Contract Manufacturing and Packaging July-August 2011

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Contents

July/August 2011

Features 10

The Ideal Supplier/Manufacturer Partnership Here are keys you can use to improve your partnerships.

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Roundtable: Packaging Innovation CM&P talks to the experts about the changing face of the packaging industry and what to expect in the coming decades.

Departments 5 6

Point of View

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Raising the Bar: Convenience Packaging Reigns in 2011

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Tactics Watch: Make vs. Buy The pros and cons of creating a product yourself or outsourcing it to a third party. Ad Index

CONTRACT MANUFACTURING & PACKAGING is a supplement to PLBUYER and other BNP Media publications. CONTRACT MANUFACTURING & PACKAGING is published by BNP Media II, L.L.C., 2401 W. Big Beaver Rd., suite 700, Troy, MI 48084-333. Telephone: (248)362-3700, Fax: (248)362-0317. Printed in the U.S.A. Copyright 2011, by BNP Media II, L.L.C. All rights reserved. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations. Change of address: Send old address label along with new address to PLBUYER, P.O. Box 1080, Skokie, IL 60076. Canada Post: Publications Mail Agreement #40612608. GST account: 131263923. Send returns (Canada) to Pitney Bowes, P.O. Box 25542, London, ON, N6C 6B2. For single copies or back issues: Ann Kalb at (248) 244-6499 or [email protected].

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July/August 2011

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POINT OF VIEW A SUPPLEMENT TO BNP MEDIA PUBLICATIONS

Editorial John N. Frank Editorial Director [email protected] Jordan Brandes Managing Editor [email protected] Josh Majka Art Director

Editor’s Note

EDITORIAL ADVISORY BOARD Raymond Baribeau Confab Laboratories Inc. Bill Biedenharn Trillium Health Care Products Peter Cokinos Little Lady Foods Ryan Gladieux Plastipak Italia Kevin Meyer Century Foods International Tanja Mordeson RC International Tina Mori NexGen Pharma Technologies Lisa Shambro Foundation for Strategic Sourcing Brian W. Wassall L’Oreal USA

Advertising Brion Palmer Group Publisher [email protected] (847) 405-4072 Don Beal Associate Publisher [email protected] (908) 889-4506 Todd Tamcsin Regional Sales Manager [email protected] (623) 825-5414 Rose Weiss Advertising/Production Manager [email protected] Jill DeVries Corporate Reprint Manager [email protected]

Audience Development Peggy Perez Audience Development Manager Devon Bono Multimedia Coordinator Carolyn M. Alexander Audience Audit Coordinator

Corporate Directors Timothy A. Fausch Publishing John R. Schrei Publishing

elcome to another edition of Contract Manufacturing & Packaging magazine. This issue marks a change of pace for the publication and the content within. When I first came aboard this magazine, I told you that it was my intention to create a magazine that would cater to you and your company’s needs. I feel that with this issue we are one step closer to achieving that goal. Not only are our topics more focused on the day-today operations of life as a contract manufacturer but they are more detail oriented. For instance, this issue contains a great article on pros and cons of outsourcing and how both options can help your company. You also will find an in-depth discussion on product innovation and how it is changing the way companies do business. Make sure to go to the CM&P homepage to enter for the inaugural design awards. The awards will showcase the most innovative design and packaging in our industry. Don’t hesitate, sign up now. As always, I invite you, the reader, to reach out to me if there is anything you would like to see in the publication that can help you and your business run more smoothly. Feel free to contact me by phone or via email. This publication is for you and we want to make sure every issue is focused to your needs. ||

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Rita M. Foumia Corporate Strategy Ariane Claire Marketing

Sincerely,

Vincent M. Miconi Production Lisa L. Paulus Finance Michael T. Powell Creative Nikki Smith Directories Marlene J. Witthoft Human Resources

Jordan Brandes Managing Editor CM&P Magazine

Beth A. Surowiec Clear Seas Research For subscription information or service, please contact Customer Service at: Tel. (847) 763-9534 or Fax (847) 763-9538 or e-mail [email protected] List Rental Postal contact: Kevin Collopy at 800-223-2194 x684 [email protected] Email contact: Michael Costantino at 800-223-2194 x748 [email protected] BNP Custom Media Group Christopher Wilson (248) 244-8264 [email protected]

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5

RAISING THE BAR

Convenience Packaging Reigns in 2011 By Glenn Scott

eading the business tea leaves in a post-recession period is a tricky proposition for any industry, packaging included. But as the economy sputters back to life, all signs point to at least one major theme for 2011: packaging that answers consumer demands for convenience in all of its permutations. From packages that can be reused to designs that prolong product freshness, reduce spills, provide on-thego capabilities, and enable easy handling for arthritic Baby Boomers, brand manufacturers are increasingly embracing solutions that relieve everyday consumer irritations – even if the fixes carry a higher price tag. That may be the biggest surprise of the year, considering the fragility of the economic recovery, but it demonstrates an understanding that segments of the marketplace are willing to pay for benefits like avoiding spoilage that save money in the long run. Sensory packaging is also making an appearance, along with a variety of other new technologies that either improve on older package/closure formulas or pave the way for new product development. Here are some of the trends that are shaping the market today.

