Intelligent Packaging White paper

1. WHITEPAPER INTELLIGENT FOR CIRCULAR ECONOMY

2. CONTENTS Introduc�on 03 Intelligent Packaging, Market Poten�al 04 Graham Packaging's Innova�ons: 14 Solving the Plas�c Waste Collec�on Conundrum and Enabling Circularity through Packaging How Avery Dennison is innovating to advance 21 circular packaging Solving Global challenges of Food waste 28 and loss with Intelligent Packaging Market Sen�ment Analysis 32 The Way Forward 36 Authors 37 Further Reading 38 About Future Market Insights 39

3. Whitepaper - Intelligent Packaging for Circular Economy INTRODUCTION The primary objec�ve of intelligent convenience to consumers con�nues to packaging is to combat waste genera�on remain potent challenges in the intelligent and improve overall product shelf life. packaging domain. Several external Intelligent packaging can reduce the risk factors need to be considered by of counterfei�ng, and improve tracking packaging engineers and top management and tracing of products. All of these are to streamline the development of pivotal to achieving a circular economy, intelligent packaging. with the primary focus being on incorpora�ng sustainable and recyclable This whitepaper aims to provide an packaging material. analysis and understanding about the role of intelligent packaging in establishing Governments and private sectors sustainability and circular economy. It also worldwide have realized intelligent highlights recent technological packaging could be a means to solving advancements in this space, market global issues such as waste genera�on adop�on and percep�on towards and resource deple�on. They are ac�vely intelligent packaging, and how deploying measures to a�ain scalable organiza�ons can generate value out of circular economy prac�ces through such innova�ons. intelligent and sustainable packaging. However, heightened packaging costs as well as the quest for maintaining a MANUFACTURING balance between innova�on and CIRCULAR ECONOMY CONSUMING RECYCLING 3

4. INTELLIGENT PACKAGING MARKET POTENTIAL

5. Whitepaper - Intelligent Packaging for Circular Economy THE MARKET POTENTIAL OF INTELLIGENT PACKAGING Businesses are using intelligent packaging Manufacturers are tapping into the as a holis�c solu�on to improve poten�al that intelligent packaging holds consumer engagement and overall sales in terms of monetary gains, recyclability, of the product. Market leaders are and eco-friendliness. With Gen Z and adop�ng intelligent packaging solu�ons millennials preferring recyclable and to monitor consumer sa�sfac�on and sustainable packaging, companies are improve their brand value. Such adop�ng intelligent packaging solu�ons to innova�ons hold the key to transform a�ract these consumers. Packaging is not business by collec�ng and leveraging data a secondary considera�on anymore, with to make effec�ve business decisions. new technologies and material development; these packaging advancements are capable of disrup�ng the tradi�onal mode of business. Sales of intelligent packaging generated revenue of US$ 19.7 Billion in 2021, and is an�cipated to grow at 9% CAGR, reaching US$ 46 Billion by 2031. The global market for intelligent and sustainable packaging is experiencing steady growth driven by gradual but robust commercialization by food and beverage, healthcare, and cosmetic companies, with intelligent packaging expected to account for 5% of total packaging by 2030 Ismail Sutaria, Packaging Consultant, Future Market Insights 5

6. Whitepaper - Intelligent Packaging for Circular Economy GLOBAL INTELLIGENT PACKAGING MARKET INCREMENTAL OPPORTUNITY (US$ BILLION) (2021E-2031F) 3.3 3.1 2.9 2.8 2.6 2.4 2.2 2.1 46 1.9 46.6 Incremental $ Opportunity (2021-2031): US $ 25 Billion 19.7 17.8 2020 2021 2023 2024 2025 2026 2027 2028 2029 2030 2031 2022 Market Value Incremental $ Opportunity THESE ADVANCEMENTS IN INTELLIGENT PACKAGING ARE EXPERIENCING MAJOR GROWTH SPURT Currently, packaging market leaders rely packaging a�aining maturity. Ac�ve heavily on advanced chemical and packaging is experiencing major growth material development techniques, such as spurt as the global import and export of nanotechnology for developing packaging rare ac�ve pharmaceu�cal ingredients solu�ons that offer protec�on to food, (APIs), eatables, and beverages have beverage, personal care, and increased in recent years. pharmaceu�cal products. Ac�ve and user While several intelligent packaging friendly packaging solu�ons are in the technologies are in nascent stages of growth realm with solu�ons such as evolu�on, there are some ac�vely barcodes and low energy bluetooth reaching maturity. 6

