Flexibility Positions Brands for a Better 2010
Last year was such a tough one economically, no one seemed embarrassed to admit it. Downsizing took place in almost every industry and region.
The personal care and cosmetics product industry was no different. “Our industry, like so many others, continued to struggle with the ramifications of an economic downturn, and many of our members experienced flat sales at best,” wrote Lezlee Westine, president of the Personal Care Products Council (http://www.personalcarecouncil.org/), to her membership in December.
But there already seems to be a more hopeful tone emerging in 2010. As personal care products and cosmetics manufacturers coped with decreased sales in 2009, they found creative ways to minimize or cut costs, often with the help of packaging suppliers. Tube manufacturers and suppliers in particular offered a range of innovations to help companies survive—and perhaps
even thrive—during the economic downturn.
|A high-end look is possible with direct printing. Image courtesy Express Tubes.|
These new solutions—ranging from material innovations, printing and decorating advances, ordering flexibility, and contract service support—are positioning product manufacturers to benefit as retail markets turnaround.
Throughout 2009, market uncertainty drove many retailers to reduce their inventories. Approaches included ordering fewer SKUs, in smaller quantities, which often resulted in fewer orders for product manufacturers and marketers.
Ted Sojourner, vice president, tubes and laminates, Americas, for Essel Propack, reports that he saw “a lot of inventory reductions in 2009, particularly in April and then again in November to December. We saw delays in orders and reductions in orders.” Higher-end beauty and personal care products saw lower consumption, he says, while generic and store brands picked up.
Ordering small quantities is often requested by product manufacturers. It often achievable for both product marketer and tube manufacturer, but not without some complication and added cost. Holding inventory is an option, too, but experts say it can increase costs.
Laminate tubes in particular present challenges. “It is tough to be more flexible on quantities with laminate, given the setup and printing processes,” says Sojourner. “Low minimums are hard, unless customers are willing to pay for higher laminate scrap. They’re easier for extruded tubes.”
Sojourner gives 25,000 as typically the lowest quantity Essel Propack typically supports, but he says the company wants to be as flexible and accommodating as possible, given market challenges.
|See Sidebar: Tube Manufacturing Mexico|
It’s not normal business practice, but World Wide Packaging can handle small runs, reports Jeffrey Hayet, executive vice president, global sales. “A good part of our capacity is geared for small runs,” he says. The company runs much of its tube-making equipment as separate stations, such as those for tube extruding and printing.
“We are seeing customers asking for smaller, just-in-time orders, not knowing how their products will sell in the market. Consumers are conservative, and that trickles down. So our customers are thankful we can be flexible, and we’ll continue to do so regardless of the economy,” Hayet adds.
Shanna Massey, sales manager for Express Tubes (Kent, WA), reports the company’s niche is producing low minimums of 5000, “regardless of specs.”
James Alexander Corp. (Blairstown, NJ) has been quoting low minimums, too. “Small orders are a good thing—they’re all new business!” says Carol Gamsby, sales manager, citing requests for 20,000–25,000, even as low as 5000–10,000. The company offers its unit-dose plastic ampule along with contract filling and finishing services.
|See Sidebar: Filling Competitive Requests|
Massey of Express Tubes notes, however, that “pricing is better in larger quantities.”
And filling small quantities of certain products may not offer much of a cost advantage, if any, reports Gamsby. “It costs more to do smaller runs for prescription drugs. They require full batch records and a four-hour setup for filling machines. Customers have to pay for cleaning, and all tubing lines are discarded. Customers have to pay for such procedures regardless of whether it is 5000 or 500,000 tubes.”
But while Express Tubes saw scalebacks in 2009, just like other tube manufacturers did, “quantities are going up for 2010,” Massey says.
And Gamsby reports getting calls in late 2009 from customers emerging from inventory restrictions.
In the meantime, to offer flexible solutions, tube manufacturers have had to get creative.
Essel Propack cites direct printing as an innovative means of controlling costs.
Because custom colors and custom molds and caps can add to the cost of a tube, Massey suggests custom printing as an alternative for enhancing a tube. “We can produce very unique and complex artwork using silkscreen and offset printing as well as hot stamping,” she reports. “Offset printing is the most cost-effective,” she adds. Holographic hot stamping is also now available. Express Tubes has a graphic designer on staff to act as a full-scale resource for clients.
Massey points out a recent project for the Norvell self-tanning line. “They use four-color-process offset printing and two colors of hot stamping in their art design,” she explains. “The printed tube looks incredibly luxurious on an otherwise standard white glossy tube.”
Turning to Redesign
With beauty products looking to keep costs down, tube manufacturers are investigating raw materials that offer such reductions. “We are looking at different materials that will yield thinner structures and other innovations,” reports Sojourner.
Eliminating the use of aluminum foil cuts the associated costs, as Essel Propack has done with Egnite, which the company launched in September 2009. The nine-layer plastic barrier laminate tube offers a metallic look and collapses without denting, allowing users to potentially drop cartons. And, while they may be more costly than extruded plastic tubes, Egnite tubes are more cost-effective than foil-wrapped plastic tubes, he explains.
Massey maintains that Express Tubes’s five-layer coextruded tube utilizing a middle EVOH barrier is a good, cost-effective alternative to laminate tubes. The five-layer tube structure can replace laminate tubes and is recommended for products such as toothpaste or sunscreen that have active ingredients or essential oils that could potentially become volatile when exposed to heat or pressure-sensitive environments.
Changing caps and closures, too, may offer some cost reductions or help streamline supplies.
Massey of Express Tubes says that product manufacturers could employ a variety of flip-top caps to vary orifice size without redesigning the orifice of the tube itself.
Another solution Express Tubes offers is to preseal tubes during production. “It is a good option for start-ups that cannot meet the minimum fill/seal requirements of larger companies. It is also for companies that are ordering printed tubes with through-the-crimp labels or full flood artwork that can be challenging to crimp post production. Companies would simply fill the tubes through the orifice,” she explains.
Thrive, Not Just Survive
In the face of this economy, product manufacturers need to do more than just survive. “They need to think differently and innovatively, in order to spark sales,” Sojourner points out. “They need to look at the market and see what products are selling, and why.”
For instance, consumers may not be able to regularly afford expensive day spa treatments, but they may be able to pay for at-home treatments. They’ll be looking for products that look good and that make them feel good.
“Now is the time to plan, so once the economy gets going, companies can launch new products,” says Gamsby. “We are already seeing customers developing new formulas for 2010 launches. I think 2010 will be fantastic.”
Massey suggests that to be prudent, product manufacturers might want to consider going back to the basics when it comes to design. “Trends are great, but are they always worth the investment?” she muses. “Soft-touch tubes feel wonderful, but we’ve received great feedback that most consumers cannot tell the difference in the shower.”
Also, “going green is a philosophy we absolutely encourage, and that is why all of our tubes are recyclable. Some tube manufacturers also offer the option to use postconsumer-recycled content (PCR) tube material and that is good as long as they remind the buyers to test that material with their ingredient decks and ensure the PCR material can maintain the stability of their product.”
Instead, consider advances that ease product use, “such as oval tubes to spice up the standard round-shaped tube. Try a dual-chamber tube for applying lip gloss and tint or a brush applicator on a tube for applying face paint or waxing products,” she concludes. ■