2. Infusion closures for drink concentrates

1. Rigid club and bulk packages

3. Trigger-activated aerosol sprayers

Many club and bulk products are moving away from paper-based packaging and transitioning to rigid containers that provide convenience features such as reusability, resealability for freshness, spillage resistance, and more durability than tear-prone bags and boxes. This transition started several years ago in other sectors. Domino’s Sugar began phasing out bagged product and instead using a round plastic container with a resealable lid. Folger’s Coffee made the leap from metal coffee cans that had to be unsealed with can openers to plastic containers that can be opened easily without tools. Now we’re seeing a similar movement in bigger packages for products.

Another newer convenience technology involves triggeractivated aerosol sprayers that provide continuous spray capabilities. A user-friendly front-loaded trigger pad allows cleaners and other products to be dispensed in a continuous stream rather than in the stop-and-go manner of older push-button aerosol dispensers. Like rigid club and bulk packaging, these triggers cost more, but they’re easier and faster to use – no repriming necessary. Product uses include automotive care, air fresheners, carpet cleaners and various cleaning supplies.

R

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In the on-the-go category, new infusion closure technology is providing an alternative to tear pouches and tear sticks used for water-soluble drink concentrates. Consumers still get the single-serve, ready-to-use, dose-controlled, freshblended benefits of those older packages, but without the tug-and-pull opening or spillage risk. With the infusion closure, the concentrated powder or liquid can now be packaged in a cap that fits on a standard water bottle and is sealed with a foil membrane. Screw the cap on the bottle when you’re ready to drink, and a built-in mechanism punctures the foil and discharges the contents of the cap into the bottle. Shake it up, and you’re ready to drink. It’s a consumer-friendlier way to provide a portable solution for beverages ranging from vitamin waters, sports drinks and newer relaxation beverages promising a better night’s sleep to children’s electrolyte replacement treatments. The caps can be tucked into a purse or briefcase and retrieved when needed, enabling consumers to enjoy their preferred beverage enhancement anywhere they can find bottled water.

4. Ergonomic adaptations for Baby Boomers The graying of the Baby Boom generation has been driv-

July/August 2011

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RAISING THE BAR

ing packaging changes for several years, and that will continue into the foreseeable future as brand manufacturers respond to the need for easy-grip closures, easyread labels and other compensation for Boomers’ aches, pains and mobility limitations. We have already seen food and medication packages with finger lugs or other new cap features for easier handling. Some of these products have received the Arthritis Foundation’s Ease-of-Use Commendation Logo, designed to encourage manufacturers to make seniorfriendly products and packaging. The same catalyst is also fueling a switch from glass to plastic to lighten the load for some products. This again fits the convenience theme, but in this case it’s not just a matter of being handy for consumers. It’s a necessity for brands that don’t want to miss sales to the 78 million Boomers who are responsible for over half of all consumer spending in the United States.

larly suitable for hot-fill food packages like retorted cheese, barbecue sauces and salsas.

7. Trial sizes for premium products Either as an outgrowth of the recession (on the one hand) or to encourage splurge purchases for more expensive products (on the other), cosmetic and personal care brand manufacturers in both the mass market and high-end arenas are turning to trial and travel size products under 3.5 ounces. || Glenn Scott is vice president of product development for Berlin Packaging (www.berlinpackaging.com), a hybrid packaging supplier that is one of North America’s largest stocking suppliers of plastic, glass and metal containers and closures as well as a provider of value-added services including package/graphic design, global sourcing, package equipment financing and consulting.

5. Flavored and scented plastics Packaging that engages the senses is on the menu this year as well with new flavored and scented plastic technology that offers novelty as well as an opportunity for product innovation. FDA-approved flavored plastics can be used to safely add taste to everything from baby pacifiers to bottled water without adding calories. In the latter case, bottle tips can be infused with mint, raspberry, chocolate or other flavors of the manufacturer’s choice for variety and personal preference. Look for the technology to spark the release of a whole new generation of diet beverages. Scented plastics deliver aroma infusions that can make a holiday package smell like a pine tree, add a lemon scent to a toilet bowl scrubber, or camouflage the odor of a garden chemical. This can enhance the product experience, differentiate it on the shelf and overcome negatives that may discourage buyers – especially those with sensitive noses.

T.H.E.M. Offering Sck Pack R&D Center

6. Lighter-weight plastics and glass Other innovations that are poised to enter mainstream packaging include new plastic and glass manufacturing techniques that decrease package weight as well as providing sustainability benefits. In the case of food and beverage glass, suppliers have been able to reduce weight while also maintaining durability and simultaneously reducing energy consumption, materials and related costs. These new jars are particu-

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TACTICS WATCH

Decisions, Decisions Unsure on whether or not to outsource? CM&P asks the experts By: Jordan Brandes

ou’re a food processor and the time has come for you to expand your product line. The question you must first address is whether you plan on producing your new product in-house or through a contract manufacturer. Consider the following when addressing this issue, says Jack Podnar, chief executive officer of the Kent, Ohio-based plastic jar manufacturers Rez-Tek Corp.:

Y

• Cost- what will be your cost of manufacture, cost of downtime, cost of rejects, cost of quality control, cost of opportunity lost, cost of shipping? • Time- will you be quicker to market doing the product in-house or by contracting the work to an outside firm? • Risk- which option presents the shortest risk list? • Control- how much control do you have over product quality, time-to-market and other key factors when using a contract manufacturer? How important is over-all control of the manufacturing process to you?. Outsourcing has started to show up in more and more industries, says Jeffery Ryan, vice president at the Chicago-based supply management consultant firm BravoSolution. Very few companies have the manpower and financial backing, much less the knowledge and skills, to do everything in-house, he says.

