A game changer. That’s what ecommerce and business experts are calling Amazon’s recently announced acquisition of Whole Foods. Amazon has already been leading in ecommerce packaging, especially for durable goods. How will this venture change the retail landscape, especially for fresh foods and beverages? And what might it mean for product packaging?
Packaging Digest asked a trio of analysts (see their bios at the end of the article) for their opinion on the deal and its probable packaging impacts:
• Scott Deutsch is the president of Ehrhardt + Partner, North America, a global provider of warehouse management systems (WMS)/warehouse control systems (WCS)/voice solutions.
• Stephen Kaufman, is the chief product officer of BLUE Software, a label and artwork management solutions provider.
• Dan Wilkinson is chief commercial officer of 1WorldSync, a multi-enterprise, global product information network with offices in the Americas, Asia Pacific and Europe.
Dan, you’ve said you think this acquisition of a trusted grocery partner could place Amazon as the clear market leader in e-grocery. Why is that so important?
Wilkinson: Trust has been one of the biggest barriers for the grocery industry in the shift online. Historically, consumers have been adamant in their desire to touch and feel a perishable food item before purchasing it, and only in the last couple of years have organizations been able to slowly gain consumer trust to purchase perishables online.
Whole Foods’ has built its brand on a reputation of trust, using its organic-only products and detailed product content approach to drive loyalty with its customers. With this acquisition, Amazon absorbs that reputation of trust and gains access to Whole Foods’ loyal customer base. Other retailers in the online grocery industry have struggled with this, including Amazon, due to its position as a marketplace, not a pure-play retailer.
Along with Whole Foods’ brand reputation, Amazon gains 431 new fulfillment and distribution centers across the nation, giving them greater power to improve fulfillment of grocery products and improve trust to acquire new grocery customers. With Whole Foods’ brick-and-mortar stores and Amazon’s powerful ecommerce technology, the company has effectively solved the last-mile fulfillment barrier that has prevented widespread consumer and retailer adoption of omni-channel grocery.
Industry experts have speculated that Amazon’s purchase of Whole Foods is a strategic way of expanding Amazon’s distribution of fresh foods bought through ecommerce. What do you think and why?
Kaufman: Amazon’s purchase of Whole Foods might indeed be a method for expansion of fresh foods distribution, but the move goes much farther than that.
At the heart of this acquisition is Amazon’s pursuit of a richer and deeper experience with its customers.
You can only develop so much of a relationship with a web page and a box. The consumer is looking for engagement that can best be served in a crafted environment like a store. Much like Apple, Amazon realizes that a store can become an emotional destination, and Whole Foods already has developed this type of relationship with shoppers: 460 stores in the U.S., Canada and the United Kingdom, and $14 billion is more than an experiment.
Amazon also realizes that eventually Walmart and others will catch up with online retailing; Amazon wants to move into Walmart’s space to make it defend its home turf.
Add to this notion the idea that Millennials are increasingly more aware of where food (and especially fresh food) is sourced. Whole Foods’ supply chains only span a few counties for some products based on “buy local” sentiments. Amazon will find a way to bind these micro-chains to online fresh shopping, while simultaneously leveraging the in-store experience with the same consumer.
Expect to see a new blended experience between online and retail where online orders can be picked up at Whole Foods, and items ordered and purchased at Whole Foods can be delivered through Amazon’s growing delivery network. Shop with your friends, go to a movie and have all your groceries arrive tomorrow morning at your respective homes.
All makes for interesting and compelling combinations.
Wilkinson: I have no doubt that this was a strategic move by Amazon to improve its ability to sell fresh foods online. The two barriers that Amazon need to get over to penetrate this market were consumer trust and fulfillment. They solved both by buying Whole Foods.
Amazon is now in the position to leverage Whole Foods’ 431 existing stores across the U.S., which gives them valuable fulfillment centers in highly populated areas and the ability to distribute fresh food quickly and reliably. Amazon could also use these stores as additional touchpoints if they wanted to sell other product categories outside of food in Whole Foods locations.
