- Executive summary
- Protect and promote
- The rise of AI-powered smart packaging
- Smart packaging in the real world
- A new dimension to product packaging
- How AI will shape the future of product experiences
- Learnings
Executive summary:
The packaging of tomorrow will do far more than just protect and promote the products it contains. Thanks to the arrival of disruptions like artificial intelligence, IoT sensors, and augmented reality, the next generation of ‘smart’ packaging solutions will be able to do so much more. Not only will they change the way consumers interact with products, they’ll improve supply chain traceability and product safety.
- As per a 2023 report by Future Market Insights, the smart AI-powered packaging market is about to boom, rising from US$24.6 billion in 2023 to US$38.3 billion in 2033.
- Companies around the world are using smart packaging solutions to create more engaging and dynamic interactive experiences for consumers.
- “Digital technology is now constantly adding a new dimension to what packaging can be and how it can add to the overall experience,” says Ama Guglielmino-Brady, global media head at brewing firm Diageo.
- “AR is a great way to reach new consumers and provide them with a fun way of trying the brand, but it can also be a great tool for retaining customers and building brand loyalty,” explains Will Harvey, senior innovation manager at Diageo.
- “IoT devices can be attached to packages so that their journey throughout a supply chain or distribution network can be traced and their condition during this journey (e.g. their temperature) can be monitored,” remarks Rory Gopsill, senior analyst at data consultancy GlobalData.
While there are some outstanding concerns around production costs and data privacy, smart packaging is expected to see wide adoption in the not-too-distant future. As this promising field continues to advance, we can expect to see even more exciting developments, including reusable containers that can automatically reorder items when supplies are low and edible packaging that minimises waste.
Protect and promote
Packaging has long played a central role in how consumers experience products. But like so many things in today’s ever-evolving digital society, it is changing. Historically, the function of packaging was simple – shielding products from damage while ensuring they stand out from their competition. However, as technology advances and consumer expectations shift, so too does the role of packaging, expanding far beyond its original purpose.
These days, packaging is an integral part of the consumer journey, often as meticulously designed as the product itself. Through the integration of cutting-edge digital technologies, modern packaging enables companies to convey vital information in new and engaging ways, improve supply chain transparency, monitor a product’s condition in real time, and even provide consumers with interactive experiences. So, what does this technology look like up close, where is it taking the industry, and how did we even get here? Let’s find out.
The rise of AI-powered smart packaging
Smart packaging uses a range of modern digital technologies to make packaging do far more than just protect a product.
What exactly makes packaging ‘smart’? The term ‘smart packaging’ is used to describe any product casing that incorporates technologies like quick-response (QR) codes, radio-frequency identification (RFID) tags, near-field communication (NFC) tags, time-temperature indicators (TTIs), freshness indicators, the Internet of Things (IoT), or augmented reality (AR). You’ve probably heard of a few of these already! In this context, they provide functionalities that go well beyond simply protecting and promoting a product.
Video games and virtual tours
Take QR codes and NFC tags, for example. With a simple scan via a smartphone, consumers can access a wealth of information about the product, such as nutritional information, recipe suggestions, or usage instructions. That’s not all, though – a growing number of companies are also using the technology to provide consumers with a more entertaining way to interact with products: video games. Indeed, you can also use QR codes to launch video games or virtual tours. Naturally, this can boost consumer engagement and generate enthusiasm towards the brand – especially among young people.
Safety first
There is no shortage of fascinating applications for smart packaging, but it could prove most promising in industries like food and medicine, where traceability is of the utmost importance. Consider, for example, that manufacturers could use sensors embedded inside the packaging to measure various chemical, physical, and biological indicators or detect the presence of certain organic and inorganic volatile compounds and pathogens. This information can then be displayed through colour changes to the labelling, making it easy for consumers to instantly determine the condition of what’s inside.