Outsourcing Outsourcing can help you avoid much of the risk involved in manufacturing a product yourself. If your plants already are running at full capacity, then outsourcing allows for a faster start-up for the new product or new line of products than

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TACTICS WATCH

would building more capacity in-house. “In order to be efficient manufacturers and compete on the same playing field as other companies, it makes sense to go to a third party that can handle the capacity your company hopes to output,” Says Ryan. For instance, earlier this year, Salem, Ore.-based food processor Truitt Brothers entered into an agreement with San Francisco, Calif.-based Del Monte Foods to have DelMonte co-pack its cherries and pears at its Yakima, Wash. factory. Del Monte’s size and up-to-date machinery means that Truitt, which started as a cannery, will be able to increase its production and reach more consumers faster than if it had done the added production in-house. In some cases, a contract manufacturer can be used to handle sudden spikes in product demand. This allows production to remain on schedule without having to hire new staff or enlarge your facilities, explains Ryan. You can look to outsourcing products as a means of creating a competitive advantage as well, says Mike Darland, partner at the New York-based business advisory firm CRG Partners. “Over the last couple of decades, larger companies that decide to outsource have been looking to third party companies for advantages beyond chasing low costs.” “The manufacturing process is always evolving but can be expensive to keep up with, especially for companies just starting out. By outsourcing, your company can have another company carry the burden of keeping up with new technology,” explains Ryan. Both experts agree that companies must now find ways to adjust to everything from the rising costs of fuel and commodities to increased inflation in many developing countries that have been used for outsourcing in the past. “It is a sign of the times where leading ‘brands’ like Nike and Apple outsource manufacturing or key components of their product while ensuring the final product meets their standards,” says Neil Stern, senior partner at the Chicago-based research firm McMillianDoolittle, LLP. Experts agree that outsourcing is a trend that will not only continue but will flourish in the next two to three decades. “Usually they start by contract manufacturing all new packaging and then, as risk versus reward get big enough, they bring everything in house,” says Podnar. If companies see the value created with external manufacturing partnerships, the decision will virtually always be to outsource because branded companies generally have higher overhead than do contract manufacturers, says Lisa Shambro, executive director of the Oakland, N.J.-based Foundation for Strategic Sourcing (F4SS).

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Making the Product Contract manufacturing isn’t the answer for every company, however. The ability to exert total control over the factors that go into a product’s development is a big attraction that prompts many companies to keep production in house, experts agree. Keeping control of elements such as cost and intellectual property can be vital to your company’s survival, explains Ryan. “Intellectual property laws around the globe are not consistent and it is easy for sub-contractors to sell knockoffs of products,” he warns. Quality control can be a deciding factor as well. If the product you intend to produce has very specific tolerances in its production than there is no guarantee that a third party will make the product the way you intended, he says. “A different company could maintain different quality control tolerances than your product allows and outsourcing might end up harming the final product,” he says. Allowing your company the freedom to choose which materials go into your final product goes all the way down the supply chain, Darland and Ryan agree. While bringing your product to another company can be cost-effective, the materials that go into it while it is in their facility often are under their control.

Who Decides While there are benefits to both choices, the question becomes, who will ultimately decide whether or not to outsource? It turns out the answer varies depending on whom you ask. If you are a new company, then it is up to the entrepreneurs in charge of the company or project. But for larger companies, a variety of people may take on the role. Although the head of manufacturing often takes the lead on projects such as this, they can look for consultation with collaborative source firms that will find ways for outsourcing to give both companies a competitive advantage, says Ryan. In larger companies, the decision will go before an executive committee which will then inform a board to make the final call, explains Darland. “We are hopeful the industry can evolve to a place where suppliers can communicate and deliver value well beyond price, that suppliers can convey this value to their customers, and, most importantly, that customer colleagues responsible for external manufacturing can convey that value to their internal colleagues so everyone views all the manufacturing options in a purely objective fashion,” says Shambro. ||

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ON THE COVER

A Matter of Trust:

The Supplier/Manufacturer Relationship A look at the ideal business b i partnership t hi By: Jordan Brandes

A

marriage is built on trust, understanding and the ability to work with your partner through the good times and the bad. The marriage between manufacturer and supplier is not much different. It too is dependant on the trust between two parties both working toward the same, beneficial goals.

