In the early 19th century, a contest was held by the French government—they offered 12,000 francs to any inventor who could create the best way to preserve food for Napoleon’s navy and army. This competition led to the birth of the tin can. Since then, an uncountable number of packaging innovations have come around.
Originally, packaging was only a way to hold things—just a container and nothing more. But the role of packaging has evolved dramatically over the years to function in much more sophisticated ways. Packaging is one of the simplest and most effective ways to advertise now. Most people don’t even read the packaging of their items when they go to the grocery store—they recognize the branding, and from that they know it’s what they’re looking for.
Packaging solutions, or PS, is now a $900 billion market as well as an important segment within the broader industrial sector.
Packaging Solutions is On the Rise
After several years of creating little value, the packaging solutions sector has generated economic profit every single year since the year 2013. It’s even closed the performance gap with the industrial sector as a whole—which historically has had a better track record.
Experts claim that three main factors have contributed to this improvement:
- Improved operational performance
- Efficient use of capital
- Steady revenue growth
Packaging solutions companies have achieved margins of earnings before interest, taxes, depreciation, and amortization of 10.3 percent from 2013 to 2017, up from 8.3 percent for the previous period.
In addition to this, capital turns increased from 1.7 times to 1.9 times from 2013 to 2017. Packaging solutions has achieved a 2.2 percent compound annual growth rate from the same period, compared to 1.4 percent for the entire industrial sector.
In recent research, it’s been found that very few companies strongly outperform others in each packaging subsegment. It’s also been found that one of the key factors when predicting a company’s performance is their Quality of Revenue or QoR. This is a measure that includes three main elements—strategy and operations, business models, and products. According to this past growth and research from experts, the packaging solutions industry appears to be poised for even more growth in several trends, including e-commerce, sustainable materials, and the integration of advanced technology into packaging.
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