The Business Case for Sustainable Food Packaging: Cost vs. Consumer Demand

Abstract

This study explores the business case for sustainable food packaging using the examination of the balance between the costs and evolving consumer demand. As the environmental challenges rise globally, the food industry is faced with increasing pressure to adopt environmentally friendly packaging alternatives such as bio plastics, compostable packaging materials, and refillable containers. The study aims to contrast the economic feasibility of the sustainable options and to analyse consumer perceptions and the willingness to pay a premium price. The research applied a qualitative approach, gathering information from surveys and focus groups of respondents from both developed (North America) and emerging (Southeast Asia) markets. The study reveals that although there is great environmental awareness and preference for new sustainable packaging types among customers, their premium willingness to pay is limited to only 5–10%, with functionality and belief in environmental claims playing key determinants. High material and production costs, lack of economies of scale, complex supply chains, and infrastructure differences at the regional level are the key inhibitors for companies. The study also indicates a disparity between emerging and developed economies, where efficient recycling plants create cost savings in the latter, while fragmented systems add costs to the former. To balance the difference between cost concerns and consumers' expectations, the study suggests strategic measures like local procurement of raw materials, expanding production for economies of scale, and collaboration with waste management companies to coordinate disposal. More openness through simple eco-labelling and consumer education can develop trust and justify small premiums. In addition, policy interventions such as subsidies and regulation support are paramount in developing economies to reduce cost burdens and promote sustainable packaging adoption. These suggestions aim to help companies achieve both business viability and environmental sustainability. 1Keywords: Food packaging, Sustainability, Eco-labelling, Consumer demand