Through the same basic principles, pharmaceutical companies could use smart packaging solutions to prevent theft, counterfeiting, or contamination. They could also educate consumers on how to use the product safely or even help them follow their medication schedule. In the more distant future, we may even be able to project holographic videos above the packaging, providing instructions or information before you take the medication.
Costs and privacy concerns
Now, steady up a second. This sounds too good to be true, right? Well, the truth is that there are a number of fairly substantial challenges that may prevent smart packaging from becoming more widely adopted. The biggest one is cost: given the additional technologies involved, smart packaging solutions are usually far pricier than their conventional counterparts. Security and data privacy concerns are also an issue, as smart packaging technologies often collect a large amount of sensitive information about customers.
Despite these challenges, however, there is also reason for optimism: the smart packaging market is expected to grow significantly over the next decade. Indeed, according to a 2023 report by Future Market Insights, it may grow from US$24.6 billion in 2023 to US$38.3 billion in 2033.
Smart packaging in the real world
Let’s take a closer look at some of the most fascinating use cases for smart packaging in today’s world.
Smart packaging solutions cannot be reduced to a single concept or idea – they come in many different forms. For example, IoT start-up Wiliot has developed an ambient software platform that allows companies to turn any old physical object into a ‘smart’ one using ‘IoT pixels’. The size of a postal stamp, IoT pixels are self-powered, battery-free smart tags that can be attached to a crate, container, or packaging to connect it to the internet. If you attach one of these mini-devices to your packaging, you can transmit all sorts of information in real time, including location, temperature, and carbon footprint.
Companies can also use this data to improve their supply chain performance and ensure consumers that their products are safe to use. By picking a pixel-imbued product off the shelf and scanning it with their smartphone, consumers can rest assured about their purchasing decisions, equipped with better, more up-to-date information.
No more food waste
Smart packaging could also allow us to level up our game in fighting food waste. The United Nations Environment Programme estimates that one-fifth of our food is either lost or wasted, costing around US$1 trillion. To help meet this challenge, researchers from McMaster University have created a new type of packaging that uses chemical sensors to detect the presence of harmful pathogens like E coli or salmonella. The safety of the food is then visually conveyed to the consumer.
In a similar vein, UK-based start-up Oli Tec has developed smart labels equipped with a time and temperature-sensitive panel that transitions from yellow to red over time to indicate how fresh the food is. Solutions like these could eliminate the need for expiry dates, which are often inaccurate and cause a lot of perfectly good food to be cast away.
Next-generation consumer engagement
For the general public, the most powerful impact of smart packaging could be in consumer engagement. Rauch, one of the largest fruit juice producers in Europe, recently joined forces with digital technology studio Appetite Creative and packaging company Tetra Pak to launch a new interactive smart package for its new line of winter-themed drinks. By scanning a QR code printed on the pack, consumers will be presented with an interactive personality test, after which they will receive customised cocktail recipe suggestions based on the results of the test.
Rauch is not the only company getting involved. Early in 2024, industry giant Coca-Cola partnered with Marvel to launch an AR experience centred around a line of exclusive cans and bottles. Each package features one of more than 30 heroes and villains from the Marvel universe, which can be brought to life on the user’s device via a simple image scan.
“Connected experiences bring products to life. They humanise products and give them a personality by allowing for two-way communication between the product and its user.”
Charis Marquez, vice president of global fashion at eBay
A new dimension to product packaging
The consensus among experts is that technologies like AR and IoT could potentially expand the role of packaging in the overall product experience.
So, what do the experts make of the rise of smart packaging? “Digital technology is now constantly adding a new dimension to what packaging can be and how it can add to the overall experience,” says Ama Guglielmino-Brady, global head of digital, content and media at alcoholic beverage manufacturer Diageo. Take, for example, a whisky bottle that tells its own story through AR, from the origin of the ingredients to the distillation process and maturation. This way, the product acquires its own personality, and the brand experience is deepened.
