Trends Driving Today’s Packaging Industry

Keith Schafer, Nordson Corporation June 23, 2011

Who is PMMI?

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North American packaging supply chain association

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Member Profile

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500 general members

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69 processing, supplier & materials members

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PACK EXPO Trade Shows

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Discover innovation across the line

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Help attendees

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Strengthen brands

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Improve cost, production efficiencies

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Achieve sustainability goals

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Allied partners add value

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Industry Resource

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New Industry Alliance

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Alliance for Innovation and Operational Excellence

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Mission: Unite CPGs and suppliers to establish best practices for critical manufacturing issues

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GMA is charter partner

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Multiple solution groups

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Product Safety Solutions Group (PSSG)

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Sustainability Solutions Group (SSG)

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Operational Reliability Solutions Group (ORSG)

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Workforce Development Solutions Group (WDSG)

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Presentation Overview

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Vision 2015: End-users, OEMs expect gains

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Trends and advances in food packaging

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Beverage market forecast

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A preview of PACK EXPO Las Vegas 2011

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Vision 2015: Economic Outlook

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“Cautiously optimistic” outlook for economy

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Slow but positive growth in next 12-18 months

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Specific niche opportunities for new products and packaging to drive growth rates

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Increases in spending by CPG’s due to several factors

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Economic stability in developed countries Continued economic growth in developing countries Improvement in consumer spending Benefits from tax and other public policies that support increased business spending

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Vision 2015: Economic Impacts

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Project must produce high and short-term returns with minimal risk

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Capital funds increasingly being directed toward process and operational improvements

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Strong emphasis on lean strategies

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Using automation to reduce labor costs across operations

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Leveraging sustainability strategies to reduce costs Applying Six Sigma disciplines to measure and improve performance

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Emphasizing OEE metrics

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Decrease in incremental innovation that produces marginal results

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Vision 2015: The Upside

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End-users will continue to implement strategies to build customer loyalty and market share

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Consumers still seeking innovation due to desire for convenience, value and safety

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Consumers increasingly “thinking green”

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Compliance with new government policies will spur investment in packaging machinery and innovative materials

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Large retailers continuing to push for packaging innovation

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Market Spotlight: Food

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Market Spotlight: Food

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Three primary drivers shaping today’s food industry

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The Economy

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Consumers more thoughtful about spending and saving more

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The Consumer

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Convenience continues to drive demands

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Counting on food processors to reduce waste

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The Retailer

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Creating choice for consumers with premium store brands Initiating packaging material reduction Retail Ready Packaging (RPP) trend Source: PMMI’s Trends & Advances in Food Packaging 2010

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Market Spotlight: Food

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These drivers are, in turn, directly impacting today’s packaging trends

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Sustainability

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Labeling and food safety

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Sustainability

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Sustainability efforts spanning multiple packaging stages Primary Package

-Material reduction -Right-sizing the package -Reducing web width and cut off to minimize waste -Using new bio-film materials for better shelf life and barrier protection -Lightweighting glass/plastic -Using water based inks to aid recyclability

Secondary Package

-Increase use of recycled corrugate -Material reductions; gapped flats -Specialty glues to add corrugate strength -Moving away from bleached corrugate

Transport Package

-Better pallet configuration -Recycling pallets -Cube utilization -Source materials closer to production & distribution

Source: PMMI’s Trends & Advances in Food Packaging 2010

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Sustainability

Source: PMMI’s Trends & Advances in Food Packaging 2010

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Sustainability

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Materials being tested or considered for food packaging

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PLA (polyactic acid) Regresa® oxo-biodegradable polyethylene films NatureFlex™ films

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Surlyn® IntegraGuard™ Eco-Wise Source: PMMI’s Trends & Advances in Food Packaging 2010

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Labeling & Food Safety

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Foodborne illness is a significant public health burden that is largely preventable

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48 million people (1 in 6 Americans) get sick each year 128,000 people are hospitalized each year 3,000 people die each year