Meet the Companies Apex International is a Chaska, Minn.-based contract manufacturer that develops OTC ointments and creams along with a variety of health and beauty care products for the consumer packaged goods industry. It handles processing for The Village Company, also based in Chaska, creator of such well-known products as Mr. Bubble and Village Naturals Aromatherapy. The two companies have been working together for more than three decades. This, executives of both companies agree, is due in large part to the close proximity of one company to the other. “We are right across the alley from each other, which makes a tremendous difference in helping our relationship flourish,” says Frank Klisanich, president and chief executive officer of The Village Company. But a good partnership takes more than proximity. It also requires trust, leadership, transparency and an added value for both companies. What Apex and the Village Company have accomplished in their partnership can provide valuable lessons for other companies hoping to do the same.

Building Trust “Our customer relationships are all long-term, mutually beneficial relationships based on trust. We build that trust through integrity, results and transparency. We look for customers that share our philosophy and are interested in total collaboration,” explains Julie Christiansen, head of customer solutions at Apex International.  | Both agree that a good relationship embodies a

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A Matter of Trust:

The Supplier/Manufacturer Relationship  |

Continued from page 10

relationship allows us to react quickly by building up existing inventories,” says Christiansen. This is due to a close eye kept on sales and operational planning between companies.

Leadership

360-degree understanding on what the company’s purpose, vision and values are in order to ensure a fit between both companies. For Apex, that has meant understanding Village Company’s vision to be quality oriented, cost effective and responsive to the needs of the consumer. “A building of trust comes from transparency during all aspects of operation,” explains Christiansen. Having the companies in close proximity to each other allows them to conduct business without a time delay that might result from being in different time zones or different countries. If, for instance, there is a problem in production and Klisanich wants to assess the problem, he can walk across the street and deal with it first hand. “Our employees are the critical ingredient to our success, and one of the main things that truly sets us apart from other contract manufacturers,” says Christiansen.

Added Value To encourage transparency, both companies collaborate via meetings both weekly and monthly, making sure that each shares the same vision that will create results. Weekly update meetings deal with prioritization of production and decide which SKUs deserve the most attention that week, Klisanich explains. Monthly meetings deal with sales and operations planning for the next 90 days. These meetings help to ensure both companies are clear on their operational responsibilities, both short- and long-term. “If both organizations are working towards the same agreed-to goals, then success results for both. A true partnership,” he says. The goal of a business, whether you are a producer, retailer or contract manufacturer, is to make a profit. “A good relationship requires each company to be an extension of and into the other. Each company must be in the relationship for long-term benefit that is measured, evaluated, discussed and recalibrated on a regular basis in a very open and transparent way. Both companies need to have a dedication to ensuring the financial success of the other,” explains Christiansen. For example, “in certain occasions where there have been inventory challenges or a packaging vendor has an issue, our

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Unlike a marriage, in a business partnership both sides have teams of employees which act as leaders, making sure a particular goal is met. “Leadership is about going somewhere. A leader in contract manufacturing must have a vision of where they are going that is meaningful to its customers. Then they must actually be able to achieve that vision. What was important to customers a year ago may be irrelevant today. Right now, we [Apex] believe cost savings and continuous improvement are incredibly important, as well as protecting IP and providing innovation,” says Christiansen of all business partnerships involving contract manufacturing. As a customer Klisanich agrees. “A great contract manufacturer is detail oriented, a great listener, cost-conscious and intuitive to the needs of his customer. We [The Village Company] need to move quickly and adapt to changing consumers wants and desires…we need a partner to understand the immediacy that comes from the need for speed,” he says. While both companies agree that they are in what they consider to be an ideal supplier/manufacturer relationship, they realize that term is relative. Every supplier and contract manufacturer faces different challenges and must find their own ideal business relationship. Like a marriage, each person is different and you must find the one that is right for you. ||

Five Keys to an Ideal Business Relationship 1. Trust: built on integrity and ethical business relations, knowing that both companies have the same goal lays the groundwork for a better business relationship. 2. Accountability: with both companies working independently but together, knowing who is in charge of what task in the production process allows for more open dialogue between companies when problems arise. 3. Transparency: continuous feedback along with weekly update meetings to make sure everyone is on the same page in the day-to-day operations of the plant creates a workplace that encourages shared knowledge between companies. 4. Added Value: both companies must be working toward the same goal of creating a profit. 5. Leadership: both companies must be able to achieve the goals they each set out to reach when they created the partnership.

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ROUNDTABLE

INNOVATION

The Changing Face of Packaging

>When it comes to contract manufacturing what defines innovation? JoAnne Hines: Packaging innovation is something that changes the traditional way of using packaging. In contract manufacturing it could be a better way of solving a problem, becoming more efficient, better resource utilization, all of which translate into lower costs and more efficient delivery. Leslie Gurland: An innovation is something that is new to the consumer, and delivers ease of use, or appeal. It can also be something that makes the contract manufacturer’s process more efficient or environmentally friendly in terms of the type or amount of packaging being used. It could also be something that saves the contract manufacturer or its customer money. Debra Darby: Responding to consumer demand for packaging that performs as expected (or marketed), but also lessens environmental impact, is an important aspect of innovation. The key is to design packaging materials with end-of-life in mind, and educate manufacturers on the value of materials that are both high quality and environmentally responsible. Users want to know that biodegradable plastic packaging can replace regular plastic

