The luxury packaging market is defined as the packaging of luxury items or goods that helps in establishing brand value. With the increasing consumer spending, consumer preference for luxury products, and rising focus of various brands on design, processes, and overall product development, the luxury packaging market is witnessing significant growth. According to the Bureau of Labor Statistics September 2020 study, the average annual expenditure on cosmetics, perfume, and bath preparation products per consumer unit in the United States in 2019 accounted for USD 19,701, which was a significant increase over USD 152.03 in 2007.
Among different materials used for the packaging of these luxury goods, paper and paper board, and glass are witnessing significant growth owing to consumers and brands’ focus shifting toward sustainability and eco-friendly packaging.
Moreover, premiumization is another factor driving market growth as brand owners continuously attract customers by offering products packed in the premium form of packaging. Alcoholic beverages such as wine and other high-end spirits are adapting premiumization in their product packaging. For instance, Bordeaux is offering Bordeaux Burgundy Wine Bottle Boxes, which are richly colored wine bottle gift boxes.
Various end-user industry products for which luxury packaging is used are tobacco, gourmet food and beverages, and other luxury goods. Gourmet products are typically high-quality, great-tasting beverages and foods, commonly sold at higher prices due to their care, authenticity, quality, and expenses during manufacturing, marketing, merchandising, and packaging.
According to the National Coffee Association, in 2020, the gourmet coffee beverage consumption in the United States showed that espresso-based beverages were among the most popular gourmet coffee beverages in the United States, as roughly 40% of US consumers consumed them, followed by the traditional gourmet coffee, with a share of around 18%.
Some companies have come up with new innovations in luxury food packaging, such as transparent plastic packaging to display the vibrant color of Rokeriet smoked salmon product, La Secchia Balsamic’s unusually-shaped glass bottle and a stopper made from genuine cork for its vinegar, Williams-Sonoma’s Artisan pasta packaged in solid-colored, opaque boxes in varied, muted tones, Nashville’s matte paper labels and muted drawings of each jam’s fruit ingredients, and Kerrygold Dubliner Cheese’s opaque waxed paper as a primary wrapper, a brightly-colored label that ass visual interest and emphasizes the product’s status as an import.
Some of the packaging firms are giving new focus on unusual shapes, particularly for gourmet and luxury products, which is driving the creative excitement.
Packaging is an essential aspect of luxury brands since it aids in brand identification and establishes a company's value. Luxury brand owners are strategically investing in packaging to improve their business's image. Based on the price of the goods, luxury packaging can be divided into two categories: high street and pure luxury packaging.
When it comes to packaging design, pure luxury packaging places a greater emphasis on the target demographic. In this situation, each brand has its package style. High-street packaging focuses on cost and follows a certain trend, such as the use of lightweight and long-lasting designs. Luxury goods companies are committed to long-term growth and are investing in biodegradable and environmentally-friendly packaging.
With the outbreak of COVID-19, the luxury packaging market has witnessed negative growth as there is a changing consumer behavior regarding purchasing luxury products where the consumer is spending more mindfully on their purchase of the luxury product; instead, they are spending more on essential items.
Further, the lockdown imposed in the initial outbreak of the virus has resulted in the closure of many luxury goods and packaging production plants, which have impacted the studied market growth.
In addition, the retail stores are closed in many countries, that have also impacted the growth of the market. For instance, in April 2020, Neyret announced that its production plant is operating at between 30% and 80% capacity depending on the country.
Moreover, in November 2020, British luxury brand Burberry announced that fresh Covid-19 lockdown measures in Europe would hit trading, with more than 10% of its global stores currently closed. But, with the closure of retail stores, the online channel of shopping for luxury goods has witnessed a tremendous spike, forcing many retailers in the luxury goods market to build their meaningful online presence and are working on connecting with their consumers via the digital landscape.
The luxury packaging market is segmented into four regions: North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa.
Asia-Pacific is the fastest-growing luxury packaging market. The Asia-Pacific luxury packaging market is predicted to be worth USD 4,570 million by 2030, increasing at a 5% CAGR.
The cosmetics market in China has been one of the fastest-growing sectors in China over the last few years, benefitting from an increasingly engaged consumer base, which augments the growth of the market studied.
Furthermore, the country’s personal luxury market is segmented as true luxury and accessible luxury. According to Tencent, by 2025, the true luxury market share will increase to 32%, and accessible luxury’s market share is going to increase by 69%.
Vendors in the market are constantly introducing new innovations. For instance, in the recent past, VBX solutions have introduced a rotating ring box for special movements. The box is equipped with a velvet liner which gives a luxurious experience for the consumers in the market. In addition, vendors are also working on various types of finishing, such as UV coating, hot foil stamping, embossing and debossing, screen printing, and laser cutting. For instance, Bell Printers provides jewelry boxes manufactured with technologies such as metal forming, notching, 3D printing, and lazer cutting.
Moreover, the ban on tourism from Asia and other countries in the world showed a huge dip in sales of luxury goods in Japan. However, the country is expecting a speedy recovery from the huge losses and is expected to increase the number of luxury goods sales which boosts the luxury packaging product sales during the forecast period.