Packaging Deals Bring Internet of Things to Crackers, Hairspray and Tomato Paste
Headlines about connected products often hype the latest consumer electronics, seemingly out-of-reach home appliances, and the occasional internet-enabled bottle of whisky. In the past year, however, the near future of connected products became decidedly more mundane. Recent partnerships have begun the process of turning everyday items from hairspray to tomato paste into digitized, identifiable, data-generators that can be tracked from the factory to the pallet to the store to the consumer.
This month international packaging firm WestRock Company announced a deal with digital barcode provider Digimarc and internet-of-things data platform Evrythng that will help WestRock integrate digital signals across boxes of crackers, labels for sliced deli cheeses and all sorts of paper-based packaging. It was the third such recent deal between some of the world's largest packaging firms and Evrythng, whose system produces and tracks digitized identifiers for products.
In November, the "IoT" platform inked a pact with metal packaging giant Crown Holdings, whose clients have included brands such as TreSemmé hairspray, Nescafé coffee and Barbasol shaving cream. That followed an April deal with global apparel labeler Avery Dennison, which is expected to result in a minimum of 10 billion digitized and identifiable clothing and footwear products over three years.
Marketers of low-tech products and retailers have a multitude of reasons to sheathe their wares in data-emitting cardboard or metal: product identification, shipping and inventory tracking, supply chain management, more efficient cashier scanning, fraud prevention, temperature or moisture monitoring, and, yes, enabling consumers to readily interact with products and related marketing campaigns through a quick scan with their phones.
"The potential that we're trying to unlock is how does that data become more meaningful and more rich and they can do something with it to solve omnichannel problems," said Bruce Davis, CEO of the digital barcode provider Digimarc.
Market research firm Smithers Pira predicts spending on intelligent packaging, which includes IoT-enabled packaging, will grow 18% each year for five years and reach $2 billion in 2021, according to its 2016 "The Future of Smart Packaging" report.
The high projected growth rate reflects the nascent state of connected packaging adoption. But these packaging players believe the investment will pay off. "We wouldn't be participating in this if we didn't think the opportunity was in the billions," said Dan Buckman, VP of customer solutions at WestRock.
Once integrated with Crown's system, Evrythng's digitized codes or triggers will be added to food, beverage and aerosol cans at the manufacturing stage. Those codes hold product identification data that can be updated in real time throughout the supply chain, and potentially serve as launch points for communication between brands and consumers via their smartphones.
In late 2016, Avery Dennison introduced its connected label product, which is built on the Evrythng platform, with a limited-edition $630 satin Rochambeau bomber jacket featuring hidden sleeve fabric containing a QR code (for Quick Response) and NFC (Near Field Communication) signal that is recognizable by smartphones once owners register the garment. The digitized jacket served as a VIP ticket to a New York tapas restaurant and under-the-radar nightclub.
Avery Dennison works with high-end designers such as Astrid Andersen Menswear and Vivienne Tam, but has already begun working on projects to incorporate its IoT-enabled tags in garments for non-designer apparel manufacturers, too, according to Bill Toney, VP of global marketing development for RFID at Avery Dennison.
Adding an IoT-enabled tag to a garment where it is produced means a variety of origin data can follow it through the supply chain -- information such as where fibers were sourced, what types of dye were used or how it should be laundered.
"The physical-to-digital trigger can be embedded at the point of manufacture which means effectively that very, very early on in the value chain, brands can turn on the digital identity," said Andy Hobsbawm, co-founder and CMO of Evrythng. The company's technology works with any type of digital trigger including NFC sensors, smart ink and digital barcodes or QR codes.
Manufacturers can track the items to ensure they got to the right place or simplify product recalls, and retailers or brands can monitor inventory or link apparel to a promotion or loyalty program at the point of purchase. Yet one of the main attractions for designer fashion brands as well as makers of high-end liquor and wine, pharmaceuticals, and foods in danger of counterfeiting is fraud detection and prevention.
In November, ThinFilm, a producer of NFC-enabled tags for product packages and labels, joined with makers of Italian olive oil brands including Buonamici, La Ranocchiaia and Il Cavallino to electronically tag bottles with identification codes proving that their extra virgin olive oil is indeed real EVOO.
