Opportunities and challenges in times of global crisis
Increasing momentum in the glass industry
Change in the glass industry has traditionally been rather leisurely, because investment cycles are long and the value chain is characterised by well-established processes and partnerships with customers and suppliers that go back several years. For some years now, however, the dynamics have been increasing, mainly due to digitalisation and faster changes in the framework conditions.
Crisis outside any scenarios
At the beginning of 2020, the outbreak of the COVID 19 pandemic was the starting point of a comprehensive global crisis. Even the glass packaging industry, which had previously benefited from a supportive market environment for years, was not spared by the crisis. From the second quarter of 2020 onwards, the decline in demand due to severe restrictions in the catering and tourism sectors left a clear mark on all industry participants. These negative effects were partially offset by a shift in consumption to the domestic sector. Thanks to its great flexibility in production and the breadth of its product range, Vetropack was able to benefit from this shift. Accordingly, the Vetropack Group was able to digest the first year of the pandemic very well.
In many European countries, the measures to combat the pandemic were relaxed from spring 2021. From autumn onwards, compulsory certification took the place of restrictions and lockdowns in many places in the catering and tourism sectors. Despite the temporary closures imposed again towards the end of the year in some cases, these industries were able to recover in part during the year under review, which subsequently led to an increase in demand for glass packaging.
The upturn in demand placed heavy demands on Vetropack’s supply chain at times - particularly due to the shortage of certain raw materials and goods in procurement as well as the interruptions and bottlenecks in global supply chains. In such times, it is clearly important to have diverse and good connections with suppliers, as well as agility in the company’s own processes.
Vetropack was able to meet this rapidly increasing demand in a timely manner, also because the pandemic and the associated measures had not led to a plant standstill at any point. Planned investments were made and projects implemented - in some cases adapted to the new framework conditions.
Flexibility and individual design remain in demand
On the customer side, Vetropack has been observing a trend towards flexibility and individualisation for several years now: customers increasingly want to differentiate themselves through their individually designed packaging. This often leads to small batch sizes and also requires a high degree of flexibility in production. The COVID 19 pandemic has further intensified the trend towards flexibility, as value chains and goods flows (raw materials and finished goods) have had to be adjusted or redefined at short notice. This gave Vetropack the opportunity to question entrenched processes and habits and to revise them accordingly at some points.
In order to be able to respond even better and faster to customer needs in the future, Vetropack restructured its Technology and Production division during the year under review with a view to enhancing its innovative capabilities.
Although the glass packaging collection rate in the EU already totals over 75%, the EU has decided to up recycling quotas again as part of the revision of the Packaging Waste Directive. As a result, 70% of glass packaging must be recycled in each country by 2025, rising to at least 75% by 2030. These targets no longer apply to collection rates alone. Instead, they refer to the actual recycling of glass packaging waste.
There are also voluntary industry initiatives such as “Close the Glass Loop”. This initiative is aiming to achieve an EU-wide collection rate of 90% by 2030. It is supported by various industry associations such as the Fédération Européenne du Verre d’Emballage (Feve), of which Vetropack is also a member. The developments in the EU and Vetropack’s plans to increase the proportion of used glass in production therefore go hand in hand. Only a larger supply of high-quality used glass will make it possible to use a higher proportion of it in production, thus improving sustainability.
Against this backdrop and in the context of its Strategy 2030, Vetropack has set itself the goal of achieving a cullet content of at least 70% in production across the Group by 2030.
As the trend is also increasingly moving towards reusable glass, Vetropack is simultaneously working on new methods to increase the traceability of glass containers. For example, Vetropack began using a process at its innovation centre in Austria that places QR codes on each individual glass container. In the future, these could be crucial for organising reverse logistics or tracking how many times a bottle has been in circulation.
