Packaging is viewed by brand owners as critical to a brand’s success, and even more so given headwinds from the current macroeconomic conditions. Middle market and micro brands, in particular, view packaging as integral to their brand positioning and image. Tier 1 brands, meanwhile, tend to spend less on packaging as a percentage of selling price relative to their smaller peers (driven at least partially because of scale economies and buying power), whereas the health and household category spends the most on packaging overall.
Those are among the findings of L.E.K. Consulting’s seventh annual proprietary U.S. Brand Owner Packaging study. Conducted during the fourth quarter of 2024 and the first quarter of 2025, the study analyzed key issues facing brand managers and packaging stakeholders, from the importance of packaging to brand owners and how they plan to respond to an expected increase in packaging costs in 2025, to how brand owners change packaging to meet sustainability goals and how they are focusing on innovation to drive growth.
Assessing the results of this latest study of brand owner sentiment can make clear a number of important implications for converters.
Key insights for 2025
With this latest study, we examined a handful of critical issues facing brand owners in 2025 and asked a series of related questions, the answers to which we’ve collected and presented in a series of four distinct articles focusing on these topics:
- The importance of packaging to brand owners — How important is packaging to a brand’s success? How does relative spend on packaging vary by end market and customer segment?
- Packaging cost expectations for 2025 — What are brand owners’ expectations for packaging cost changes over the next four years? What actions are brand owners taking in response to increasing packaging costs?
- Brand owners’ approach to meeting sustainability goals through packaging — How do brand owners define sustainable packaging? How much progress has been made toward meeting sustainability goals, and what primary actions do they expect to take over the next four years to achieve these goals?
- How brands are leveraging innovation to drive growth — What are brands’ approaches to new stock-keeping unit (SKU) innovation and investment? How are they expected to change going forward? What aspects of product innovation, if any, are driving the introduction of new SKUs?
The importance of packaging to brand owners
As this first article in our four-part series makes clear, despite concerns around challenging macroeconomic conditions, packaging is viewed as critical to the success of a brand, according to our latest study. Nearly all (99%) of our study respondents said they viewed packaging as highly important to brand success, with middle market ($750 million-$2.49 billion in annual revenue) and micro (less than $250 million in annual revenue) brand owners, in particular, emphasizing its relatively higher importance compared with the overall average.
Also notable is how branded products’ brand owners rated packaging as “very important” at a rate two times higher than private-label brand owners did. Tier 1 brands, meanwhile, tend to spend less on packaging as a percentage of selling price relative to smaller peers (see Figure 1).
The importance of packaging in brand success is also rated high across end markets, especially in beauty and personal care. But while beauty and personal care brand owners place the greatest importance on packaging, they spend relatively less on packaging as a percentage of retail selling price, given the higher average selling price of their products on an absolute basis relative to other end markets (e.g., health and household, food, beverage) (see Figure 2).
This creates an opportunity for converters to serve beauty and personal care brand owners with high-value packaging solutions that enable those brand owners to stand out and “win” with end consumers — and in the process, capture higher margins (see Figure 3).
To learn more from our four-part series of articles, please see our next summary of study findings, which looks at how brand owners plan to respond to an expected increase in packaging costs in 2025. And don’t miss our overview of how brand owners will continue to change packaging to meet sustainability goals, or how brand owners are focusing on innovation to drive growth.
About the study
For this seventh annual proprietary study, we surveyed 400 U.S. brand managers and packaging stakeholders to understand their packaging needs and views on trends driving demand.
As in prior years, the study looks specifically at packaging trends related to spend, the evolution of sustainability in packaging and SKU dynamics, and highlights how perspectives on these topics have changed over the past few years.
As to survey respondents, we targeted brand managers and other packaging decision-makers at consumer packaged goods companies who were:
- Responsible for or directly involved in making packaging decisions for a consumer brand
- Responsible for a consumer brand that is sold in the U.S. but may also be sold into international markets
- Responsible for a brand within the food and beverage, beauty and personal care, household and wellness, and healthcare end markets
If you would like access to the full results, please contact us.
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