We've had a dynamic last few years, haven't we? As we approach the third anniversary of our '2-week quarantine' and the start of the COVID-19 pandemic, one thing is certain: 2023 will be different. Each of the last few years has brought mutually exclusive challenges and opportunities that have ensured sustained rough seas in the printing and packaging space.
Supporting essential applications in the packaging of consumer and medical items, the industry was at the forefront in navigating the uncertain and uncharted waters of 2020. In 2021, we were propelled by increasing consumer demand while also hindered by headwinds brought on by limited supply. Choppy waters remained in 2022 much as they had in 2021, however, with a storm looming on the horizon in the form of high inventories along the value chain. FDR said, “a smooth sea never made a skilled sailor,” and there is much we have learned about our industry, the pivotal role we all play in the consumer economy, and the value of customer/supplier partnerships over these last years.
For the last few months, the tide has been turning. Consumer prices are up across most economies; for the OECD in total, the annual increase in the CPI was 9.4% in December. This increase in costs has forced consumers to pick up anchor and change their spending habits. While this has often meant that large purchases are delayed, it has also led to an overall belt-tightening across consumer groups.
Dollar stores in the US, for example, have noted an increase in higher income customers frequenting their stores, which is a sign that higher costs are impacting spending patterns across the board. Cost has remained in focus in consumer packaging, with some looking toward lighter weight substrates while others look to reduce number of process colors in a bid to reduce complexity, inventory, and number of print runs. It's difficult to predict how the economy and consumer spending will evolve in 2023. Traditionally described as 'recession proof', demand for consumer goods and packaged grocery items should remain relatively flat with prior years. However, as consumers look to save wherever possible, a rise in generic and store brand sales may also materialize, which may use lower amounts or lower-end inks and coatings.
Though focused on steering through current challenges, the industry has its sights firmly fixed on the horizon. Sustainability has been an important trend in the printing and packaging space; however, it has taken a back seat at times over the last few years as more urgent issues have demanded so much organizational attention. The rising green tide has returned in full force. Not since before the pandemic have I seen as much interest in sustainability along the value chain. While we've all been in the same boat in dealing with many industry challenges over the last years, BASF have also continued to expand our portfolio of solutions that enable the industry to reach their sustainable packaging commitments.
With the launch and expansion of our Joncryl® BRC range, current ink and coatings formulations can now benefit from increasing levels of bio-renewable content. Our Joncryl FLX portfolio continues to gain momentum in flexible packaging applications where water-based inks can effectively replace traditional solvent based incumbents. Beyond printing inks, our leading solutions of functional packaging coatings are enabling the packaging itself to be more sustainable. Marketed under the trade name Joncryl HPB or Joncryl HSL, our leading portfolio of water-based solutions enable package recyclability, improved product shelf life, removal of chemicals of concern, and the ability to comply with growing regulations.
We're coming into 2023 more experienced and with strong customer partnerships; skilled sailors having navigated unprecedented challenges. I look forward to continuing our work with the industry to meet short, mid, and long-term goals. With our leading portfolio of solutions, and those yet to come, I know that the future is looking brighter…and greener.
Until next time,