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and help eliminate plastic waste through anaerobic digestion, home composting or industrial composting. David Brown: When it comes to manufacturing, what I think it is, is what is going to change the category, what is going to get the product off the shelf, from a retail standpoint, how is that going to move product for you. I think the consumer ultimately decides that, from an innovation standpoint. For example, if you just use steam, steam in bag product, for frozen vegetables, that was clearly a consumer need that wasn’t even being explored. So, I think you have to explore and understand what the consumer wants in packaging, that’s what defines innovation. Jack Podnar: A true innovation is a new, novel process that provides greater benefits. Kurt Kroening: Innovation is about having meaningful differentiation so you can offer things—better things—that others cannot. Janelle Oxford: We believe processing aseptically is as innovative as it gets in our industry. The process uses

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ROUNDTABLE INNOVATION

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Continued from page 14

less water, products can be shipped dry, can have longer shelf life and have added food safety benefits compared to conventional processing. KanPak has long been a leader in improving the aseptic process and educating the public about the benefits of aseptic during the last three decades. Today, KanPak can create dairy, nondairy, soy, high-acid and low-acid bag-in-box, pouch and bottle products that help customers compete on a new playing field.

Laser scoring micropores into certain laminates is a growing trend in fresh fruit and other produce where a longer shelf life can make a big financial difference. And we use our laser scoring capabilities to create handles for large pouches as a consumer-friendly feature that helps shoppers accept bigger packaging that manufacturers can handle more efficiently and economically. We are also doing very well with flexible packaging for caulks and adhesives.

>What do you consider an innovation in packaging?

Gurland: At Interpack [an international trade fair focusing on packaging machines and appliances], I just saw very innovative manufacturing equipment and a product called LitePac, developed by Krones. A pair of straps can replace film shrink wrap for six-packs of certain shapes of PET beverage bottles, using 70 percent less packaging material and promising up to 50-percent cost savings.

Hines: Innovation for me is a game changer. I see lots of packaging ideas and products that I consider tweaks to existing packaging solutions. What truly is packaging innovation makes people change how they shop and what they buy. Innovation can create an entire new packaging category like MAP [modified atmosphere packaging] or microwavable packaging has done. A new cap or a different shape box is not innovation unless it allows something unique and different to be done with the package. Unfortunately innovation is a buzz word that many times is used when it’s not really innovative. Rani Stern: We’re seeing innovation in larger pouches. We’ve made great advances in bigger pouches for institutional use – anything from retort pouches for prepared food to large condiment pouches with fitments for condiments, soups and sauces. We have seen great interest in bag-without-box pouches for wine and other beverages in 1.5, 2 and 3-liter sizes, and in big pouches with laser-scored handles that offer better consumer convenience. On the opposite end of the size scale, retort pouches for baby food have become very popular in Europe – we are making them for several chains. Consumer convenience and efficiency on the manufacturing side make baby food pouches a growing trend. Two-compartment pouches – which allow manufacturers to package ingredients together that should not be mixed until it’s time to combine them during meal preparation, like fresh pasta and sauce – are also a significant new category. Other customer-focused pouches are onecompartment pouches for honey and other high-viscosity foods and a laminate that has paper and clear windows in the structure.

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We have also begun working with an extraordinary technology called the CoolVu T&S (thaw and sell) indicator by a company called Freshpoint. The CoolVu is a time-temperature indicator technology that can be frozen after it is applied. When it is thawed, a steady reaction between two layers of the label slowly exposes a colored panel that indicates that a product has reached its sell-by date. The brilliance of the system is not only how well it works and how intuitive it is for shoppers to understand, but the fact that the CoolVu can be applied by the contract manufacturer of sandwiches, deli meats and sausages, pastries and other value-added foods prior to freezing. That eliminates the high cost of manual labeling and the potential errors from having a grocery store or C-store clerk applying “best before” labels when stocking merchandise and it gives consumers extra confidence in the product. It’s a great fit for pouched, shrinkwrapped or poly-bagged products. The result is that the customer is saving money and getting a better-controlled, more uniform product – which is great for the manufacturer, the customer and the consumer. In terms of production from Tadbik and Logotech, linerless labels will be an important innovation because they create less waste and reduce costs by eliminating the

