where possible until at least March 2021.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP will have fallen by 11.3% in 2020, recovering by 5.5% in 2021, and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until the fourth quarter of 2022. The central scenario has unemployment peaking at 7.5% in Q2 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

From the start of the outbreak, we have made the assumption that an effective vaccine would not be widely available until well into 2021. On 9 November, Pfizer and BioNTech announced highly encouraging results from trials of their vaccine, followed by similarly positive results from Monderna. This means that a vaccination programme may be brought forward, but a full rollout will take many months, meaning that Mintel is still making the assumption that we will be living with COVID for some time to come.

Covered in this Report

For the purpose of this Report, food and drink packaging includes the following: paper and board, plastic glass and light metal packaging.

The paper and board packaging market includes a number of products:

  • folding cartons, used in a wide variety of market sectors including food, drink, tobacco, soaps, detergents, groceries, toiletries, footwear, cosmetics and pharmaceuticals

  • liquid cartons, consisting of laminated paper, plastic-coated board or aluminium foil-coated board

  • fibreboard, used for containers for both long-life storage, such as engineering components, or in corrugated form for short-life uses

  • solid cases and boxes, manufactured from glued or stitched fibreboard and used for either storage or presentation

  • corrugated cases and boxes

  • fibreboard drums

  • packaging paper

  • multi-walled sacks, used in the packaging of vegetables and dry products such as cement and agricultural chemicals

  • paper and packaging bags

  • moulded paper packaging, such as egg boxes and fast food trays

  • rigid paper boxes, used in the tobacco sector and for high quality confectionery and giftware products

Glass packaging consists of container ware used for the packaging of liquids, semi-solids, grains, granules and powders. The sector includes bottles, jars and flaconnage, consisting of small bottles for pharmaceutical, perfume and cosmetic uses. However, the main end use for glass packaging remains the food and drink sector.

Light metal packaging includes all metal packaging made out of metal sheet, either tinplate or aluminium, with a thickness not exceeding 0.49 mm with a capacity below 40l. This is in contrast to heavy metal packaging, which encompasses packaging produced from cold-rolled steel sheet with a surface thickness of 0.5 mm or greater, which is used in the production of casks, cans and drums with a capacity ranging from 30l to 220l.

Typical uses for light metal packaging include:

  • drinks cans, particularly carbonated drinks

  • hermetically sealed packaging for food, including both human and pet food

  • multi-purpose, general use containers, such as removable-lid cans for paints and varnishes, and cans for cleaning agents and dried food products - typically referred to as “general line” packaging

  • aerosol cans

  • collapsible tubes, typically manufactured of aluminium and used in sectors such as toothpaste

  • lids, caps and other closures

Light metal packaging can be produced from either steel or aluminium. Plated steel is typically produced from low-carbon mild steel which is electro-chemically coated with a microscopic layer of tin to produce a non-porous, sterile, non-rusting finish for cans.

Aluminium offers a lightweight, non-corrosive and non-ferrous metal, alloyed with manganese and magnesium to produce a material of high strength and easy formability. Although the costs of primary aluminium are significantly higher than tinplate, secondary aluminium is much more price competitive.

All of the values quoted in this Report are at current prices unless otherwise specified.

Some numbers in tables do not add exactly due to rounding. The term billion is used to represent one thousand million.

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