Sustainable packaging takes backseat in Asia says GlobalData

GlobalData has released a new report showing that high inflation since 2022 has been sapping Asian consumers’ enthusiasm for sustainable packaging. Only a third of respondents consider recyclable packaging when making purchasing decisions.

According to GlobalData, sustainable packaging has been gaining pace in the region, becoming even more prominent during the pandemic. However, when sustainable packaging is gaining critical mass globally, it has been taking a backseat in Asia due to the high inflation in the region.

Parthasaradhi Reddy Bokkala, lead consumer analyst at GlobalData, said: ‘Sustainable packaging initiatives have been driven by consumer awareness, corporate commitments to prove green initiatives and regulation. Given the multiple factors encouraging sustainable packaging, manufacturers have increased their investments. With all-round support, sustainable packaging has been trending, especially since the COVID-19 pandemic, when consumer awareness increased. However, the high inflation since early 2022 has dampened these initiatives.’

‘Sustainable packaging materials are generally priced higher than traditional packaging materials,’ added Deepak Nautiyal, consumer and retail commercial director for APAC and the Middle East at GlobalData. ‘They require special manufacturing processes to be acceptable to consumers. However, these processes increase the costs of the material. Amid rising input costs, manufacturers are not in a position to absorb these costs and have to pass them on to consumers, which will ultimately lead to price increases. Given the high prices due to inflation, products would become even more expensive with the addition of these costs.’

According to Bokkala, Asian consumers, who are generally enthusiastic about embracing products with sustainable packaging credentials, are now highly concerned about high inflation and economic uncertainty. This makes them more pragmatic with their purchase decisions. Consumers are in a dilemma between supporting sustainable initiatives and scouting for cheaper prices.

‘Consumers’ confusion can be gauged from a recent GlobalData consumer survey, wherein nearly a third (31 percent) of respondents opined that recyclable packaging is an essential feature when purchasing products,’ said Bokkala. ‘Conversely, 58 percent of them responded that they are checking or comparing prices before a purchase, while 46 percent stated that they are switching to cheaper brands.’

‘With consumers in a dilemma between their choice for sustainable packaging and their pursuit of cost savings, sustainable packaging manufacturers face significant challenges in the coming years. While inflationary pressures have mostly eased, the volatile geopolitical situation across the world is leading to economic uncertainty, which is not the best time to coax consumers to spend more on something that may not have a tangible benefit. As such, sustainable packaging initiatives will be adversely impacted in the immediate future,’ concluded Nautiyal.

The 2024 Q2 Consumer Survey – Asia and Australasia, has been published by GlobalData in July 2024 and included 6,506 respondents from the region.