1

PACKAGING

MAY 2017MARKET INSIGHTS

2

HA

VI M

ark

etI

nsi

gh

ts

HELPFUL HOLOGRAMS AR with hologram-like images

embedded with layers of real-time data can provide information that could help prevent supply chain disruption. That information

could range from customer and product information, to

population, socioeconomic data and real-time traffic, weather and social

media data. The Massachusetts Institute of Technology (MIT) expects that AR could save companies money by optimizing productivity and facilitating decision-making along the supply chain. To that end, the university plans to build a new multimillion-dollar Visual Analytics Lab. MIT will work with experts in data science, software development, machine learning, quantitative modeling, and supply chain logistics to research and develop ways businesses can leverage the new technology to improve operational efficiency. Improvements in the performance of AR equipment along with expected cost reductions will help drive AR into the mainstream.

TRACTORS, TURBINES, AND AIRPLANESOne company already experiencing the benefits of AR technology is AGCO Corporation, a manufacturer

of agricultural equipment. Workers on the factory floor are equipped with smart glasses that display diagrams and instructions superimposed onto their actual work environment as they conduct quality checks on tractors and chemical sprayers. According to the company’s director of business-process improvement, there is a proven 20% increase in speed of logging quality checks in this manner. In the next year, AGCO will experiment with hologram-like images to guide workers through the process of welding 30-foot booms to chemical sprayers. Other examples of AR enterprise usage include General Electric Company (GE), who started using smart glasses to help workers in its Oil and Gas facility in Florence, Italy, record the 100-plus measurements required in their gas turbine nozzle manufacturing process;2 while mechanics at Boeing Company have been using smart glasses to guide the assembly of complex electrical wiring for airplanes. The glasses display digital diagrams and text in the mechanics’ field of vision, thus eliminating any need to reference instructions elsewhere.3

Augmented Reality (AR), which superimposes computer-generated content onto

a user’s view of the real world, is in the earliest stages of commercial development

but already promises to make a significant impact in the supply chain.1

THE BUZZ ON Augmented Reality

SUPPLY CHAIN & LOGISTICS

33

MARKETING

NO PRICEY PRETENDERSMultinational alcoholic beverage company Diageo’s Smirnoff brand is doubling down on authenticity with a new campaign taking on “fake crafty” upstarts. The campaign, which suggests that its top competitor is a snobby pretender, leverages supermodel Chrissy Teigen’s relatable personality and down-to-earth humor to appeal to her Twitter audience of 4.8 million followers. Smirnoff, currently the number one vodka brand in the United States, has recently lost ground to competitors positioning themselves as “handmade vodka.”

The brand hopes Teigen’s approachable personality will dial up Smirnoff’s reputation of authenticity and affordability. One Smirnoff ad features Teigen using what she believes is “handmade body butter” only to discover that it is “plain butter, like for your toast” but with “a fake handmade label.” The ad campaign, with the tagline “Only the Best for Everyone,” is complemented with direct social engagement videos on Teigen’s channels.5

AMBASSADORS OF EGGSThe British Egg Industry Council, owner of the British Lion quality assurance mark that safeguards the UK egg industry, is working with Chef Simon Rimmer, television presenter Helen Skelton, and fitness expert Lucy Mecklenburgh on a £1m marketing campaign promoting the health and nutrition benefits of eating eggs. Capitalizing on a burgeoning consumer appetite for eggs, as well as recent health recommendations that clear the path for all consumer segments, the campaign hopes to encourage consumers to indulge in egg dishes without concern.

The celebrity egg ambassadors will share their favorite egg recipes and tips on healthy eating. Chef Rimmer goes a step further, developing a ‘one-pot’ egg recipe collection, which he launched during a special pop-up restaurant event in London. The Egg Industry Council is counting on the trio to convince consumers of the ease, versatility, and nutritional benefits of cooking with eggs and will support the recipe campaign with additional messaging targeting healthcare and trade professionals.6

Brands continue to count on celebrities and influencers for mass marketing

appeal in 2017 as they take on an increasingly competitive market. Relatable

celebrities perceived as genuine and authentic are especially favored for their

large and engaged social media following.4

FOLLOWING Famous Faces

4

HA

VI M

ark

etI

nsi

gh

ts

SUSTAINABILITY

LIGHTING THE WAY Technology is a significant enabler for indoor farms, with technologies like hydroponics, aquaculture, aquaponics, and greenhouse helping control key environmental variables, such as light, temperature, humidity, and more. Advances in high efficiency LED lighting have dramatically cut the required energy costs to sustain an indoor farm, helping fuel growth for the overall market. Staay Food Group, a privately held fresh fruit and vegetables company, is building a 9,700-square-foot indoor vertical farm in the Netherlands. The new facility will be the first vertical farm in Europe to operate commercially, serving a large European supermarket

chain. Staay, Philips Lighting, and vegetable breeder Rijk Zwaan partnered together for three years to identify optimal lettuce varieties, growth recipes, and environmental factors (including the use of Philips GreenPower LED horticultural lighting) to improve crop quality and yields.8

WAREHOUSE WONDER Operated by California-based startup Plenty United, Inc., the vertical farm is being constructed inside a 51,000-square-foot warehouse and is expected to yield approximately 3 million pounds annually of leafy greens (150 times per square foot greater than conventional outdoor farms) with 1 percent of the water usage. Ceiling-height plastic towers of lettuce, arugula, and herbs are nurtured to growth by multicolored LED lights. The advanced facility also relies on sensors to monitor temperature and moisture levels, automated systems that pump water and nutrients, and LED lighting strips to create an ideal growth environment.