According to Charis Marquez, vice president of global fashion at eBay, you can create a kind of dialogue between sellers and buyers by connecting products to digital experiences. “AR is a fantastic way to engage consumers and build brand loyalty,” agrees Will Harvey from Diageo. This development has the potential to permanently change the way consumers experience and use products. Imagine a pharmaceutical company integrating IoT sensors into medicine packaging to monitor temperature and humidity during storage and transportation. Now pepper in some AI to continuously analyse this data and automatically send out intervention alerts when conditions are not optimal.
Tracing the product throughout the supply chain
Some experts are particularly excited about the possibilities created by the IoT for smart packaging applications. “IoT devices can be attached to packages so that their journey throughout a supply chain or distribution network can be traced and their condition during this journey (e.g. their temperature) can be monitored,” remarks Rory Gopsill, senior analyst at data consultancy GlobalData. “The data collected by these sensors can be analysed by AI to gain insights into a variety of performance-related areas.”
Others highlight that embracing IoT technology could also increase the risk of a cyber attack. “One of IoT’s technological weaknesses that needs attention is their typically poor cyber security – many IoT sensors don’t possess the computing power for proper endpoint security to be installed on them,” continues Gopsill. “This means threat actors can use sensors that are internet-connected and unprotected by security software as entry points into the corporate network.”
“We think that AR can help us share the higher purpose of our brands to consumers in different and engaging ways.”
James Adkin, senior global brand manager at Unilever
How AI will shape the future of product experiences
Let’s peer a little further ahead and consider a future where the world of smart packaging is far more advanced than today.
As time goes on, there can be almost no doubt that the number of exciting developments in the field of smart packaging will increase dramatically. Maybe, in ten years’ time, everybody will have their own reusable smart containers that use cutting-edge technologies to extend the shelf life of products and communicate directly with consumers. Through sensors and a smart user interface, these containers could suggest recipes based on the ingredients stored inside them. When the stock starts running out, the package could even place an automatic order for fresh supplies.
That’s not all, though: through the integration of a chatbot, smart products could also be able to present and explain themselves digitally. Imagine your favourite products being packaged with a digital assistant that guides you through their use. This assistant not only tells you how to store or prepare the product best but also makes personal recommendations based on what it already knows you like. This will turn shopping into an interactive and personalised experience where your product virtually thinks alongside you.
But what if there was a way to get around disposing of a package? Well, edible packaging could be the answer. Made from natural, biodegradable materials that can safely be consumed alongside their contents, edible packaging could all but eliminate the packaging waste generated by consumers. For those with specific dietary needs, it could even be customised, adding a whole new dimension to personalised nutrition. As sustainability concerns continue to drive innovation, we may also see the emergence of self-cleaning containers that use UV light or nanotech coatings to eliminate bacteria and extend product shelf life.
Learnings
So, what’s the big takeaway here? It’s clear that smart packaging has the potential to dramatically alter how we interact with products. But as with any other emerging technology, this innovative concept is not without some drawbacks. While it promises enhanced product safety, reduced waste, and improved consumer experiences, smart packaging also raises important questions about cost, data privacy, and cyber security.
- Smart packaging not only provides practical information but also a deeper product experience. Through augmented reality, QR codes, or NFC tags, brands can bring their packaging to life and build a personal connection with the consumer.
- Companies can use smart packaging to improve supply chain transparency and ensure product safety. For example, Oli Tec has developed smart labels that change colours based on the product’s freshness.
- Smart packaging is typically more expensive than conventional packaging, which could limit its adoption. Nevertheless, companies should keep in mind that embracing innovation is key to remaining relevant in the future.
- There are also security and data privacy concerns associated with the collection of sensitive customer data.
As we embrace these advancements, we must also consider their broader implications. Will consumers be willing to chip in a little more just for the sake of packaging? Or will it push them to raise their expectations? What’s more – can smart packaging really be used to create a better-informed, more sustainable consumer culture?
