Circular economy = lifeline in the commodity market?

Circular economy = lifeline in the commodity market?

Thomas Reiner | 23.03.2021

Our recent survey of 270 packaging industry executives shows that 3 out of 4 plastic packaging manufacturers are struggling with commoditization in the market. With the increasing importance of the Circular Economy, there are immense opportunities for these companies to differentiate and grow. However, reactive solutions from within the operating business are not enough to achieve this. It takes foresight – and quick action.


 

The market for plastic packaging is increasingly becoming a commodity market. The perceived added value of the products hardly differs anymore. As a result, everything boils down to price. Our recent survey of 270 packaging industry executives confirms this impression. 3 out of 4 plastic packaging manufacturers are struggling with commoditization.

At the same time, 79 percent recognize the Circular Economy issue as an opportunity. This is good news, because the overriding importance of the circular economy for the industry is undisputed. Especially the increasing pressure from regulations under the EU’s Green Deal leaves no doubt about this. Without a sustainability strategy and a circular portfolio, it will soon be impossible to do business.

It is astonishing that the realization has hardly been followed by action so far. The majority of plastic packaging manufacturers have a lot of catching up to do when it comes to circular economy. Most of them try to find solutions reactively from within their operating business. However, this approach is not very promising. What is needed are far-sighted and far-reaching answers based on a valid sustainability strategy.
Those who recognize this, act accordingly and lose no time in doing so have great opportunities to differentiate themselves in the market and grow. There is a lot of pent-up demand in the industry – and the slice of the pie that is still up for grabs is correspondingly large.

The B+P Consultants market survey
The survey of 270 packaging industry executives conducted by B+P Consultants in October 2020 took the pulse of plastic packaging manufacturers. Key findings of the self-assessment:

Commoditization
– 78% see cost pressure as the biggest challenge to existing business.
– 75 % look with concern at competitive pressure.
– These figures manifest classic symptoms of companies in a commodity market. More than three quarters of the companies are thus in growing difficulties – and beyond that in a growth squeeze.

Circular Economy
– 79 % see the Circular Economy as an opportunity for their company
– 12 % have a corresponding strategy to exploit the opportunities
– The gap between knowledge and action is startling. As promising as the knowledge of the opportunities is, the paralysis that has afflicted many companies is striking.

Getting out of the commodity squeeze
The disruptive change brought about by the Circular Economy offers great opportunities for differentiation and growth. The industry’s need to catch up on the topic of the circular economy is enormous. The opportunities are correspondingly large.
It is of crucial importance that the course is set far-sightedly. Far-reaching answers are needed at product level. Reactive patchwork as part of the operating business will not lead to success. And it requires a fundamental, valid sustainability strategy at the corporate level.

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