Smart Packaging, Labels & Tags - Selected End User Vertical Markets

Aims & Scope of this Research
Smart Packaging is a broad term that covers a wide diversity of product technologies, features, functionalities & applications.

This new report comprises a complete overhaul & update of the 1st edition of a previous Vandagarf report of the same title published in 2022.

The new report brings fresh insights, as the world of smart packaging has evolved significantly even over the last few years and this trend is set to continue.

The aim of the new report is to provide stakeholders & solution providers with an up-to-date road map that can support moving forward with the development of optimal strategies & actionable plans in relation to smart packaging globally.

The report aims to bring clarification to the ramifications, benefits, requirements & opportunities for smart packaging.
And to provide a guide for:
• Smart packaging solution providers (both wireless & optical) - To develop fit-for-purpose technologies, that can provide optimal solutions for stakeholders
• Packaging & label converters - To tailor their offerings to meet the needs of different vertical markets, product categories & customers
• Retailers - To further exploit smart packaging technologies in an omnichannel setting, with many retailers already embracing smart packaging systems & related technologies – New

Retail
• Brand owners - To keep abreast with smart packaging related developments, as technology is fast getting better all the time - In order to support selection & deployment of appropriate smart packaging technologies for optimal results & ROI
• Track & Trace - To move towards full supply chain transparency in a complex global setting
• Sustainability & End-of -Life specialists – To develop an understanding as to how smart
packaging can add value in terms of sustainability - A high priority.

Highlighting:
• Actual & potential areas of applications & functionalities that have been identified
• Important recent developments highlighted & incorporated into the report For example, the rapidly emerging field of artificial intelligence (AI) empowered image processing technology - Both online eCommerce & offline traditional channels bricks & mortar channels
• How the World has changed post COVID 19
• Business & market opportunities arising from the fast-changing scene in smart packaging and to provide ‘quantitative’ estimates of such opportunities.

The report contains quantitative analysis & market sizing estimates for Smart Packaging in 2025 with forecasts to 2030 in a global context.

Selected Vertical Markets
The report covers 5 selected vertical markets that have been identified as having significant further potential
• Healthcare / Pharmaceuticals
• Drinks
• Beauty & Personal Care
• Automotive (aftermarket)
• Food.

The evolution of each of these markets is examined in detail in the report. And within each of these vertical markets there are typically an array of product categories, leading to many areas of potential opportunity.

Numerous smart packaging implementations have already been rolled out commercially across the verticals listed above.
• from high value niche products
• to generic commodity mass market products.
Within the major vertical markets listed above, the further potential opportunities for smart packaging are very substantial & diverse across a number of areas & applications.

Evolution of Packaging to Smart
From traditional packaging to smart packaging:
• Step 1 – Historically - The codified package, with a type of printed bar code that could be scanned but offered limited connectivity (specific to an SKU or batch, but not unique to individual packs). The vast number of products in the market have a point-of-sale (POC) barcode, typically a universal product code (UPC)

• Step 2 – More recently - Combining connected packaging platforms with a unique scannable code printed on each item level pack, enables consumer engagement solutions & traceability. These unique codes make it possible to track and trace the location and history of any product from source to recycling. Consumers can simply scan the code with their smartphones directly accessing the online world

• Step 3 – Fast emerging - Packages and devices will be able to communicate with one another, providing truly intelligent smart packaging with new levels of service, insights & benefits for multiple stakeholders (brand owners, supply chain, retailers, consumers). With a unique scannable code on each item-level pack, products are transformed into interactive media

channels
• Step 4 – The future is here – The integration of AI into smart packaging systems has already begun. Notably in image recognition, but other applications will surely emerge soon enough.

Smartphones - A Key Enabler for Smart Packaging
With their huge consumer held global footprint today, the importance of smart phones in relation to smart packaging can hardly be over-emphasised:
• Supplanting the need for costly dedicated readers for many types of application
• Constantly improving & upgrading functionality & performance.

Smartphones are the reader of choice for consumers (as opposed to dedicated readers, which are still preferred for many industrial applications).

Unique ID / Gateway to the Internet – At the Heart of Smart Packaging

Smart Connected Packaging may be defined as a carrier (packaging / labels) of various types of wireless / electronic devices that provide some form of mass customisation that can transform packaged goods into sensor platforms that can provide:
• Unique serialised IDs codes for each individual primary retail pack
• a gateway to the internet (incl. access to a brand's website).
Smartphones (or dedicated readers) can then be used together with such connecting devices to enable digitally printed codes.

