Consumer Packaging Strategies: Adapting to Cost Pressures

December 2023

The consumer packaging value chain is challenged by raw material prices and high operating costs. Brands can employ pack innovation strategies, to reduce the impact of price rises and preserve consumer affordability, ranging from adopting distribution-efficient flexible pack formats to providing a diversified pack size offer. Sustainability – a core target for the packaging industry and a cost pressure – is an opportunity, as an enabler of consumer purchasing and for a positive brand reputation.

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This report comes in PPT.

Key findings

Managing costs is a big priority for brands, packaging suppliers and consumers, as inflationary pressures persist

The consumer packaging industry is strong in its ability to withstand crises, given the value of everyday groceries to its business. Food and drink accounted for 92% of retail packaging volume sales in 2023. Inflation, rising interest rates and geo-political instability amplify costs. Packaging is energy-intensive. Volatility in energy (somewhat eased in 2023) has combined with raw material prices and logistic costs to increase packaging prices for brands and consumers.

Use innovation in packaging design to improve operating efficiencies and affordability

Consumer brands and retailers are employing packaging design strategies to maximise margins, and increase operational efficiencies to offset increased costs. Altering materials to use flexibles/refill pouches as an economical alternative to rigid plastic is apparent across food, drinks, beauty and home care. Reducing components cuts costs and eco-footprint. Bag-in-box (ships-in-own-box) is seeing new detergent launches.

Pack sizing is an important brand tool to tailor to consumer budgets and changing habits, and aid the company balance sheet

In response to increasing operating costs, of which packaging is only one (along with ingredient, manufacturing and shipping costs), consumer brands are using diversified pack size strategies. Reducing pack sizes to keep retail prices accessible is widely in use, eg to tackle higher ingredient costs in dairy and edible oils. Upsizing strategies – bundling, multipacks and bulk buy options – help sell products in a softer consumption climate.

Circularity is a driving force in packaging development and regulation, and a reputational opportunity

With higher corporate costs and more price-conscious consumers, advancing sustainable packaging is threatened. There is, however, mounting regulation (national, regional, global) on packaging circularity, to reduce waste and increase recycling, recycled content use and material reuse, as well as a consumer expectation of sustainable packaging. Lack of action or reneging on pledges carries with it reputational risks of losing consumer loyalty and investors.


Key findings
Packaging mostly exhibits crisis resilience but inflation is constraining consumer spend
Across packaged groceries, volume growth proves more challenging; “value” search is strong
Food packaging contraction: Staples fare best with cost-conscious shoppers
United Arab Emirates: The rise of private label in essential fresh dairy products
Navigating the many inflation drivers that impact packaging costs
Commodity price fluctuations ease for operations in 2023, but energy risks remain
Labour shortages and supply disruption are further concerns to watch
High operating costs currently translate into higher retail prices for consumers
Investor and regulator sustainability intervention add to Packaging cost pressures today
Packaging strategies to adopt in an era of elevated costs
Consumers show care in how they spend and search for savings
The value for money pouch is a growth format
Affordable pouch brings fun and functionality to food in Latin America
Premium beauty sees the rise of the value for money refill pouch
Flexible plastic: Another economic value pack choice
E-commerce expansion promotes boxed wine
Bag-in-box wine to a mezcal debut: Distribution efficiency lowers price and enviro-impact
Detergent: Detersolín Protect in Spain highlights the “reduced plastic” benefit
The rise of multifunctional and waterless beauty alters packaging design
Beauty: Europeans simplify hair care routine with 2-in-1 shampoo/conditioners
Right-sizing is more crucial than ever with today’s price-sensitive grocery shoppers
Downsizing: Food pack downsizing for immediate affordability
Dairy: Arla reduces the pack size of its Anchor and Lurpak butter brands
Small cheese indulgence in China: K iri’s cube cheese outperforms the category in downturn
Ice cream: Downsizing is strongest in the developed world but beware taxation risk
Beverages: Familiar pack/price/promotion strategy is most active in soft drinks
Beauty: Latin America hyperinflation meets shrinkflation in rise of “daily affordable” packs
Home care: Compaction expansion as Aromatel Rinde+ launches concentrate in Mexico
Price-competitive private label and discounter opportunities
Private label whistleblows on downsizing: Carrefour uses “shrinkflation” warnings
Up-sizing to deliver consumer value: From bulk to bundling to multipacks
Big bottle promise in beverages
Beauty mini bundles: Opportunity to experiment as “try before you buy” resonates
Sustainability regulation is set to intensify, making packaging progress a must-do
Consumers want to live more sustainably; this is backed by green packaging actions
Sustainability is of increasing strategic importance to businesses
Consumer goods players target packaging circularity and net-zero
The cost implications of environmental inaction are also strengthening
New plastic and packaging regulations reinforce responsible packaging momentum
Canada’s plastic multipacks ban creates demand for fibre-based alternatives
Reducing virgin plastics in progress but some way to go, to hit voluntary 2025/2030 targets
L’Occitane highlight: Improves recyclability, recycled content and launches EcoRefill bottle
Regulatory rise of reuse and refill in beverages: EU, France and Austria act
Refillable glass will grow: In readiness for regulation and to advance eco-positioning
The reputational return: Packaging sustainability delivers brand growth
Hershey ranks “packaging and end-of-life” top investment and reputational priority


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