Private grocery brands get connected
As of June, mid-Atlantic regional grocer Wegman's had 1,400 of its private label products including Wegmans Classic Entertainment crackers and Wegmans tomato paste in Digimarc-enabled packaging, according to Mr. Davis of Digimarc. The company's technology enables smartphones and industry interfaces such as store scanners to recognize product identity, UPC codes and related data that is embedded and printed in tiny, nearly invisible square tiles just over a half inch in size that are repeated across an entire package.
WestRock partners with Digimarc on the Wegman's project and will do some of the printing of the Digimarc-enabled packaging. For Wegman's the goal is to shave seconds from checkout times.
"Our strategy is to focus on the private brands of retailers first… to lay a foundation to market awareness," said Mr. Davis. Relationships with larger makers and sellers of everyday consumer products are also in the works, he said. Though he would not name them, Mr. Davis said Digimarc is "in early production with two of the top ten retailers in America and two of the top ten consumer product companies in the world."
New Seasons, another small regional grocer with locations mainly in and around Portland, Ore., has begun incorporating Digimarc's codes into packages of its store brand nut butters and juices, with plans to do the same across its entire store brand product line. Eventually deli labels could incorporate the technology, which would allow New Seasons to include required data such as country of origin and ingredient lists while freeing up space on the labels.
The grocery chain's decision to use Digimarc-enabled packages and labels is about customer engagement, not checkout speed, said Sean Teisher, VP of IT at New Seasons. Rather, the initial goal is "simplifying the checkout and allowing the cashiers to remain engaged in a dialogue with the customer," he said. The ability to scan a heavy bag of pet food or charcoal sitting at the bottom of a shopping cart from a few feet away is helpful, too.
Logistics before marketing
Right now, however, neither of these regional grocery chains has applied digitized and identifiable packaging for marketing purposes. While the New Seasons marketing team is intrigued by the Digimarc integration and potential to interact with consumers through connected packaging, the store does not have an app, which today would be the most feasible way for mobile devices to surface product information, recipes or other promotions from packages.
"Adoption of connected packaging technologies on a mass scale will be logistics- and cost-driven to start, and once the comfort level is there on that side, the brands will roll it out to the consumer level side," said David Luttenberger, global packaging director at market research firm Mintel.
In its partnership with Westrock and Digimarc, Evrythng's system keeps track of which digitized package pattern or code is associated with each product, serving as a data clearinghouse. From there, data might flow through Westrock's system to its brand clients, or go directly to the brand, or might end up in a separate marketing data platform employed by the brand. According to Evrythng, brands always own the data associated with their connected products.
As a product makes its way through the distribution chain, each stop can be reflected in the data. When a consumer brings the product home and scans it to reveal additional information or interact with the brand, that can be recorded in the data also.
This is where it gets tricky. It's not clear how brands or intermediaries will track, collect or share data once a product is in the hands of the consumer. These types of IoT packaging technologies don't emit signals, so they don't generate data unless consumers actively scan them.
There are no laws or regulations about privacy notifications or data use related to IoT package tracking.
"You'd be crazy to do anything to track anything on a user without their permission," said Mr. Hobsbawm of Evrythng, who said privacy policies related to the firm's technology vary by brand and geography.
Skeptics with long memories
Not everyone is convinced that these recent IoT packaging deals foretell a future in which most consumer products are connected. "Fifteen years ago RFID was supposed to take over the packaging industry," said Jeff Wettersten, president of packaging consultancy Karstedt Partners, suggesting it's too soon to know whether today's technologies will catch on.
Many agree that Radio-Frequency Identification, which relies on small electronic chips, turned out to be too cost-prohibitive to have an effect at the product level. The firms fostering IoT packaging partnerships today are betting that connectivity via Near Field Communication and QR codes or other smartphone scanning technologies have lower barriers to adoption because they are cheaper and can interact with devices most people have.
"The more cautious, very large global brands are saying, 'We've got to get a hold of this thing and really get it right," said Mr. Davis.