Since raising $26 million to establish and operate the first warehouse, Plenty hopes to reduce expansion costs by locating additional farms on less expensive land outside city centers. The company also seeks

Vertical farming, a new food production model, has exploded

in recent years—fueled by growing consumer demand for

organic foods, increased acceptance of hydroponic processes

to grow plants, and technological advances that enable tighter

control over the farm environment. With vertical farms “taking root” inside used

warehouses, skyscrapers, and shipping containers, the size of the global vertical

farming market is projected to reach $6.3 billion by 2023, a CAGR of 24.2 percent.7

GROWING UP

55

SUPPLY CHAIN & LOGISTICS

to boost analytical and decision-making efficiencies by implementing a machine-learning technique in its computer systems. Long-term, Plenty’s goal is to operate 60 farms in the United States and more than 300 worldwide. Experts foresee many challenges for large-scale vertical farms in balancing the capital-intensive operation with consumer expectations for low-cost produce; however, Plenty anticipates that it will achieve parity pricing in the long run.9 Located by the San Francisco Bay, Plenty will grow its produce for local consumption, distributing it through area grocery stores and restaurants.

GROUNDED SHIPPING

Urban farming accelerator program Square Roots is focused on training young entrepreneurs to grow non-GMO, fresh, and tasty food year round. The initiative, made possible in large part by Freight Farms’ Leafy Green Machine hydroponic growing system, houses climate-controlled and indoor vertical farms inside

320-square-foot steel shipping containers. High-efficiency LED light strips provide crops with spectrums of red and blue—the light spectrums required for photosynthesis. A closed loop hydroponic system delivers a nutrient-rich water solution directly to roots, using only 10 gallons of water a day. A multiplaned airflow and intercrop aeration system automatically regulates temperature and humidity through a series of sensors and controls.10 The containers are similar in size to a typical one-car garage and can each yield 50,000 mini-heads of lettuce annually, comparable to two acres of farmed fields. Operations began in November 2016, with initial crops harvested six weeks later.

Each of the ten urban farms is managed by a different young entrepreneur, selected from an application pool of more than 500 applicants. Not all people chosen had farming experience, but the program—run by Kimbal Musk, brother of Tesla CEO Elon Musk—enlists the aid of 120 mentors to provide support. Harvests are available at a local farmer’s market or through “Farm to Local” delivery service to local offices. Square Roots hopes to be located in 20 cities by 2020.

6

HA

VI M

ark

etI

nsi

gh

ts

HELPFUL HOTLINEBritish grocer Tesco has created a hotline for its 5000-plus fruit and vegetable suppliers to contact Tesco’s product teams directly about food waste issues in the grocery supply chain. Tesco is actively working toward food waste reduction, and to this end, the company has demonstrated a willingness to be more nimble and collaborative in response to ever-changing market conditions. Case in point, when unexpectedly warm weather in 2016 caused strawberry crops to ripen quickly, Tesco sold the strawberries in bulk quantities at a market-leading price, thus benefiting customers and reducing food waste at the supplier level. The food waste hotline

further continues Tesco’s forward momentum toward its goal of achieving zero food waste by the end of 2017 in its UK operations.14

SUPPLIER SWAPIn an innovative effort to cut food waste, UK supermarket retailer Asda has unveiled a B2B online marketplace app geared toward helping suppliers buy and sell their excess food and food-related goods. The app, Asda Surplus Swap, enables suppliers to redistribute surplus food to other suppliers, including leftover ingredients, finished products, or trimmings that other suppliers may have a use for. Set up like an online classified ads platform, the Surplus Swap app allows sellers to upload descriptions and images of their surplus products. Buyers then locate and purchase excess produce and ingredients that can still be used for production. By centralizing surplus food information, the system creates real-time opportunities for redistribution of food that would otherwise become waste.15

According to a recent report from the United Nations Environment Programme

(UNEP) and the World Resources Institute (WRI), annual food waste costs

have grown to almost US$1 trillion, representing approximately one-third of

food produced for human consumption worldwide. In the United Kingdom, 40

to 45 percent of food waste occurs along the supply chain.13 With an eye on

food waste reduction, many companies are taking steps to make the global

food supply chain more efficient.

