Sean Riley:
So with all the fancy introductions out of the way, welcome to the podcast, Steve Davis.
Steve Davis:
Nice to meet you, Sean.
Sean Riley:
So what inspired the research that ultimately led to how packaging impacted solutions in 2023? You spoke about this on the innovation stage at PACK EXPO Las Vegas. What was it that really triggered the research for you?
Steve Davis:
Industrial physics, as you know, operates in a multitude of end markets. We operate in the consumer end market. We operate in white goods and that kind of thing. We've got general sort of testing inspection equipment for packaging in general cardboard, et cetera. And we're very big into metal packaging and PET. We've got a bunch of teams working in the product group, helping customers with technical questions and testing materials, et cetera. And over the years it's been a fairly well trodden path.
And then throughout the end of 2021, 2022, we started to get requests to test materials that we hadn't seen before or test existing materials in a new way. And they were all, I wouldn't say left field, but just unusual for the sort of standard types of tests that we've been producing for years or test methodologies. And we just wanted to understand more from our customer base about why they were asking these questions. What was driving them to test these new materials or what was the catalyst? And hence the research that we commissioned with a third party to go out to our customer base and just ask some fairly straightforward fundamental questions. And that really was the inspiration for the report.
Sean Riley:
After doing the report and pulling the research and the data, was there anything in the research results that surprised you?
Steve Davis:
Yes and no. I think the overall focus on plastics, if you like, from the broad gamut of materials, as sustainable as they already are, some of them are seen as not sustainable. But in principle, it was the amount of focus that was being put on plastics within the industry as the material of choice to try and innovate around or off or away from. I think over half the people that we interviewed said, "We're trying to innovate away from plastic." That was by far and away the biggest category. And that kind of surprised us, really. We all knew it was happening in the background, but just the amount of the level of focus on those particular materials was quite interesting and surprising.
Sean Riley:
Was this just flexible packaging, plastic for packaging, or rigid as well, or a little bit of both?
Steve Davis:
No, it went across the whole thing really. So rigid plastics were the number one focus, followed very, very closely by flexible packaging. So the 59, 60% of the respondents said that rigid plastics were their biggest area of innovation or focus, followed by about 59% for flexible packaging. So again, plastics either scored very highly in the dataset that we got from our customer base.
Sean Riley:
So I guess, could you share some examples of the packaging innovation that you've been seeing in the industry this year?
Steve Davis:
There's some really funky ones, which the most interesting one is a functionalized paper, which is a mixture of paper and resin. It's a hundred percent recyclable. Traditionally with papers, particularly, they've always got some sort of plastic membrane attached to them, which is the impermeable barrier, if you like, or the waterproof barrier. And it makes it very difficult to recycle in the circular economy. It's difficult to separate plastic from the paper. And yeah, perhaps the most interesting one out there was the material, this functionalized paper, which is intended to replace that kind of material and give you a completely 100% recyclable paper rigid container. And I thought that was a really interesting one.
In terms of the existing materials that you're seeing that we already have in the marketplace, I think the most interesting innovation is the amount of water which traditionally has gone into either plastic rigid containers like our PET or virgin PET, which are transitioning across into metal containers. So there isn't a day goes by without you see some brand owner launching a water brand in a rigid metal container. And I think those are the two kind of standout things that I've seen this year in the industry.
Sean Riley:
Fascinating. I guess, how are you and your team impacted by the significant level of innovation we're currently seeing in the packaging industry?
Steve Davis:
It's given us some good challenges. Like I said earlier, we have a bunch of product professionals steeped in their industries, who are there to assist the industry in the development of standards and tests. And they're really being challenged to come up with new test methodologies, new test methods, and new standards, because most of the standards that the industry uses within rigid containers or flexible packaging are actually in-house standards. Maybe only 30% of them come from government standards or ASTM standards or ISO standards.
So the bit that's impacting us the most is with these new materials or the innovation, if you like, or the developments that people want to make, is the assistance that we're giving in the development of new testing standards and test methodologies in order to be able to get these materials to the point where people trust them, they're reliable, and they can then deploy them in the marketplace. And on top of that, when we are thinking of developing a new products, a new test, or a new gauge, a new instrument, we have to think of a broader scope of applications than perhaps we did before or just a different set of terms of reference from our customer base.
Sean Riley:
Interesting. So do any of these concern you, any of these innovations concern you from what you're observing? If so, what concerns you about the innovations that you're observing?