Additionally, Amazon can now leverage Whole Foods’ reputation for trust and authenticity, which has been a key driver in Whole Foods’ ability to grow and maintain such a loyal customer base. Amazon’s choice to purchase Whole Foods instead of another grocery chain was strategic—it saw the necessity of consumer confidence in the food industry and chose the most trusted grocery chain on the market to help it grow its online grocery presence.
Deutsch: I believe the strategic value in making the acquisition of Whole Foods by Amazon is really about building out its “local operational distribution model” to effectively compete with Walmart. Whole Foods is its “testing playground” to learn how to address the complex frozen and chilled grocery offerings.
In Whole Foods, Amazon obtains a high-end grocery chain with actually a limited market footprint, but room probably for greater operating efficiencies and thus the potential for lower and more competitive market pricing. When you compare the market footprint of Walmart’s 150+ distribution centers to the 11 distribution centers of Whole Foods, the scale of an Amazon/Whole Foods just does not compete effectively with Walmart.
Map shows the location of Walmart’s 150+ distribution centers in the U.S. Source: MWPVL Intl.
NEXT: The packaging implications?
A patented carton that can be made foldable or compressible addresses product and packaging waste concerns and is part of a family of inventions under the Project: I-Pack name that also includes a unique airtight, one-way-valve cap.
Do you ever crush gable-top cartons with your bare hands or stomp on them before putting them into the recycle bin to save space? I do it all the time. For others like me, there’s a European inventor who has a patented solution, one that also offers a unique valved cap that extends the shelf life of liquid foods and beverages. It arrives at a time when food, product and packaging waste are top concerns.
Muchtar Ismailow is general director/inventor with K-Bis Studio, a small family-run company that has operated within the Polish market since 2002. His patent was sparked by a problem-solution he pondered over a number of years.
“The idea of packaging to prevent beverages from going bad after opening was born long ago,” he says. “I did not like the fact that after consuming a small amount of juice or milk, the remaining packaged product had to be discarded after several days.”
While the product plays a role in shelf life, so does the packaging, that latter of which is attributable to the growing headspace as the product volume decreases with use. As a designer, he felt that there were solutions available down two avenues:
1. Creating a compressible packaging.
2. Creating a hermetic valve that would retain pressurization when the packaging was compressed.
“I like challenges, so I didn’t abandon the idea over these many months,” Ismailow says. “It was only when I was able to create a compressible carton—I considered only cartons for this, not other packaging—that I started working on the valve.”
The problem was not creating a hygienic valve by inserting a spring-loaded flap onto the valve assembly that would prevent let foreign bodies from entering the package. “The real challenge was to create a 100% airtight valve that would not let air pass,” he points out.
After much research and experiments with different materials and constructions, he reached a solution that was as surprising as it was ingeniously convenient.
“For me, the biggest success and surprise is that it is possible to place the mechanism inside the body of a standard cap,” Ismailow reports. “Another success is, of course, the price. We expect that in mass production the price will not be higher more than by 30% in comparison with the models present on the market of dosing caps or caps with cutting elements. The reason is that the I-Pack airtight valve can be made of the same standard materials and its construction is not more complicated than that of those valves.”
A drawing of the valved cap found in the patent filing.
The one-way valve is intended to allow the product outside and, of course, prevent its return back into the container. At the same time, the valve effectively blocks air from entering the inside of the packaging, thus providing a hermetic seal. The structure of the valve enables to be both on the outlet as well as on the screw cap. It is also possible to modify the shape of the valve for dispensing different products into various designs, such as a ribbon.
The I-Pack structure enables the user to adjust the product flow capacity and the pressure exerted on the paperboard carton.
The company applied for a patent in 2013 and in 2016 received European Patent EP 2845816. The basic idea of the I-Pack design is that as the product is used, the container can be reduced in volume until it is completely collapsed. The design specifies the scored creases and the specially contoured shape of the gable-top carton to define and facilitate the folding direction in specific way. This makes the process intuitively simple and natural for the user, Ismailow claims.
