Green Can Be Cool And Profitable
Growth opportunities lie ahead for companies that recognize that sustainability is not something to embrace simply because of regulatory demands, but also because of the sales benefits of differentiated packaging and the cool factor increasingly associated with green, according to a white paper by L.E.K.
The paper says sustainable packaging is now a $27 billion market, and it is growing at a rate of nearly 4 percent annually across three market segments: reusables, recyclables and degradables. Key drivers for this trend can be broken down into five areas: halo effect, legal landscape, channel pressures, the all-natural revolution, and product innovation.
- Halo Effect: Environmental consciousness is now mainstream, and that is being felt throughout the sustainable packaging sector. Consumers are expressing their green values through buying choices, marketers want to build a compelling brand story around sustainability, and companies in the supply chain are finding ways to increase earnings by being first to market with new materials and innovative designs.
- Legal Landscape: Although polystyrene is still the primary choice for takeout boxes, many US cities have already banned their use, and the EU has taken legislative steps to make corporations more responsible for their packaging waste, a move that could easily have an impact on the US down the road.
- Channel Pressures: A number of US airports have supplier mandates or on-site composting programs, and quick service restaurants, colleges, universities and sports arenas are also part of this trend.
- All-Natural Revolution: Green products go together with sustainable packaging. L.E.K. research forecasts a compound annual growth rate of nearly 13 percent between 2010 and 2015 for packaged organic foods, and about 28 percent between 2012 and 2017 for green cleaning supplies.
- Product innovation: Companies that are choosing packaging innovations – such as the newest form of degradable molded fiber – get the double win of making both a green statement and being cool, particularly to Millenials and members of Generation X.
Traditional recycling is likely to continue being the predominant material in the sustainable packaging arena in the near future. While degradable packaging is showing promise and innovation, that part of the market is inconsistent in widespread adoption and faces some short-term obstacles, the whitepaper says.
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