Getting Noticed – At Any Price

©Gut Zillingtal Edeldestillate (DIVA)

The increasing wealth in the world has resulted not only in more and more expensive luxury products being purchased, but also in that their packaging has become increasingly luxurious and, above all, more valuable as well because only what looks like luxury will be perceived as being luxurious. According to a study from Pira International, above all the Asia-Pacific region will profit from the increasing packaging market for luxury goods.

According to a current study conducted by the British market research company Pira International Ltd., the luxury packaging market in the Asia-Pacific region is forecast to have an annual growth rate of 7.1% by 2015. Thus, this segment will greatly exceed the expectations for the general increase in the worldwide packaging market (3.0%). The largest growth is supposed to accordingly originate from China where the market is generally booming for luxury goods. According to the research that has been done, the region will develop into the clear market leader with a market share of 35%.

Demand is Increasing

According to Pira’s data, the luxury packaging market in 2010 accounted for approximately three percent of the overall worldwide packaging market. At a value of almost US$ 11.9 billion, this corresponds to consumption of “only” 7.6 million tons. After the continuous growth of the market until 2008, sales drastically collapsed as the global economic crisis occurred. However, since 2010, there have been clear indications that the demand for luxury goods and luxury packaging is once again increasing – in parallel with increasing global wealth. The currently largest and most important markets for luxury packaging are in the regions with comparatively high per capita income like North America (25.6%) and western Europe (29.9%).

In 2015, however, the Asia-Pacific, North America and western Europe regions will be surpassed, according to Pira. According to the forecasts, South America – led by Brazil, eastern Europe – led by Russia – as well as the Middle East and Africa will also increase their market shares. Even if the USA will remain the largest national market for luxury packaging, Pira expects that, by 2015, to the tune of 29% of the luxury products consumed worldwide will be consumed by China which would thus become the world’s largest market for luxury goods. At a forecast growth rate of 10.8% over the next five years, the market would increase to US$ 2.5 billion.

Healthcare, Cosmetics and Perfumes

The largest end consumer industry for luxury packaging in terms of value is the “healthcare, cosmetics and perfumes” segment. In 2010, more than 46% of the overall market value for luxury packaging was attributable to this industry. In second and third places were alcoholic premium beverages and foods. According to Pira, the strongest annual growth of approx. 6% can be expected for the packaging for alcoholic beverages. However, the healthcare, cosmetics and perfumes segment is also expected to have a similarly strong growth rate of approximately 5.6% and 5.3%, respectively. However, the demand for luxurious tobacco goods packaging will decrease over the next five years.

Precisely with perfume packaging, emotions have long dominated when making purchasing decisions. It has been proven that not only the nose decides, but rather the aesthetic looks and the communicated brand world. Precisely in this segment, individuality and exclusivity must be communicated and, in addition to the colour scheme, form and materials have very important superficial effects upon the packaging. The communication of maximum value through the packaging design is mandatorily required and thus perfume has a special status. In this case, it involves not only brand and product messages, but rather the communication of entire life feelings and emotional sensitivities such as eroticism, sensuality, romance, elegance, serenity, sportiness, etc.

“Getting noticed at any price” is thus also the motto in the cosmetics industry. An impressive example is the purported “most luxurious anti-aging cosmetic in the world”: BB Royal. The unprecedented successes of appealing products are based upon luxurious packaging which are set with up to 5,000 Swarovski crystals.

In the spirits segment, the design of the bottles is very important, e.g. for the major cognac, whiskey and vodka manufacturers. An example is the vintage vodka from Kaufmann, of which only 25,000 bottles are filled per vintage and its packaging looks like an oversized perfume bottle.

The “Diva” vodka from the American manufacturer Blackwood Distiller is supposed to be the first vodka in the world which is filtered with pure diamond dust. Thus, the packaging outfit includes the feature that the transparent bottle is decorated with colourful Swarovski crystals. But even “Pure 21”, which is one of the most expensive vodkas in the world at a price per bottle of approximately EUR 4,800, is offered in a bottle which has been decorated with 7,321 Swarovski crystals that have been set by hand.

And the luxury spirit from Rémy Martin, which trades as the most valuable cognac in the world for EUR 36,000 per bottle, is filled in a specially developed decanter made of lead crystal which is likewise packaged in a specially created dark-grey gift box.

Sustainability as a Growth Driver

However, the strongest growth driver for all luxury packaging will probably be the increasing interest of brand owners in sustainable packaging solutions. Indeed, they will always focus on retaining the luxurious “look & feel” of the packaging for their brands, but this is opposed increasingly by the effort to use environmentally friendly packaging materials. In this case, cardboard clearly profits from image advantages with the consumer so that, above all, the (high-quality refined) folding box is expected to have a great future. More and more leading manufacturers are having their packaging materials certified according to the strict standards of the Forest Stewardship Council (FSC) and this thus helps the branded-goods manufacturers even more to document their environmentally responsible and resource-saving approaches.