Such smart connected packaging can also house devices able to sense any changes that take place and store any variable data relating to the way the pack has been handled/used; e.g. a physical change (e.g. tampering or re-filling) or an environmental change (e.g. temperature exposure profile).
Enabled smartphones (or dedicated readers) can then be used together with:
• Electronic devices
• Digitally printed codes.

Packaging can be excellent carriers of unique ID in a mobile world, from manufacture through to end-of-life disposal,

Digitalising a company’s portfolio of products can provide an organisation with an effective basis & compelling reason to centralise & aggregate all of its product data.

No longer does product data need to reside in separate ‘silos’ that are not interconnected but rather may be stored altogether on a single interactive database - And this can lead to enormous savings & efficiency gains.

Digital Twins - Enhanced Visibility

A digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and can use simulation, machine learning, and reasoning to help decision-making.

When a packaging carries a UID and this is entered into a digital platform automatically generate a corresponding digital twin (i.e. a replica) of a physical object, thereby connecting the physical with the digital world.

Digital twins are intelligent pieces of software that contain all aggregated data relating to the product/ packaging to which they are attached, such as:
• unique identification number (UID)
• URL with more information about the product
• other attributes contained in a database.

Digital twins, being pieces of software, can execute any set of logic-based rules, and this can enable automation, triggered from real-time data captured from products in the real world out in the field.

Once a product packaging carries a unique identity, this effectively creates a digital twin (or digital replica) of a physical object - Thereby connecting the physical with the digital world.

Data can be gathered from the physical world at key touch points and sent to cloud-based systems, where they are processed and used for additional data analysis.

Creating digital twins for branded products is an increasingly highly prized type of application.

Digital Twins – Retailer Applications- Achieving Availability across all Channels

For retailers, it is valuable to have a full picture of the availability of all their products.

And this is clearly not a trivial matter given that:
• A typical supermarket may stock thousands of unique SKUs (stock keeping units)
• Omnichannel (both bricks & mortar & online eCommerce) retailing in here to stay

To avoid lost sales, it is essential that brands and retailers can have reliable inventory data & lead times at their fingertips – Many shoppers tend to have quite short attention spans - All in real-time.

Creating a digital twin can assure accurate stocks, thus enabling fully automated stock management.

This leads towards 100% stock accuracy. If then, brands and retailers share their stock information in a unified stock pool, the digital availability of merchandise can be optimised.

Achieving full transparency serves to create a seamless shopping experience is to make store stock available online.

The Internet of Packaging (IoP)
The development & greatly expanded implementation of the IoT has resulted in its growth across all industries, including packaging.

This leads to the concept of the Internet of Packaging (IoP), in which the world of packaging is rapidly developing its own extended connected & mobile global eco-system, with packaging / labels acting as highly effective data carriers.

The Internet of Packaging (IoP) has been gaining traction and is becoming better understood & more established for packaged brand products. Over the next few years very many packaged products will carry some kind of unique ID device, powered primarily by wireless or optical devices.

Brand owners now have the opportunity to produce huge numbers of individually & uniquely identifiable packs that can connect to the internet.

Fully integrating interconnected technologies through the entire packaging value chain represents a significant over-arching opportunity - The feedback information that the IoP can provide to brand owners is highly prized.

Integrated smart systems embodied within the IoP, together with data & analytics are supporting
stakeholders to:
• make smart decisions
• automate processes
• reach efficiency and cost-saving targets.

Multiple Functionalities - Enhanced ROI
The beauty of the creation of digitalised smart packaging is that multiple objectives can be achieved through one unique code on each package.

Unique intelligent identifiers (aka Digital Twins) can provide mass customisation for individual packs (covertly or overtly) and can provide benefits & value in a number of ways:

Once the UID is stored to a pack (by whatever means) it then becomes possible to identify, track & trace products seamlessly, with their digital twin held in the cloud.

Smart packaging identifiers provide mass customisation for individual packs (covertly or overtly) and can provide benefits & value in a number of ways:
• Consumer Engagement & Mobile Marketing
• Item level track & trace, supply chain transparency, mass serialisation, inventory Management
• Brand protection, product authentication & grey markets
• Product Recall management
• Tamper Evidence
• EAS - anti-theft
• Sustainability & circular economy.

