The research findings described in these extracts are based on qualitative research carried out during two periods in 1996 and 1997.

The methodology employed was face-to-face in-depth interviews with multinational fillers in 7 European markets, which was supervised by two specialised organisations : Market & Industry Analysts and ITC, in co-operation with our communications consultants.

The findings are now in the process of being quantified, which will allow us to monitor the progress of our "Steel for Packaging" programme over time.

Determine the criteria applied by multinational FMCG companies in their choice of packaging material.

Understand, in detail, the decision-making processes in place in these organisations.

Increase our knowledge concerning the attitudes of multinational FMCG companies towards packaging manufacturers.

Understand FMCG companies perceptions today regarding each type of packaging material.

Delineate their future packaging requirements.

3. CRITERIA OF CHOICE

The choice of packaging is limited by the type of product in question.

Considerations are:

Integration into the manufacturing and distribution process, and in particular, the speed of filling, which has an impact on price. Lower speeds and therefore higher prices are acceptable.

Protection of the product. This is of critical importance because it concerns the health and safety of the consumer and the liability of the manufacturer.

Consumer preference. Consumers look for ease of handling, storing and opening as well as more intangible values. They may have particular requirements for certain products, e.g. microwavable packs for ready meals, and some may be concerned about recyclability. The last point will be more of an issue in countries with strict legislation. One U.K. FMCG company says consumer preference as determined by consumer research is the key factor, but other respondents thought other factors were determinant.

Cost. The price of the packaging is important, but not usually critical, except perhaps in the case of low value products. Cost has to be considered in the widest sense, including the cost of the production process involved.

Weight is of less importance than the previously mentioned factors. In terms of transport cost, volume may be more important. Consumers probably prefer lighter packs.

Appearance. Appearance has become more important because consumers have a wider range of choice. It also promotes impulse purchasing. Original and attractive shaping to increase shelf differentiation and impact are therefore becoming increasingly important.

Retailer preference. Retailers generally have no particular requirements except that the pack should be stackable, and in Germany, it should be recyclable. For their own private label brands, retailers tend to imitate brand leaders in all respects, but say that they could change their source of supply if the supplier could not offer the packaging they wanted. For manufacturers of private label products, the preference of retailers is the only factor.

Company strategy. Companies may decide to adopt a new type of packaging in order to redynamise a brand and to create an image of strength and dynamism for the company. Companies may also introduce a new type of pack simply because their competitors have done so, as a defensive measure, or to be fashionable. One major FMCG company said that the decision to change packaging is largely motivated by the desire to remain market leader and therefore to be at the forefront of packaging technology.

Functions involved at one stage or another in decisions about packaging are generally:

- general management
- marketing
- purchasing
- production (except in retail companies which do not manufacture)

Other functions, which exist in some companies, and which may be involved are:

30% of the companies interviewed had a specific packaging development function. About the same number of companies have a packaging purchasing function, i.e. a person whose job was exclusively to buy packaging material.

The relative importance of the different functions can vary from company to company and also from case to case. Many "small" decisions with no marketing implications such as a decision to go for a lower gauge, or to use a new type of coating, seem to be decided almost entirely between the purchasing and production departments, and the packaging development department if such exists. The job of the purchasing department was said to be "to continually challenge specs to reduce costs".

Major decisions such as the choice of packaging for a new product will usually be taken within the context of a "brand group" which will hold regular meetings during the period leading up to the launch and which will involve all relevant people. The brand manager, who is a member of the marketing department, will take the lead in this case. The purchasing and production departments are sometimes asked to explore the feasibility of the idea.

All the companies interviewed said they did not use outside packaging consultants because they had the necessary expertise in-house, although some called on their advertising agency or design consultants to help design the label. This occurred at a late stage of the decision-making process. As described elsewhere, there is often close collaboration between the filler and the packaging supplier.

In all multinational companies, there are more or less important and more or less formal exchanges of information and experience, especially between executives working in the same fields. Several have central packaging development units responsible for giving advice and disseminating information.

Most fillers seem to use several can manufacturers. Some have long term contracts with can suppliers. One major marketer says that they give 10 per cent of their supply contracts to "small suppliers with good ideas".

Relations with packaging manufacturers, specifically can manufacturers, seem to be generally good. In many cases there is a working partnership to develop new products. One organisation described a structure where it has new product development teams appointed to each of its 5 suppliers. These teams consist of people from R&D, manufacturing, marketing and purchasing who hold monthly or quarterly meetings. Another marketer indicated that the launch of a new pack was a matter of close co-operation between the packaging manufacturer and the filler.

The close co-operation in new product launches does not seem to involve any problems of confidentiality, despite the fact that in the UK for example, there are only three can manufacturers. It does not appear that can manufacturers give financial help for new product launches, however the client may receive exclusivity for a limited period in the case of a jointly developed innovation.

The advice given by can manufacturers was generally considered satisfactory, although small can manufacturers were said to be less well equipped to give advice than the big companies. Packaging manufacturers are also an important source of information about new developments.

6. UNDERSTANDING FILLERS PRESENT PERCEPTIONS

Overall perceptions of steel cans amongst research respondents are as follows :

Steel cans and glass jars have been the traditional methods of packing retorted products. Nevertheless, it is evident, based on our knowledge of recent technological developments in steel packaging, that the FMCG companies we interviewed have little awareness of the newer characteristics and properties of steel cans.

Other developments mentioned were :

Only a few of the FMCG companies interviewed manufactured their own cans. Economic conditions and the supermarket price war have not allowed some of them to update their equipment as much as would have been desirable.

Even without its own can making facilities, a manufacturer can be committed to cans by a long term contract with a can manufacturer and more importantly, by the fact that his whole manufacturing process is geared to canning. Moreover, the product itself is strongly associated with a type of processing.
Changing from cans to any other type of packaging would inevitably lead to higher costs.

7. FUTURE REQUIREMENTS OF FILLERS

Recyclability

Recycling and environmental questions are not yet really an issue in France, Italy and the UK. However, manufacturers producing for sale in Germany have to take account of stricter laws in that country, e.g. by reducing the weight of packaging. In the UK at any rate, it is anticipated that new laws will include financial disincentives for excessive packaging, and one respondent said that requirements for recyclability could lead to a major revival in the use of steel cans, independently of other technological breakthroughs.


Information

All respondents say that either they, or one or other of their colleagues, read the main national or European packaging, food industry and marketing journals, and marketing people especially read grocery trade journals. Some read US journals, which contain information about new developments in packaging. Some packaging specialists also read more technical journals such as chemical industry journals for information concerning materials.

Most companies or relevant individuals within the company belong to trade or professional associations related to packaging.

People from most companies visit the main European packaging exhibitions and some also go to the United States.

Executives in many multinational companies receive internal company information more or less systematically from a central packaging department.

Most respondents said that their preferred source of information was personal contact with:

Many respondents suggested that there should be more direct contact between steel producers, can-makers and fillers. Co-operation between all sides (FMCG companies, can manufacturers, steel manufacturers, and eventually machinery manufacturers) should be fostered.