Packaging holds up in face of Brexit threats

By Rhys Handley, Wednesday 20 September 2017

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A YouGov survey has revealed that while many small businesses in the UK are seeking to cut costs in the face of Brexit uncertainty, the vast majority won't cut packaging spend.

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SMEs are not looking to reduce packaging spending in the face of Brexit

Commissioned by packaging supplier Davpack, the pollster found that more than a third (36%) of 1,100-plus SMEs in the UK are actively looking to cut costs, with 28% of them citing the country’s departure from the European Union as their primary motivation.

However, 95% of the SMEs looking to cut costs said they had no intention of cutting their packaging budgets. Areas such as staffing, marketing, and professional services were shown to be more likely to be cut by SMEs.

“I’m not at all surprised by this,” said Packaging Federation chief executive Dick Searle.

“Packaging is essential for product protection and preservation, but it also plays a huge role in product promotion – the three 'P's of packaging.

“Cutting packaging would inevitably lead to losses of revenue - packaging is definitively not an optional extra," he said.

Mike Ridgway, director of the Consumer Packaging Manufacturers Alliance, also said he believed the survey’s findings were “correct” and that packaging was one of an array of “marketing weaponry” SMEs need to utilise to extend their reach.

“With the post-Brexit, increasingly globalised world we are moving towards, the business environment is becoming increasingly competitive,” he said. “SMEs can push their brands by adding value to packaging to support their products. Brand marketing, including packaging, will only become more crucial in the future.”

Of the 5% of SMEs that do want to target reductions in packaging, 31% cited the UK leaving the EU as the main reason. Davpack warned that the packaging industry will see a shift in spend, but believed that industries will continue to use packaging as a marketing tool.

Davpack managing director Barney Byfield said: “The indications are that the packaging market continues to expand and that customers don’t foresee a need to cut costs on this business essential.

“In fact, we are currently experiencing strong demand across the board, not just within economy packaging supplies, but also added-value areas such as custom printed boxes and e-commerce solutions.

“However, many businesses do feel a need to offset the uncertainty around the future impact of Brexit with some cost reductions today as an insurance policy.

"We will continue to monitor the situation, because if companies feel more affected as Brexit gets closer, this is likely to affect business confidence and, in turn, demand for packaging supplies.”

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