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INNOVATION ROUNDTABLE

liner and putting more labels on a roll. I would say our patent-pending ARS resealable labels for flexible packaging for wipes are another exciting innovation. What’s interesting is that the stopper that creates a dead zone in the adhesive to provide a finger grip area for easy opening is part of the lamination. That means they’re efficient to produce, they use 30 percent less material and that they run on the contract manufacturer’s existing labeling equipment. Last, polyethylene terephthlalate (PET) lidding for thermoformed cups offers great consumer appeal, and they’re kid-friendly. They are also extremely efficient for manufacturers, as there’s no longer a need to X-ray packages to ensure that aluminum has not fallen into the package. Darby: A true packaging innovation is bioplastic packaging that is not only biobased, but is also biodegradable – the difference being that biodegradable plastic can decompose under certain environmental conditions, while this is not always true with biobased plastics (not all biobased plastics are biodegradable). Usability of biobased and biodegradable plastics is also an important aspect of packaging innovation, as there is a strong demand for materials made from annually renewable resources that can replace the use of petroleum-based plastics. Brown: We’re a major vegetable company, so the steam bag is probably one of the biggest for us. Something that I’ve seen is a steam carton. Its basically a carton that has vegetables with sauce in it, and you put the carton in the microwave and you can actually eat it out of the carton, it’s like a little bowl that you can eat vegetables out of. Another one is Lean Cuisine, and their sandwiches, how they can microwave those things, on a grilling pad, and its looks like its been grilled in the oven and everything, and those are pretty cool, so those are good innovations in packaging. For us it’s the steam bag, and putting sauce in the steam bags, and that’s a good innovation for us, so basically you don’t have to add any ingredients to the vegetables, you can just cook it, cook the vegetables in the steamed bag, you don’t have to open it, you don’t have to tear it open, you don’t have to put it in a pot, you don’t have to dirty a pot, you can put it in the microwave, you can nuke it for a couple of minutes and you’ve got an entré, if you want it, if that’s all you’re going to eat, it also complements the dish that you’re cooking. Podnar: There must be benefits for the consumer such

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Particpants in CM&P’s Innovation Roundtable • Janelle Oxford, director of sales operations and production planning at KanPak. • Debra Darby, director of marketing communications for Metabolix/Mirel Bioplastics. • Dr. Rani Stern, chief executive officer of CLP Industries, a flexible packaging manufacturer headquartered in Israel and distributed worldwide. • JoAnne Hines, known as the “packaging diva”, works as a packaging and source expert for MFG.com online marketplace. • Jack Podnar, president and chief executive officer, the Rez-Tech Corp. a plastic jar manufacturing company. • Kurt Kroening, vice president of Mosaic Printing. • Leslie Gurland, President of Logotech a label manufacturing and marketing company. • David Brown, vice president of retail sales for Allen’s Inc. a vegetable canning manufacturer. as easier availability and convenience. There must be benefits for the packager such as faster fill -speed, more down time and less costs. For the brand, the new product must increase sales yet still remain sustainable at a low cost and increase awareness of the brand itself. Kroening: Utilizing the package itself as an intelligent marketing tool is one of the greatest innovations of the packaging industry. Incorporating structural concept, design, printed effects and human response research to provide maximum impact at the point of purchase. Oxford: In February 2010, KanPak made a capital investment to expand its packaging offering to include an aseptic bottling line. That was a significant innovation in our industry, as it provides customers with individual plastic bottles to stock on their shelves with all of the benefits of being produced aseptically. In fact, KanPak is the first low-acid aseptic company to be able to file low-acid PET | utilizing vaporized peroxide for bottle sterilization while 

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meeting FDA Peroxide Residuals requirements with PET. This is a pretty big step in our category, and we are seeing great results.

>Looking at the current state of the industry today would you say there are more or less innovations on the market? Why? Hines: There are a lot of packaging innovations around new technology, technology that didn’t exist even a few years ago. Technology can be a new material such as all the packaging material innovations in the sustainability arena or it can be a technology such as QR codes and track-andtrace devices. There are still opportunities out there as consumers demand better packaging solutions and want less over all packaging. Gurland: I think there’s more innovation right now. Consumers demand new products, new packaging, new features and a sense that products are evolving. And retailers like Walmart and Costco drive innovation by placing demands on their suppliers for increased efficiency, lower cost and more environmentally sound packaging. Darby: There seems to be a focus on reducing the size of packaging, as well as the amount of material used – but this doesn’t necessarily reduce the problem with packaging waste sent to landfills. Brown: More, I would say. Because of the change in technology, and just the advent of when you look at marketing, from a marketing standpoint as well. Right now, we’re exploring QR codes, and the QR code is where you can take the iPhone, and take a picture of the QR code and image it and it brings up recipes and how you can use that product in the store, or what the ingredients are, what the nutritional values are, you know, things like that about the product, or the marketing behind the product, if there is some kind of coupon on that. Podnar: More innovations but more confusion. Packaging innovation can take on many forms and go in many directions. All have good and bad points but each unto themselves can help push a product. Lots of innovations are imperceptible to consumers, which can be good if change is not wanted. From an expansion of brands idea, consumer-known innovation can add value to acquiring new customers whom may not have bought before but now will based on different packaging innovation.

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Kroening: More. Over the past decade, more attention has been given to the quality of the appearance of the package. The race to differentiate one’s self has heated up. Customers are demanding it. But to create packaging that has maximum impact at the point of sale, highly focused smart package marketing research must combine package structure concepting, graphic design, print effects, new technologies and human response or marketing psychology. Design that takes advantage of highly sensory effects is an intricate part of the total message you want to deliver with the package. The right package helps the consumer experience the product in a way that intrigues and compels them. Oxford: We continue to see new products in customized packaging make their mark on the shelves and grab consumers’ attention. Products are differentiated by packaging and use, which is great to see. For example, KanPak works with Made, an organic green tea beverage company, and their packaging needed to reflect the organic quality of their product. We used our in-house capabilities to design and create bottle prototypes unique to Made. Having those resources on-site helps keep our customers on the leading edge.

