How contract packing is evolving due to Brexit, the pandemic, and EPR

Earlier this year (2021), Defra held a consultation on the implementation of Extended Producer Responsibility (EPR). The new regulation, which will come into force in 2023, seeks to improve and increase recycling.

It will affect all manufacturers who produce and use packaging and, in our sector’s case, has implications for our contract packing, 3PL, and even promotional marketing clients.

Legislation that seeks to tackle challenges like cardboard waste and single use plastics is potentially good news.

However, it’s not without its own challenges – like implementation, logistics and the cost implication.

Yet, it’s an opportunity for fulfilment, packaging, marketing and manufacturing to get their houses in order – and to make some evolutionary leaps in how we do things.

What is Extended Producer Responsibility?

EPR will reform the Packaging Waste Regulations of 1997. Since then, the cost of recycling collection has been borne by householders.

From 2023, any company that produces or uses certain materials, including cardboard and plastic packaging, will pay instead.

EPR will affect you if you:

• Do fulfilment for brands (like we do)
• Manufacture packaging (like The Cardboard Box Company does)
• Have your products delivered directly to customers via e-commerce fulfilment
• Sell your products in a store or department store on the high street

What will the effects be?

The government and the waste sectors will have to redesign the logistics around recycled materials if they want to meet these goals, including everything from an ‘EPR tax’ to more efficient collections, consumer education on recycling, and recycling processes.

For brands, manufacturers and 3PL companies, the effects, challenges and changes will include:

• Increased costs (potentially billions)
• New packaging and packing equipment
• Sustainable resource supply and demand (wood, water)
• Consumer expectations, needs and satisfaction

Cardboard use and recycling in 2021

First, let’s look at shopping habits. One of our packaging partners, The Cardboard Box Company, experienced a 30% increase in demand for packaging between 2020 and 2021; overall growth is around 10%.

While this surge was due to the pandemic, it signifies a shift in the balance between retail and e-commerce. As we discussed on our blog a couple of months ago, buying online is the new normal.

“Corrugated cardboard currently has the best recycling rate at a whopping 80%”

Now, as far as packaging materials go, corrugated cardboard currently has the best recycling rate at a whopping 80%. It’s also 100% recyclable. Which is great, because we need more of it, if the surge in packaging is here to stay (which it is).

The EPR’s objective is to raise this to 86%, which Defra describes as “ambitious and close to the maximum likely to be achievable”.

However, even achieving this recycled rate, we still need to use virgin wood and other resources, like water, to turn a used box into a new box.

Virgin wood from managed plantations is required to strengthen recycled cardboard. Sustainability is a commitment here too – for every mature tree felled, three more are planted.

How brands are meeting customer needs

An interesting development in the midst of all this change is how product marketing has subtly evolved its offerings.

Within the pressure cooker environment of e-commerce brand fulfilment, lockdown purchasing, and increased packaging demand , brands have worked very hard to keep customers happy. Business as usual, basically – though in unexpectedly challenging times.

An emerging trend has borrowed from YouTube influencers and the unboxing phenomenon. Initially popular for tech – like the new iPhone, Xbox or power tool – videos of people taking their purchase out of its packaging spread like wildfire.

“With the rise of direct-to-consumer fulfilment, we’ve had more call to provide a special unboxing experience for a host of other, less expensive products”

During the last year or so, with the rise of direct-to-consumer fulfilment, we’ve had more call to provide a special unboxing experience for a host of other luxury products.

Product packaging no longer has to attract the eye from the shelf in a store; the focus has shifted to providing complete brand satisfaction upon receipt.

Brands are working with designers on packaging with a high end look and feel, bespoke creations that are a delight to see, to handle and which occasionally offer a surprise too.

These often involve special processes – for example, the design might require print on the interior of the box too, taping, or bespoke cutting.

What in 2019 was perhaps a two-step process has, in 2021, become a five-step process. Often this involves specialist machines.

“Product packaging no longer has to attract the eye from the shelf in a store; the focus has shifted”

While a global pandemic and, in the UK’s case, Brexit red tape has meant a long lead time on machine components, packaging manufacturers are nevertheless pushing new ways to make a private, personal unboxing into something really special.

And, all the while, customers who really love this added value from their favourite brands also want their packaging to be environmentally sound and easy to dispose of.

And there’s the small matter of the forthcoming EPR legislation.

What can contract packing do next?

We’ve covered quite a lot of ground in this article; it’s clearly a complex landscape with some unexpected obstacles and interesting developments.

• Where do we go from here?
• What can our businesses do to prepare, while remaining risk-free and robust?
• Can this be an opportunity for an evolutionary leap for contract packing, fulfilment and packaging?

Preparing for EPR

• Assess whether packaging, in whole or part, is “necessary, could be reduced or not used at all” (Defra)
• Assess how packaging might be easily reused without the recycling process – from secondary uses (like ‘packaging you can plant’) to refilling
• Continue driving innovation in design that satisfies customers – and which gives brands more efficiency and value at the logistics stage
• Invest in bespoke solutions that are fit for purpose and cost effective
• See how our sectors can engage, learn from, and educate customers and clients on reusing and recycling
• Be early adopters and thought leaders on new technologies and ideas

A summary of this stage of consultations is awaiting publication on devolved government websites at www.gov.uk/defra, www.daera-ni.gov.uk, www.gov.scot and www.gov.wales, so we might get more clarity then.

COVID-19 and Brexit

It’s really hard to say how contract packing and consumer needs will continue to evolve while we adjust to a post-lockdown pandemic society, or what challenges it will bring to our sector; being responsive and flexible, certainly.

Brexit is easier to tackle head-on. New import-export regulations aren’t yet running as smoothly as they could. If you need help navigating red tape, you might be interested in this blog on how to navigate DDP, or get in touch with us now.

Many thanks to Ken Shackleton, managing director of The Cardboard Box Company, for his insight into recycled materials and current packaging trends discussed in this article.

Photo by Tania Melnyczuk on Unsplash