7. Whitepaper - Intelligent Packaging for Circular Economy INTELLIGENT PACKAGING : PRODUCT LIFE CYCLE CURVE Bluetooth Low Energy Bar Codes QR Codes Absorbers & Scavengers RFID Food Usage AR & VR Beverages Temperature Controlled Packaging Healthcare & Pharmaceutical 3D Printing AI and Machine Learning Logistics & Transport Machinery & Equipment Sensors & Indicators IoT Automotive parts Holograms Consumer goods Personal & Homecare Introduction Growth Maturity Decline Time End Use Industry Technology Source: Future Market Insights FRONTRUNNERS IN ADOPTION OF INTELLIGENT PACKAGING disease annually. This is majorly an The primary beneficiary of Intelligent outcome of improper storage or Packaging solu�ons is undoubtedly the packaging of food items. Also, 32% of such food industry. Within food specifically the cases arise due to temperature abuse. fruit & vegetables segment, dairy These startling figures clearly indicate the segment, and ready to eat segment are immense opportunity for intelligent the major revenue garners for intelligent packaging solu�ons. packaging crea�ng an incremental opportunity of US$ ~5.5 Billion during the Real-�me food monitoring is the core forecasted period. func�on of intelligent food packaging, enabling tracking and gathering of As food processors, manufacturers and informa�on concerning processes such as distributors look to enhance the shelf-lives oxida�on, rancidity or reac�on with other of their finished products, they are turning bio�c components. Some prominent towards intelligent and smart packaging approaches include modified atmosphere solu�ons. It is es�mated that 48 million packages (MAPs) for oxygen detec�on, people become sick from foodborne 7

8. Whitepaper - Intelligent Packaging for Circular Economy Congress in Amsterdam, asking a�endees to carbon dioxide detectors and humidity pitch a design resolving the issue of packaging sensors to name a few. waste. These solu�ons focus on op�mizing convenience to enable recycle with maximum Several food & beverage companies have efficiency and minimum effort, including those been leveraging intelligent packaging who may not have access to smartphones solu�ons, such as Coca-Cola, PepsiCo, every �me they look to recycle. Sainsbury, Jack Daniels. Coca-Cola hosted a recycling challenge at the Ac�ve Intelligent Packaging Industry Associa�on (AIPIA) 8

9. Whitepaper - Intelligent Packaging for Circular Economy Closely following the food industry, Healthcare and Pharma are expected to benefit largely from intelligent packaging GLOBAL INTELLIGENT PACKAGING MARKET ATTRACTIVENESS ANALYSIS BY END USE INDUSTRIES, 2021E-2031F 30.0% Food Beverage 25.0% Healthcare Market Share (2021(E)) 20.0% Personal Care & Homecare 15.0% Logis�cs & Transport Consumer Goods Cosme�cs 10.0% 5.0% Consumer Electronics Others 0.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% CAGR (2021(E) – 2031(F)) It is es�mated that US$ 35 Billion of pharmaceu�cal products and ingredients are lost every year due to factors such as improper storage. Bulk of this wastage results from the absence of op�mal surrounding temperatures. Hence, companies have been deploying smart solu�ons to monitor drug quality, including NFC tags and �me-temperature indicators. Watch the recording from our webcast on the leading industries for intelligent packaging adop�on and winning case studies. 9