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Food Safety Modernization Act (FSMA)

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Gives FDA new prevention-focused tools and clear regulatory framework

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Enhances FDA’s ability to oversee food imports Source: Centers for Disease Control and Prevention

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A Closer Look at FSMA

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The law can be divided into five key areas

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Preventative controls

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Mandatory preventative controls for food facilities Mandatory produce safety standards Authority to prevent intentional contamination

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Inspection and Compliance

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Mandated inspection frequency

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Records access Testing by accredited laboratories

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A Closer Look at FSMA

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Imported Food Safety

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Importer accountability Third-party certification Certification for high risk foods Voluntary qualified importer program Authority to deny entry

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Enhanced Partnerships

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State and local capacity building Foreign capacity building Reliance on inspections by other agencies

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A Closer Look at FSMA

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Response

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Mandatory recall Expanded administrative detention Suspension of registration Enhanced product tracing abilities Additional recordkeeping for high risk foods

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FSMA and Recalls www.fda.gov/Safety/Recalls

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Labeling & Food Safety

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FDA proposing nutrition labeling guidelines

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Nutrition Keys, a new voluntary front-of-pack nutrition labeling system

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Developed by the food and beverage industry in collaboration with GMA and FMI

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Helps busy consumers make informed decisions while they shop

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Clear, easy to read format displays calories, saturated fat, sodium and sugar per serving

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Labeling & Food Safety

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Types of new equipment needed as FDA mandated food traceability and food safety changes are implemented

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Date coding equipment

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Labeling equipment Metal detectors Barcode printers Testing equipment for salmonella and bacteria Barcode scanning equipment Scrubbers/cleaners RFID, if it’s required Source: PMMI’s Trends & Advances in Food Packaging 2010

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Labeling & Food Safety

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Wide range of industry resources for help and guidance

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New web resource: FDA Basics for Industry

( www.fda.gov/FDABasicsforIndustry ) •

Basic information about regulatory process, frequently requested information

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Produce Safety Alliance

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Funded by the FDA and USDA and housed at Cornell University

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Provides produce growers and packagers with essential, on-farm food safety knowledge

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Helps prepare for proposed rules from FDA in 2011 on safe production, harvesting and packing of produce

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Trends to Watch

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Name brand vs. store brand (Own Brand)

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Healthier lifestyles

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Foods of the future

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Continued testing of nanotechnology Source: PMMI’s Trends & Advances in Food Packaging 2010

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Trends to Watch

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Next Generation of Machinery

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Enhance operating efficiency Changeover with the push of a button Lower energy consumption Decreased waste Reduction in labor

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Increased integration of processing and packaging functions

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Streamlines operations Increases productivity Reduces waste Decreases costs Source: PMMI’s Trends & Advances in Food Packaging 2010

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Market Spotlight: Beverage

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Key Beverage Trends

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Eye-catching single-serve packaging

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Cost effective “green” packaging

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Flexible packaging machinery to support latest container technologies

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Minimization of secondary packaging to cut costs, reduce overall carbon footprint Source: PMMI’s Beverage Industry Market Research Study (2010)

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Source: PMMI’s Beverage Industry Market Research Study (2010)

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Source: PMMI’s Beverage Industry Market Research Study (2010)

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Source: PMMI’s Beverage Industry Market Research Study (2010)

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Your Resource for Packaging and Processing Innovation

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PACK EXPO Las Vegas 2011

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Largest North American packaging and processing event in 2011

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New in 2011

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The Pharmaceutical Pavilion The Processing Zone The Confectionery Pavilion Project 2020: The Consumer Experience

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PACK EXPO Las Vegas 2011

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New customer-centric approach

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Puts attendee at center of focus

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Launching initiative with three industries

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Pharmaceutical

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Confection Bakery/Snack

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Networking Lounges

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Rx Lounge

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Candy Bar Baking/Snack Break

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Partnerships: Education

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Added Value Partnerships

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THANK YOU!

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