>Who ultimately decides that an innovation is needed? Hines: Actually the consumer decides. Innovation comes to the fore when there is an unmet consumer need. I’ve seen packaging innovations go bust because it wasn’t something the consumer wanted or was not researched thoroughly enough as what the consumer really was expecting. A good example of this was the recent introduction of the SunChips compostable package. Looked good in theory and on paper but the problem was consumers hated it. Gurland: It depends on who you ask. Most people in the industry will say that Walmart and Costco are driving the push for innovation. But everybody up and down the supply chain is looking for efficiency, cost savings and something new to bring to a competitive marketplace. Ultimately, the consumer decides which innovations will be accepted Darby: There really needs to be clear communication between the packaging industry and consumers. Consumer engagement is needed, and the messaging needs to be about the value of consumer demand that can drive

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design innovation. For example, paying more for innovative packaging that can be placed in a composting or anaerobic digestion facility and not in a landfill. This requires a change in consumer behavior and a willingness to participate. I think younger generations understand this, but businesses need to take leadership now. This will help develop the infrastructure for a more responsible packaging value cycle. Kroening: Innovation is needed; but it’s not always a conscious decision. Sure, you have to consciously decide to make the investment and pursue innovation, but visionary people often have a need to concept, to be innovative and create the innovation. Then they figure out how to create the demand and illustrate the value to those who will buy into it. Oxford: KanPak has used the team approach since being founded 30 years ago. As a team, we work together to identify innovative possibilities and how they could be integrated into our facilities. Most additions or alterations to our packaging line affect other areas of our facility. Because we have team members from each area of the business represented, we can proactively identify the impact and plan in advance. Additionally, customer needs often play a role in introducing innovation. For example, we are now using shrink-wrap to replace some outside packaging in order to reduce corrugated use while maintaining ease of shipment. This was a suggestion by a customer that we might not otherwise have pursued.

Brown: I think the challenges are just that with the new packaging, its just talking about cost from the manufacturing standpoint. If you’re coming out with steam-in bag, the polypore for the steam-in bag is much more expensive than what we normally use for a regular poly bag. So the poly in the packaging, for the steam back, and I don’t know the technical term for it, is much more expensive than the other, than the previous ancestor, so that’s a cost, but the benefits of the product and what that packaging brings to the consumer outweigh that cost for the manufacturer, so there’s always added cost to the innovation and packaging. Podnar: Our biggest risk is getting buy-in commitments from companies and innovating in directions they really want versus what they say they want. Kroening: Innovation has higher upfront cost, both for the manufacturer and the customer. Justifying that cost and being able to show the potential ROI is sometimes a challenge.

>What challenges do companies face when innovating contract manufacturing and packaging? Hines: Many times innovation is behind the scenes and consumers truly don’t care. One of the biggest challenges is getting buy-in from consumers about the role packaging has to play in modern society. Consumers want products, they just don’t want the packaging that gets it there, a huge education gap. Gurland: The biggest challenge is committing the time and money needed to innovate. Another challenge is getting line time on the contract manufacturer or contract packager’s facility to validate the concepts and fine-tune the new packaging.

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Darby: When it comes to innovation, I think one of the biggest challenges is ensuring the performance of the packaging. It’s clear that consumers are concerned about the health of the environment.

Oxford: One challenge is adapting the production line to accommodate a change. That’s why we take the team approach to implement any innovation, so that we can identify how one change impacts the rest of the operation. Another challenge is quality assurance testing. We have a strict QA process to help ensure all products leaving our facilities meet our high standard of excellence. Involving the QA team early in the innovation process helps create efficiencies and smooth transitions.

>What do you see as the future of packaging innovation? Hines: I see the future as very bright. New products, new solutions, some we haven’t dreamed of yet. We need some totally new packaging that can revolutionize  | the industry.

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their tracks. Consumers gain a new experience simply when walking by the box.

Stern: Environmental friendliness is very important – laminates made of similar materials that can be recycled together, special lacquers, high-barrier PET that will be an environmentally friendly replacement for PVC coating. And better appearance is always important. The whole market is price-driven. People mostly look for a good price, a way to reduce their costs, especially because competition is so tough as everybody fights to meet the prices dictated by the big chains. Most innovation is going to go to reducing gauge or eliminating materials. It’s got environmental benefits, but is mainly driven by cost. Gurland: Innovation will continue, but it will happen at an even faster pace. Advances in material science, innovation in food science and product development, changes in manufacturing and marketing – all these will keep pushing the packaging industry in new directions Darby: Certainly, I think the future of packaging innovation lies with developing a strong market for bioplastic packaging materials that are durable in use but will also biodegrade completely – partial biodegradation or fragmentation is not acceptable. It is about designing packing with the proper ultimate disposal in mind. Podnar: A proliferation of diverging ideas from every corner of the packaging industry, segmenting the market into smaller, happier chunks. Kroening: More and more momentum in the “package as a marketing tool” movement. UV print technology is the platform that has opened up an incredible new spectrum of eye-catching printing effects and techniques. User friendly structural design software gives structural design competency to the graphic artist team, which allows structural concept and graphic design to be worked on together in harmony as one effort. Sophisticated and powerful UV print technologies can provide an infinite range of unique effects and options. One example is compelling new forms of lenticular [produced by a lens] visual effects including animation, enhanced 3D and image-to-image flips. This is important because lenticular has the power to stop people right in

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Oxford: As companies continue to seek out green products, we expect the aseptic processing industry to surge. Aseptic products can be shipped dry, can have longer shelf life and uses less water, energy and natural resources overall to be produced. These are three huge factors that keep customers competitive in this highly aggressive industry. The environmental and monetary cost of shipping products across the country in refrigerated tractor-trailers is enormous. If a customer can reduce shipping costs, it can have a direct impact on their bottom line. Packaging aseptically is a viable solution many are turning to.