The patent covers four distinct products:
1. Foldable packaging with a normal cap. After emptying the package, the design facilitates folding and waste sortation.
2. Compressible packaging–with either normal or hermetic-valve cap for easy dispensing of liquid food and easier waste sorting.
3. Airtight valve can be found in the compressible packaging that also prevents the beverage from spilling when the package is dropped.
4. Airtight valve has additional value to extend the beverage freshness and shelf life after the package has been opened.
Of these four options, Ismailow feels that the two that hit on social welfare, environmental issues and sustainable development segments hold the most near-term promise. Those are the foldable packaging that provides real help in waste sorting and storage, or the airtight valve with compressed packaging, he suggests.
“The challenge for us is to promote the I-Pack Project, to exhibit it at Fairs and to distribute prototypes and brochures to decision-makers,” he says. “Our upcoming plans also involve finding financial support for this promotion.”
For further information, Muchtar Ismailow can be reached by email at firstname.lastname@example.org
For the last few years, packaging industry professionals have been curious about the future of smart packaging. While barcodes and quick-response (QR) codes, once considered the “next big thing” in packaging, have proved successful, worries remain regarding cost, feasibility and consumer engagement. With the potential to be a breakthrough in the industry, will brands be able to find the key to unlocking smart packaging?
The industry is already seeing some progress in the design and production needed to cost effectively incorporate near-field communication (NFC) technology into packaging, especially now that Apple has announced iOS 11 will have support for reading NFC tags. While ambitious, NFC has the potential to revolutionize the way customers interact with food packaging. By reinventing packaging as a fully interactive customer engagement tool, packaging could be elevated from a simple functional relationship to providing a useful and valued service.
It also opens up a realm of new possibilities by connecting a new host of everyday objects to the Internet of Things (IoT), the interconnected network of household objects that can collect and exchange data.
The idea of high-tech packaging poses the possibility of a symbiotic relationship between the packaging industry and tech companies aiming to establish the Internet of Things as a core feature of the modern household. Imagine food cans alerting you the product is about to expire, a milk bottle that texts you when you’re almost out of milk or pasta boxes that can suggest new recipes incorporating other ingredients in the kitchen. By weaving connectivity into our everyday lives, smart packaging has the potential to showcase the long-term future and practicality of NFC technology and the Internet of Things.
The potential for where smart technology in food packaging could go has no limit, but in the short-term future, here are four key prospects as to where we could see smart technology being embedded.
By scanning NFC chips embedded in packaging, consumers could gain access to recipes, cooking instructions and inspiration for specific products, offering a richer experience with much more information than could otherwise be included. By helping brands to engage with customers in this way, smart packaging could play a significant role in boosting brand engagement and helping to spur additional product purchases.
By alerting consumers when they are running low on a specific product, smart packaging can help brands to motivate (or even automate) replenishment, stimulating customer loyalty and avoiding competition from other brands at point of sale.
In a similar vein, brands can use this technology to detect when a product is about to reach its expiration date, thus helping customers to avoid food waste by prompting them to use the product. As the technology develops, we could see smart fridges that can detect the consumer’s buying habits or plan a week’s worth of recipes around those products and quantities.
The opportunity for packaging to aid authentication to ensure it is genuine and hasn’t been tampered with could be a real differentiator, especially in emerging markets where food quality and safety is a major concern for consumers.
Will consumers be receptive to their packaging becoming smart, or should the industry focus on certain categories, like high-end, luxury goods? Furthermore, with this large investment, what return on investment will companies see from this technology?
For smart packaging to survive as more than just a novelty, we in the packaging industry—alongside food and technology brands—must ensure that the technology is not only cost effective, but offers real value to the consumer with a consistent yet manageable availability of additional content and services. If we’re able to strike a balance between cost effectiveness and functionality, however, smart packaging has the potential to revolutionize the packaging industry and ensure packaging maintains its role at the heart of the customer experience.
Ian Lifshitz is the vice president of sustainability and stakeholder relations for the Americas for Asia Pulp & Paper Group (APP). He is responsible for leading the company’s sustainability and related stakeholder engagement programs across Canada, the United States and South America. Lifshitz is also charged with leading the company’s North American CSR activities, translating and communicating many of APP’s successful conservation, biodiversity and social community programs to North American audiences.
