The coronavirus (COVID-19) continues to spread around the world infecting more than 340,000 people and killing 14,500 globally so far. With China being a huge supplier of packaging for the Asia-Pacific (APAC) region’s companies, the supply chains of the food and beverages packaging industry in the region has been hit hard by the COVID-19 outbreak, says GlobalData, a leading data and analytics company.
According to Jörg Wuttke, president of the European Chamber of Commerce in China, ‘Packaging Industry in China is almost shut down, so everything from plastic packing to steel drums is running out’. With many Chinese factories closed, or operating at reduced capacities, this could result in many manufacturers, and even retailers, suspending their operations as they run out of the key inputs they need.
Australian supermarket chains have already raised concerns that the COVID-19 coronavirus outbreak could negatively affect food stock due to packaging supplies from China becoming a bottleneck.
Arvind Kaila, Practice Head of Consumer Beverages at GlobalData, observes: “Manufacturers were already searching for alternatives to China for packaging after US imposed tariffs on Chinese products, with the spread of coronavirus more and more companies will start looking for other countries US, India and Mexico for packaging.”
According to GlobalData, beyond supply chain interruption and weakening demand, there are few other factors that are expected to affect packs used in consumer goods. Consumers are displaying a ‘flight to trust’ in terms of the brands (and packs) they purchase and the types of categories they purchase. For example, liquid dairy choices in Asia-Pacific (APAC) are being affected by perceptions around hygienic dairy production and the safety of final packaging. The result is a preference (if product is available) for trusted brands and pack formats.
The ‘what’ and ‘when’ of consumption occasions and purchasing occasions are altering – changing the most popular pack types chosen in the most affected countries. For example ‘on-the-go’ type products and packs for foodservice distribution are seeing weakening demand as consumers minimize social interactions and travelling. In contrast, bulk formats and packs suited to e-commerce distribution are growing in popularity.
GlobalData sees these trends to be more prevalent in key APAC countries currently affected by the COVID-19 pandemic.