Steve Davis:
I think the only thing we've currently got a concern about is the speed at which we can develop the standards with the industry, particularly where in-house standards are concerned. Government standards tend to sort of be a little bit more straightforward to deal with. They're well flagged, but they're not necessarily targeted at the user's success in manufacturing. Most of the industry standards are there to make sure that you can manufacture them successfully and they're fit for purpose. So if you think about, for the sake of argument, in metal containers, they switched a while ago from epoxy based slackers to polyester based slackers. That was well trailed by the governments, and that caused some new tests that needed to be made or additional tests that needed to be made to the metal containers to make sure that they did comply.
But in principle, the switch caused manufacturing issues, which the industry needed to solve. And it's really how fast you can develop tests and the standards to allow the customer base to successfully deploy those new materials, I think is the concern that we have. There's billions of good ideas, lots of people focusing on different types of material for different packaging mediums, but it's how quickly you can develop the standards so that people trust that the medium will provide the solution to the task it's being given.
Sean Riley:
Yeah, that's understandable and makes complete sense. So I guess, what do you expect to see happening within the industry over the next months, next couple of years, things like that? What sort of developments are you expecting?
Steve Davis:
Good question. It's such a broad church and it depends which end market you're looking. In consumer goods, they've got a slightly different need, in terms of it's not necessarily got to be reusable, but it does need to be recyclable. In the rigid packaging industry for drinks, for instance, then there's lots of emphasis being put forward in terms of reuse. And then in the pharmaceutical industry, they're not at all interested in space, and they're not at all interested in any kind of legislation that's coming down the track. I think they're ahead of the legislation, and they probably write it for them. And I think in the pharmaceutical industry, it's a given, anyway, that you really do have to comply. That the penalties for not doing that are draconian.
So I think the research tells us that everybody is innovating. 89% of the people surveyed said that they're invested in innovation and packaging. The choices of materials they're looking at are incredibly broad. The applications are incredibly broad. There's less emphasis on what the customer actually would like to see, in terms of shapes and diversity. I think the industry's focusing more on the sustainability argument, hoping or expecting that the marketplace just accepts that as the primary driver, sorry, the primary reason why they would purchase them. In other words, you're not that bothered if your Coca-Cola's in a red container as long as it's in recyclable packaging or reusable packaging.
So I think we're just going to see so much more diversity over the coming few years, and I think it'll take maybe longer than a few years for some of these alternative materials, biodegradable materials to get to market. And I think we'll see customers potentially shifting packaging formats in the future as they strive to beat their sustainability goals. I think we're likely to see lots of supply chain constraints, particularly around recyclable materials. And I think again, that may well drive some of the brand owners to switch packaging formats into a recyclable material that's more available or as a more solid circular economy.
Sean Riley:
Very, very interesting. So I guess to kind of put a button on our little talk here, circling back to the research that you guys put together, what would you say is the biggest lesson that packaging professionals should take from that research?
Steve Davis:
There's so much in the report to view, but I think it's the breadth, really, of the materials that people are looking at. Yes, there's some key number one focuses, focus points, but there's such a breadth of materials that people are looking at, and underlying that, and many, I think different and local reasons why they might become successful. Certainly, talking to some of my key customers, if you ask them if they're going to put their drinks into paper, they say, "Certainly not because it's not recyclable." What about other containers? Certainly not because I view the energy requirements of a recycled aluminum container to be too high. So I think the key takeaway is it's a complex area with many, many drivers which are visible and lots of personal views within the key decision makers, which are going to drive the way packaging is developed in the coming years. And I think that's probably the key one, just the complexity of the problem.
And I think the second point is that everybody came back to us and said that cost is a major concern or consideration in their choice of material. They've got a business model which is based around certain container cost and a certain whatever goes in it cost, and depending on the industry. It's not an issue in the pharmaceutical industry, less of an issue when it comes to the consumer goods industry. But a big issue when it comes to the food and beverage industry because the container in certain circumstances forms a fairly sizable component of the cost, and in other areas it doesn't. So again, cost is a big consideration that stuck out in the report, like a bit of a sore thumb.
Sean Riley:
Interesting. Yeah, cost is always a driver of change or poses a barrier to being a driver of change. So that's interesting that that would also go along with this report as well. With that, I want to thank you so much, Steve, for taking time out of your day to come on here and sort of break down how packaging impacts testing solutions and sharing it with our audience.
Steve Davis:
Thank you very much for the opportunity.