Because product giveaway = profit giveaway, you need to fix inefficient filling lines as soon as you can. A new option on the Versa checkweigher identifies when the filling machine produces overweight packages—as well as underweight ones—to help you keep fillers working at peak performance.
From Thermo Fisher Scientific, the Versa checkweigher—when equipped with this feature—will monitor the operation of up to 16 filling valves for liquid or viscous products: Think condiments, sauces, peanut butter, dairy foods, and personal care products like lotions, soaps and shampoos.
Alarms can be set to warn of deviations, up or down, from the ideal weight range. The system will also keep track of high consecutive rejects. All this is done in real time, so you can take necessary steps to maintain optimum accuracy throughout the production run and prevent problems. Remote monitoring is possible through Versa’s Modbus protocol.
Rick Cash, Thermo Fisher Scientific’s checkweigher product manager for product inspection, explains what’s involved in implementing this solution.
Fillers have been able to monitor and report on the accuracy of individual heads for a while now. What’s the benefit of having the checkweigher do this, instead of the filler?
Cash: This system is for fillers that do not have weighing capability. Monitoring flow is a good metric of performance but is not the same as weight.
What extra checkweigher setup is needed to connect it to the filler/filling valves?
Cash: The checkweigher needs a synchronizing pulse from the filler—every fill cycle—to identify when the leading bottle arrives at the checkweigher.
How does the checkweigher get that synchronized pulse from the filler?
Cash: The filler triggers a pulse upon the completion of a cycle and the subsequent release of the bottles, delaying the pulse until the initial container is about to reach the checkweigher.
The signal is a simple two wire D.C. logic signal sent to the data out of the checkweigher. The signal must be held high for a specified number of milliseconds prior to the arrival of the first container from each filler cycle. There is no other technology required.
What types of fillers does this work with?
Cash: Volumetric liquid or viscous product fillers. Also, those that have 16 heads or less, and a synchronizing pulse that properly identifies the leading bottle from every fill cycle.
How much does this optional feature cost?
Cash: It adds approximately 10% to 12% to the price of a checkweigher.
A revitalization of the iconic brand balances the past with the present to preserve what matters while making the packaging relevant to today’s consumers.
Any way you slice, dice or shred it, a redesign for an iconic brand in the dairy or any product aisle is backed by a lot of research, brainstorming and thoughtful decision making. That’s what Dairy Farmers of America faced for a new packaging design for its Borden Cheese, a brand familiar to generations of consumers. In a look that blends the past with the present, new packaging pays homage to the 8,000 family-owned American dairy farms that make up the Borden Cheese family while resonating with consumers.
Packaging Digest interviews Flavia Panza, senior director, marketing, Borden Cheese, Dairy Farmers of America (Kansas City, KS), about this shakeup for the entire portfolio of 120 SKUs across eight lines of cheese products including shreds, chunks and slices.
When was the previous design? And why the redesign now?
Panza: Our last major redesign was introduced in 2007. The Borden logo was changed in 2011, but the packaging otherwise remained the same. Our packaging refresh today represents just one of the many efforts to revitalize the Borden Cheese brand—a long-term project rooted deeply in consumer insights and an understanding of the needs of the dairy market.
What was the timeframe from start to finish?
Panza: We began this journey in early 2016, starting with a major design exploration that included many rounds of concepts and revisions, followed by quantitative/qualitative testing and focus groups. The new packaging graphics began reaching store shelves this spring.
What were the basic goals? What elements were retained?
Panza: At the onset of the project, our overall goal was to understand what elements of the current packaging were considered “mandatory” from a consumer point of view. In other words, what elements had to stay in the new design? What aspects of the brand resonated most, and what were seen as less necessary or superfluous? Our research surveyed respondents on everything from overall thoughts on the current design to the messages being conveyed through the packaging, as well as what kind of information consumers look for at the point of purchase.
