Cost of materials

Adress macroeconomic barriers & opportunities

The cost of the materials used for packaging is a variable that strongly impacts the final products, given the low margin generally applied to the converting phase. The cost of mass-market materials such as PP, LDPE, HDPE, PS and PET fall within a range of 0.8 to 1.2 Euros/kg, but with variations over time which can represent up to 30% of the average price and which are mainly linked to variations in the production of oil and shale gas. Bioplastics are located on very different cost ranges and much more dependent on polymer references, i.e. between 2.5 and 12 euros / Kg, with PLA at the bottom of the range, and PHA at the top of the range. These data on the disparity in costs between the different raw materials and variation over time being asked. It could be important to design packaging that depends as little as possible on material cost variables.

Except for certain food products such as mineral water, it can be considered that the cost of packaging rarely exceeds 30% of that of the packaged product. For some products, the barrier to the acceptability of the cost of the packaging is well below 10%. Therefore, the objective is to control packaging costs to enter these ranges of market acceptability.

Scientific based reccomendations and insights for practical applications
Comments, links

Adapt the cost of raw material to the types of packaging: Flexible packaging absorbs the high raw material costs better since (i) it represents a lower-cost share of the finished packaged product than in the case of rigid packaging (ii) the cost contribution of the raw material in flexible packaging is lower than in the case of rigid packaging.

When the cost of a raw material exceeds 4 Euros per Kg, it is clear that the material cannot constitute the only basic packaging material. In this case, the material can be co-formulated (mixtures of polymers) with compatible materials at a lower cost, or used as a functionalization material by focusing on their property of interest: use PEF as a barrier layer in co-extruded multilayer material, use PHAs as biodegradable coating layer for paper-based packaging...

When a new polymer is produced on the market, its cost necessarily greatly exceeds this limit of 4 Euros / Kg; even if it is intended to be used as a base material for rigid packaging when its selling cost has fallen below 2 Euros/kg, it is necessary to find applications accepting a higher cost throughout the period of increased production volume. This is what could be imagined for PEF, with an introduction in the market of PET film as a barrier layer, then as film support when the price will be lower than 4 Euros per kg, and finally as a raw material for injected plastics when the price will be near 2 Euros per kg.

Avoid using materials where the cost is controlled by one or two players in the world; this was the case for PBAT, which was used as a softening polymer in most bioplastic formulations. Today there is better control of bioplastic final cost as (i) a part of the bioplastic industry have found alternative solutions to avoid the use of PBAT (ii) PBAT is now produced by several companies NOTE: PBAT remains one of the most used biopolymers. At present, many companies are producing PBAT.

All of the cost barriers mentioned above will be shifted for the development of reusable packaging, which will absorb the high material costs as the number of cycles of use is high.

Consider options of contracts with Asian suppliers - NOTE: an additional advantage using biomaterials could also be linked to the presence in the EU of some of the most important players of the sector.

Asian market of bioplastics is expanding. In the nearest future, this will influence prices.

Consider the level of technological progress.

Novel raw materials usually require more energy that could be a cost driver.

Study any bioplastic on a case-by-case basis.

Each bioplastic requires an individual studying with a consideration of all related aspects across the whole value chain.

Consider the data scarcity.

Meta-studies are required to overview the scattered data situation for individual polymers.

Search for low or no economic value feedstock.

The level of production costs depends on raw material prices. Low or no economic value raw materials might contribute to price reduction.