2016 Total Packaging Market Size (million units):

105,163

2011-16 Total Packaging Historic CAGR:

0.8%

2016-21 Total Packaging Forecast CAGR:

1.1%

• The total UK packaging industry, sized at over 105 bn units in 2016, is expected to see moderate growth.
• Food and beverage packaging continues to dominate packaging, but beauty and personal care and home care packaging present niche growth opportunities.
• Flexible packaging continues to lead in size, and rigid plastic ranks second.

• Premiumization is gathering strength in beauty and personal care packaging. Customized glass bottles and jars are benefiting from this trend, with producers becoming more likely to demand distinctive features on their packaging. Folding cartons within secondary packaging are also seeing a good performance.
• The increasing frequency of occasion-driven consumption is affecting food packaging. Consumers are increasingly eating on the go as a result of hectic lifestyle and diminishing free time for sit-down meals. Packaged food manufacturers are responding to this trend by launching convenient packaging solutions. Product areas impacted by this trend include breakfast cereals and cheese, as well as baby food.
• Home care pack sizes are decreasing as formulas become more concentrated, particularly for laundry and dishwashing detergents.
• Smaller soft drink pack sizes are becoming more popular in the anticipation of a tax on sugary beverages starting in 2018.
• Premium packaging is more commonly used to differentiate alcoholic beverages as increasingly health-conscious consumers reduce their alcohol consumption. The craft beer trend is benefiting customized glass bottles, while embossing and engraving are increasingly being used to add a luxurious note to spirits packaging.

• Brexit creates some uncertainty: Most of the UK’s regulations pertaining to packaging originated in the European Union (EU), and there is some degree of uncertainty as to whether those regulations will stay in place after the UK leaves the EU in 2019. However, the UK government has signaled that there will be no sudden changes to regulatory frameworks immediately after the UK leaves the EU.
• Packaging recycling targets are likely to increase in coming years: There are ongoing discussions in the EU regarding the Circular Economy Package, which aims to increase recycling targets and facilitate the reuse of post consumer recycled materials with waste viewed as a resource rather than a burden. The UK Department for Environment, Food and Rural Affairs has thus played a role in negotiations regarding the Circular Economy Package and has stated that it anticipates the UK will adhere to the proposals set forth in this package. As a result, recycling targets for packaging and waste are expected to increase in the forecast period. This bill is also expected to discourage landfill via economic instruments and a ban on land-filling for separately collected waste, while also stimulating reuse and a symbiotic approach to waste across industries and incentivizing the use of more environmentally-friendly options.
• The Packaging (Essential Requirements) Regulations of 2015 have limited impact: The Packaging (Essential Requirements) Regulations came into force in October 2015, replacing the Packaging (Essential Requirements) Regulations of 2003. These regulations seek to reduce the impact of packaging on the environment by minimizing its weight and volume and requiring that packaging can be reused, recycled or recovered (incinerated to produce energy or composted). While company audits increasingly focus on reusing waste, there remains less of a focus on minimizing packaging. Premium packaging often continues to utilize heavy glass and secondary folding cartons. Online sellers are also often likely to use excessive packaging for goods in transit, with these players very difficult for the authorities to monitor.

• Innovation in environmentally friendly packaging: Striving for more sustainable packaging remains one of the key trends within UK packaging overall, with Coca-Cola notably announcing plans to use 50% recycled PET in its plastic bottles by 2020. The government and many consumers alike are putting pressure on companies to improve their environmental credentials, while environmentally friendly packaging will attract a growing number of customers.
• Growing interest in return schemes for plastic and glass bottles: There are no deposit and return schemes for glass bottles in the UK via the on- or off-trade. However, some link the increases seen in plastic waste to a lack of such schemes, which were previously widely used in the UK until the 1990s. Deposit and return schemes could also be used to reduce costs in the on-trade channel. There are also calls for a deposit and return scheme for plastic bottles in the UK, with similar pilot schemes proving successful in countries such as Germany and Australia. The government called for views on setting up a plastic bottle deposit return scheme in October 2017, with the aim of reducing plastic waste.
• Recycling rates fall in England for the first time: December 2016 saw the announcement that household recycling rates had dropped for the first time in 2015, with EU targets for 2020 thus unlikely to be met. The combined recycling and composting rate for household waste reached 44% in 2015, down from 45% share in 2014. As a result, the government has floated the idea of implementing a tax on packaging manufacturers to fund recycling initiatives.

• Key ingredients highlighted on labels to attract consumers: UK consumers are increasingly aware of a wide range of healthy and unhealthy ingredients and are becoming more likely to scrutinize ingredients lists as a result. Many are seeking more natural and organic options. Labels are thus key in attracting consumers across many areas from beauty and personal care to packaged food.  
• Package designs and labelling encourage sharing: Manufacturers in products such as confectionary and savory snacks are increasingly embracing the sharing trend and are adjusting packaging design and labelling accordingly. Nestlé's Kit Kat Snap and Share was, for example, launched to encourage consumers to buy larger packs in order to share with either friends or family.
• Flexible packaging offers transparency, cost benefits and lower environmental impact: Flexible packaging benefits from a number of factors in attracting both consumers and producers. Consumers in the UK remain highly price-sensitive as a result of ongoing economic uncertainty, while cost pressures from grocery retailers are increasing for players in fast-moving consumer goods. This is encouraging a focus on lower-cost packaging formats, which is in turn benefiting flexible packaging. Flexible packaging is also benefiting from a growing focus on environmental issues, being light in weight and easy to recycle.