SUSTAINABILITY

FOOD FOR THOUGHT

7

CUSTOM KITKATSUK-based Ultimate Packaging worked closely with HP Inc. and multinational food company Nestlé S.A. to print and give away more than 56,000 personalized KitKat packs. The campaign, launched in February, is an example of the growing trend toward real-time personalization in packaging. With Ultimate Packaging’s web-to-print solution working in conjunction with HP Indigo digital presses, Nestlé was able to create an individualized experience for its customers. Customers could add a photo or “break phrase” onto a four-finger KitKat pack that was then packaged in a special presentation box. HP combined its HP Indigo 20000 and WS6600 roll-fed digital presses to enable the new capability, allowing personalized messaging to print on virtually any flexible packaging application, such as shrink sleeves on paper or film, labels, and other flexible packaging solutions.17

ICE-COLD CONNECTIONBeverage giant Coca-Cola’s signature “Share A Coke” campaign will return this summer, with a new, ice-cold twist. In addition to the selection of 800 names already featured on its bottles, the company will add even greater personalization by printing and featuring 200 last names. Although first and last names will not appear on the same bottles, the company hopes consumers will purchase bottles together to create pairings that reflect their names. Expanding to include the Coke Life and Cherry Coke brands, the personalized “Share An ICE-COLD Coke” bottles will be available for purchase in stores beginning in May. As it has in previous years, the company will also allow consumers to place custom orders at ShareaCoke.com.18

The personalized packaging trend continues its rise in popularity, becoming an

increasingly important differentiator as brands seek out innovative ways to deepen

customer engagement and win at the shelf.16 Technology juggernaut HP Inc. is

behind several notable promotional efforts this year, with its HP Indigo digital

presses helping take consumer connections to a new level.

7

PACKAGING

PROMOTED Personalization

7

8

HA

VI M

ark

etI

nsi

gh

ts

www.havi.com

Credits1Castellanos, S. (2017, April 4). Augmented Reality to Revolutionize How Companies Manage Supply Chains, Says MIT Researcher, Wall Street Journal. Retrieved from http://blogs.wsj.com2Castellanos, S. (2016, December 12). Augmented Reality, Hologram-Like Images Enter the Workplace, Wall Street Journal. Retrieved from https://www.wsj.com/3Statt, N. (2016, July 14). Boeing Is Using Google Glass to Build Airplanes, The Verge. Retrieved from http://www.theverge.com 4Truong, J. (2017, March 2). 2017: The Year of Celebrity Marketing, Social Media Center, Academy of Art University. Retrieved from https://medium.com/ 5Schultz, E. J. (2017, March 24). Chrissy Teigen and Smirnoff Take Shots at “Crafty” Rivals, Advertising Age. Retrieved from http://adage.com/ 6Farming UK. (2017, January 3). Celebrity Trio Spearhead £1m Egg Marketing Campaign for 2017, Farming UK. Retrieved from https://www.farminguk.com7Paddock, C. (2017, April 17). Vertical Farming Global Market Forecast to Be $6.4bn by 2023, Market Business News. Retrieved from https://marketbusinessnews.com 8Philips.com. (2017, February 8). First Large Scale Commercial Vertical Farm in Europe to Be Set Up in the Netherlands (Press Release), Philips Lighting. Retrieved from http://www.newsroom.lighting.philips.com 9Bunge, J. and E. Brown. (2017, February 13). Indoor Farming Takes Root at California Startup, Wall Street Journal. Retrieved from https://www.wsj.com10Freight Farms. (n.d.). Square Roots Launches Urban Farming Accelerator Using Freight Farms Platform, Freight Farms. Retrieved from https://www.freightfarms.com 11Garfield, L. and S. Jacobs. (2017, January 4). Kimbal Musk—Elon’s Brother—Just Opened a Shipping Container Farm Compound in New York City, Business Insider. Retrieved from http://www.businessinsider.com/

12United Nations Environment Programme. (n.d.). Food Waste: The Facts, United Nations Environment Programme. Retrieved from http://www.worldfooddayusa.org13Churchill, F. (2017, March 13). Tesco Sets Up Supplier Hotline to Cut Food Waste, Chartered Institute of Procurement & Supply. Retrieved from https://www.cips.org/ 14Produce Business UK. (2017, March 13). Report Supply Food Chain Food Waste through New ‘Hotline,’ Urge Tesco, Produce Business UK. Retrieved from http://www.producebusinessuk.com 15Churchill, F. (2017, January 18). Waste-Cutting App Helps Supplier Redistribute Unwanted Food, Chartered Institute of Procurement & Supply. Retrieved from https://www.cips.org 16Hyken, S. (2017, January 7). Ten Customer Service and Customer Experience Trends for 2017, Forbes. Retrieved from https://www.forbes.com 17Qureshi, W. (2017, March 24). HP Works with Nestlé and Ultimate Packaging on Personalised KitKats, Packaging News. Retrieved from http://www.packagingnews.co.uk 18Stern, M. (2017, April 20). Is Personalized Packaging Going Mainstream?, Retail Wire. Retrieved from http://www.retailwire.com

Mohawk Everyday Digital uncoated items are manufactured with wind power by offsetting emissions from purchased electricity with Renewable Energy Certificates (RECs) from Green-e certified wind power projects.

Copyright © 2017 HAVI. All rights reserved. All content, products, and images not owned by HAVI are trademarks and copyrighted properties of their respective owners.