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Europe: Low-cost packaging will support competitive prices in Spain, says report

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According to a report from Canadean, low-cost packaging innovation will allow discounters and private labels to continue to take share from brands by offering more competitive prices.

Using lightweight and alternative materials are among the solutions that will minimize production cost for manufacturers in the highly price sensitive Spanish market.

Keep down manufacturing costs

Manufacturers are under pressure to reduce costs and work with smaller budgets as Spanish consumers spend less.

Lightweighting, downsizing, and innovative low cost packaging have become more important in recent years.

Advancements in packing technology also help boost productivity while minimizing costs.

Cargill for example, a Spanish manufacturer of edible oils, has installed an in-house SIPA SincroBloc system, which is capable of creating lightweight polyethylene terephthalate bottles, while retaining the visual appeal and functionality.

Changing the types of packaging materials used will also help lower costs, for example, changing from glass or rigid metal packaging to cheaper alternatives such as rigid plastic.

As a result, demand for glass packaging, as a more expensive material, will decline from 9.2 billion packs in 2012 to 8.9 billion packs by 2017.

Private labels, discounters will drive packaging innovation

Spanish supermarket chain, Mercadona, has introduced a new plastic triple pack for ambient fish and seafood products.

The retailer changed the industry’s traditional anchovy packaging from a metal can to a permeable plastic tri-pack.

With this change, it should see cost reductions of at least €0.22 (US$0.30) per pack, which means €3 million (US$4.04 million) in annual savings.

“While consumers have always sought the best deals, the importance of value for money has been compounded in recent years by the persistent weak economy,” said senior analyst Ronan Stafford.

“This means manufacturers need to both evaluate current packaging to look for cost savings that can be passed on to the consumer, but also evaluate how effective their current packaging is at showing consumers that the product offers them good value for money.”

“We expect to see more low-cost packaging innovation, particularly from Spanish discounters and private labels, as they look to communicate quality at competitive prices.”