While in healthcare:
• Improving the accuracy of clinical trials in the pharmaceuticals sector.
• Requirements for accurate & timely home medicine dispensing (out-patients & also clinical
trials).

The multifunctionality that is achievable with single smart connected devices can greatly enhance business cases, that can result ROI calculations becoming significantly more attractive in terms of commercial viability.

Stakeholders have the opportunity to design & adapt their smart packaging configurations to optimise ROI (return on investment).

Read-points / nodes gather data from the physical world and typically send to cloud-based systems(or on-premises dedicated storage facilities), where they are processed and used for additional data analysis.

And this is applicable across numerous vertical markets and functionalities.

Circular Economy – A High Priority – Smart Packaging Has a Role
Sustainability / circular economy / post-consumer waste packaging management & sorting has
become a high priority application.
Smart packaging is increasingly playing a key role in the circular economy in relation to packaged
branded products:
• Cradle to grave sustainability & recycling programs
• End-of-life recycling / Sustainable disposal
• Deposit return schemes
• Carbon footprint labelling/analysis.
Full transparency of products from manufacture through supply chains & retail to end-of-life disposal
can reduce waste. The sorting of packaging at the recycling plant by material can also be facilitated
with smart packaging that enables materials to be recognised and sorted accordingly.
This is being supported by an increasing infrastructure for the recycling of packaging materials
(plastics, metals, glass & other) and there are ongoing initiatives & pilots that are developing this
approach.

Digital watermarking technology is currently receiving significant attention for post-consumer end-of-
life waste sorting applications, for which it is well suited.

For post-consumer packaging passing through waste sorting facilities orientation for scanning is not required as the digital watermark typically covers the entire surface of the packaging (not the case for other types of printed code).

Routes to Market – Omnichannel - New Retail
Today, the following distinct channels are used to retail branded products:

• Online eCommerce has seen dramatic gains, with up to 25% market share in some vertical markets, albeit with some variation between verticals. Rapid penetration of smartphones has facilitated this process. Consumers are hesitating (in some cases reverting to the safety (real and / or perceived) of bricks & mortar stores
• Offline bricks & mortar stores still dominate the overall marketplace for many product categories & geographical markets. This suggests that the market for offline (on-packaging / on-labels) retail solutions will continue to be robust – Although Offline distribution channels are at this time being gradually eroded. Despite the recent dramatic growth of online shopping, bricks & mortar stores still underpin the credibility & reliability of brands.

The new face of retail, with greatly increased online sales, means that the integration of an omnichannel approach has become essential for both brand owners & retailers across numerous vertical markets.

Such an omnichannel approach has become essential for brand owners & retailers.

There is significant crossover & interdependence between these channels.

And this introduces additional complexity in terms of logistics & inventory control. For retailers, it is valuable to have a full picture of optimal availability of all their products across both channels.

Many shoppers want to make a purchase straightaway in order to avoid lost sales, it is essential for retailers to have reliable inventory data at their fingertips in real-time.

And given that a typical supermarket may stock thousands of unique SKUs, then this is not a trivial matter.

A goal is to maintain optimal availability across both channels.

There is a need for retailers to find new ways to enhance their store network (using retail stores as mini DCs), stock accuracy and visibility are vital to:
• minimise overstocking / under-stocking
• maximise product availability in real time.

Full visibility, serves to:
• create a seamless shopping experience
• make store stock available online.

Offline bricks & mortar stores still dominate the overall marketplace for some product categories & geographical markets this channel solutions continue to be robust, albeit with some gradual erosion
of market share.

Bricks & Mortar Stores Still Offer Advantages Over eCommerce
• many consumers still tend to find physical shopping preferable in terms of perceived better & more personal customer service.
• in some cases reverting to the safety (real and / or perceived) of bricks & mortar.
• Bricks & Mortar stores can offer a more robust assurance that products are authentic.
• While providing the consumer with the opportunity of viewing / handling the actual product prior to purchase.

Retail stores have increasingly become a place where consumers:
• spend their leisure time
• find social interactions
• experience the brand rather than just purchasing the products.

Smart packaging can play a key role across both Offline bricks & mortar & Online eCommerce channels. Show more