We learned that the current Borden Cheese logo – including the unique font and Elsie the Cow – was iconic and well known. Additionally, the red color from our legacy packaging also signified “Borden Cheese” and represented differentiation from others in the dairy aisle. We found that consumers were drawn to the wholesome, nostalgic feel of the brand and its packaging, which presented a unique challenge in our efforts to refresh and update such an established brand.
What’s the new design hierarchy and did that change from before?
Panza: The design hierarchy essentially did not change. We did, however, apply a consistent aesthetic language across the portfolio, including placement of standard packaging elements and color cues for various flavors.
One notable change is how we communicate our farm heritage and ownership. Our research revealed that although our outgoing package indicated these aspects, consumers did not understand them. To that end, a farm theme is more effectively integrated into the design, without being too overt or distracting. Our hope is that consumers will be drawn to this and feel good about their purchase supporting American farm families.
What new aspects reflect changing consumer preferences?
Panza: The farm landscape reflects our dedication to the American, family-owned dairy farms that make Borden Cheese what it is today. All of our packages proudly state “Real Cheese, Real Good” to highlight the nutritional value and quality of the product.
Additionally, we have added more information to the back of the labels to share our brand story, including our rich heritage and commitment to more than 8,000 family-owned dairy farms across the United States. The back panel of many SKUs now features a farm family—actual members of our dairy cooperative that help make Borden Cheese possible.
Next: Difficult decisions, consumer tests, lesson learned, challenges and more…
By 2020, patients will have six connected items, predicts Matt Jennings, president and CEO of Phillips-Medisize Corp. “Investments in connected health solutions [are] accelerating by traditional medical device companies,” he explained during a company press conference at MD&M East 2017 in New York City. In addition, “pharma dosage forms are evolving and connected devices are proliferating to drive compliance and improved outcomes.”
Many of the products in today’s biopharma pipelines will require some sort of delivery device, he added.
Given the complexities of drug-delivery devices, especially connected devices, there is a certain amount of risk. With its recent merger with Molex, Phillips-Medisize is working to reduce that risk. “Molex’s capabilities allow us to develop more-complex connected and electronics-enabled devices,” said Bill Welch, chief technology officer. The 2016 merger has resulted in a company with “global scale to support integrated design and production of complex electro-mechanical devices and enhanced capabilities related to electronics, connectors, assemblies and other novel technology,” said Jennings.
Speaking of the effort to integrate strategy, product development, and manufacturing, Welch said that “our process reduces time to market and lowers launch risk.”
“We eliminate the separation between manufacturing and development steps, which could add 6 to 12 months,” he said. “We have parallel product and manufacturing development.”
For example, as Phillips-Medisize’s product designers are “going through product development,” members of its manufacturing team “participate in design reviews and other key development checkpoints to start conceptualization and specification of production tooling and equipment,” Welch tells PMP News.
And there is never a “firm hand-off,” Welch adds. “As design development ramps down, manufacturing development ramps up. And we have one program manager for a level of continuity.”
Above: Phillips-Medisize’s approach to integrated lead times.
Phillips-Medisize put the strategy to work recently for an electronics-enabled inhaler. “We brought the end price down for the customer, improved the technology, shortened the timeline, and reduced launch risk,” said Welch.
But market success with a connected device depends upon more than design and manufacturing success. It also requires identifying the role that a connected device could play in improving patient compliance and outcomes. Phillips-Medisize is working to help companies figure that out.
“To be reimbursed on improved health outcomes, you need to be able to track improved outcomes,” said Jennings during the press conference. “How do you do so?”
Added Welch: “How can I use data and connectivity to improve patient outcomes?” he asked. “If I cannot figure that out, I probably shouldn’t add the expense of connectivity.”
Welch said that Phillips-Medisize can conduct “device strategy engagements” to help companies develop a connected health plan. He pointed to a recent project in which his team helped a customer develop a connected device for treating multiple sclerosis. “Patient engagement and comfort” were among the goals of the project. “The reason the device is larger is to help patients with dexterity issues,” and the companion app is intended to help compensate for declining memory capabilities by logging key patient injection information beyond simple date and time recording,” he told PMP News.