>What defines a leader in packaging/contract manufacturing innovation? Hines: Leaders consistently stand above the crowd solving packaging problems, not just offering another me-too solution. Plus they do a good job of educating the consumer about what they are doing too. Gurland: A leader in innovation is the person or team that introduces something that makes the rest of us say, ‘Why didn’t I think of that?’ It’s that combination of creativity and commitment that takes a great idea and makes it happen. Darby: A leader in packaging innovation is a person or company that tries something that hasn’t been done before. Not every new innovation needs to be a runaway success, but most advances in the packaging industry have been attempted in one form or another before they become globally accepted and adopted. Bio-based and biodegradable plastics have been on the cusp of mainstream adoption for the past couple of years and largescale, worldwide rollouts appear to be right around the corner. Brown: I think what defines a leader is someone who is always looking for innovating and trying to push the envelope. We’re in a very mature market category. For us, from a vegetable stand point, when you think of canned vegetables, they’ve been around forever, and

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since grocery stores have been around, I mean canned vegetables were around in the horse and buggy days. We’ve done a lot from a size standpoint, from a labeling standpoint, nutritional value, and making the cans safer, and sealing better, and sealants, from a tin plate. But when you talk about innovation in that category, it’s kind of like a double-edge sword, the consumer trusts that packaging, it’s the way their mom bought it, and there’s lots of different options in canned vegetables, but the consumer will not accept that. On the flip side, when you look at frozen vegetables, you see that you’ve got a product that yeah, the bag was flimsy prior, and now you’ve got a nice looking steam bag, that bag acts as a cooking process, it benefits the consumer cause they don’t have to mess a pot up, you can cook it in the microwave without a utensil, there’s less prep time. They see the benefit of that, so they are more apt to accept that. So when you talk about companies who are more

innovative, I think it’s the ones who are constantly looking to change the packaging to something that the consumers will accept. Podnar: Rewarded risk by developing, manufacturing and sustaining benefits that clients want, use and profit from. Kroening: Making a conscious choice to be an innovator and willing to make the investments to make innovation happen. It doesn’t just happen, it comes with a cost and manufacturers need to have the mindset to accept that. Encouragement and support of employees to think outside the literal box also plays a huge role. Oxford: A co-packer leader is one that constantly evaluates the process and looks for ways to improve it. The bottling line is the most recent example of our innovation. Aseptic bag-in-box and pouch products

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became very popular and respected in the industry. Our leadership team acknowledged we could add individual bottles to our lineup to provide a new solution to our customers. Moving from bulk product to single-serving plastic bottles in the aseptic category was a big leap, but customers are really appreciating the advancement.

>What trends have you noticed in the world of packaging innovation?

to know how packaging is made, can it be recycled, and now, with advances in bioplastics, can it be composted or is it biodegradable. These eco-conscious consumers are driving retailers and packagers to offer new packaging materials that will meet consumer demand. Podnar: Lighter weights, new materials, higher graphics, sustainability on all facets.

Gurland: I think we’re seeing innovation in two major directions. The first is focused on improving costs along the supply chain. The second is tying into consumer trends – for example, trying to fit into consumers’ rushed lives. We’ve has seen a huge new category of ready-to-eat products with new, convenience-oriented packaging. I have no doubt that the interest in cost efficiency on the manufacturer’s end and time efficiency on the consumer side will continue.

Kroening: High-end color and images, printed special effects and unique structural design. Also, as one of the earliest adopters of eco-friendly commercial printing initiatives and one of the first to be FSC certified, MOSAIC is often asked about the effects of the environmental movement and how companies can go green. Being environmentally friendly is a no-lose proposition. Everyone can make small, incremental changes that reduce carbon footprints; and no one views genuine environmental awareness as a negative. Even small initiatives cast companies in a better light, one that cares about the environment and its clients. I would say we are in the midst of that movement right now with next generation folding cartons establishing their many advantages over formed plastics.

Darby: Packaging innovation trends are often centered on using less material (reducing costs) and improving consumer experience with the package. Packaging that is easy to use or catches the consumer’s eye is still a top priority, but today’s educated consumer wants

Oxford: The beverage category is highly competitive, and because of that, there seems to be a strong influx of new or improved products. Staying up on consumer trends and habits is crucial to the success of the business. ||

Hines: Everything is either green or interactive/intelligent packaging. People seem to like the hype and the gimmicks revolving around this type of packaging innovation. The media love green so everybody is jumping on the eco bandwagon.

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