10. Whitepaper - Intelligent Packaging for Circular Economy THESE INNOVATIONS WILL DEFINE THE FUTURE Most of the intelligent packaging technologies are designed to interact with the product inside, and the buyer outside. And in con�nua�on with the product lifecycle curve, here we categorize the market impact of different intelligent packaging innova�ons at a prod- uct, technological, and buyer level into three areas: • Value maintaining trends • Quick win trends • Value crea�ng technologies Technology Level Package Connec�vity with IoT AI Streamlines Decision Making Holographic Future at Finger�ps Product Level VR Experience Augmented Reality World Buyer Level Consumer Pa�ern through Blockchian Temperature Controlled Packaging Machine Learning Simplifies Automa�on Bluetooth Data Transmission Monitor Packaging via Indicators RFID for Package Tracking Wireless Connec�vity via NFC URL Redirected with QR Codes Sensoring Product Condi�on E-Commerce The New Normal Op�ons Extending Shelf Life Barcode Technology Na�vity by 3D Prin�ng Value Creator Quick Wins Maintain Maintain Quick Wins Value Creator 10

11. Whitepaper - Intelligent Packaging for Circular Economy VALUE MAINTAINING TRENDS: PRODUCT LEVEL TECHNOLOGY LEVEL BUYER LEVEL Barcode Technology RFID for Package Tracking Options Extending Shelf Life • High traceability of product in produc�on and distribu�on cycle • Capable of op�mizing supply chain and inventory control • Real �me monitoring and tracking of package condi�on and packaging equipment performance • Prevents system failure and reduces environmental footprint through reusability • An�-microbial packaging to protect perishable food items from spoiling • Nano technology to detect the contaminants in the consumables especially in pre-cooked food 11

12. Whitepaper - Intelligent Packaging for Circular Economy QUICK WIN TRENDS: BUYER LEVEL PRODUCT LEVEL TECHNOLOGY LEVEL 3D printing Blockchain Technology Monitor packaging via indicators • Creates unalterable records of product from produc�on to sales • Records informa�on associated with product in the package, its physical and chemical condi�on, and geographic loca�on • Ability to develop prototypes and highly customized packaging design as per consumer requirement at low cost • Capable of developing ergonomic packaging design with limited human interven�on Wireless Connectivity via NFC • Smart indicators are made from special inks that changes color when exposed to different environmental condi�ons (temperature, light, and humidity) thus, ensuring high quality product is delivered to the consumer Temperature Controlled Packaging • Temperature controlled packaging solu�ons are gaining grounds in food & beverage and healthcare industry owing to rising produc�on, transporta�on, and storage of perishable and temperature sensi�ve products and pharmaceu�cal ingredients • COVID-19 pandemic escalated the demand for �me-temperature indicators, sensors, and ac�ve packaging solu�ons for quick and efficient transporta�on of vaccines across the globe • Packaging manufacturers are using electronic printed near-field communica�on (NFC) labels on their products to be�er market their product in high compe��ve environment • By holding the smartphone next to the NFC label, consumer can access informa�on like promo codes, offers, special memberships, etc E-commerce The New Normal • Intelligent packaging is carving its place in e-commerce industry, as online shopping trends are gaining popularity in developing and developed regions • Advanced features like easy tracking across the supply chain un�l last mile delivery has led e-commerce giants to adopt these novel packaging solu�ons Bluetooth Data Transmission • Low energy Bluetooth devices have gained maturity in past few years. They are used in asset tracking • BLE smart tags can locate the misplaced personal products and equipments through geo-tagging 12

13. Whitepaper - Intelligent Packaging for Circular Economy VALUE CREATING TECHNOLOGIES: BUYER LEVEL PRODUCT LEVEL TECHNOLOGY LEVEL Sensoring Product Condition AI Streamlines Decision Making Augmented Reality World • AR technology is gaining a lot of trac�on in product packaging industry. AR packaging offers businesses a chance to improve their consumer engagement by introducing product content, discounts, and video experience • With synchroniza�on of sensors and tags, consumers can access real �me product condi�on URL Redirected with QR codes • Smart sensors, printed electronics, and indicators detect and monitor chemical and physical changes throughout the supply chain • Proven game changer in the field of pharmaceu�cal packaging as drugs and medicines require special environmental condi�on for viability VR Exp • Enables smarter inspec�on, sor�ng, and collec�on of goods to ensure accurate shipment and efficient tracking Package connectivity with IOT • Interconnectedness embedded directly in the material • Maximizes data collec�on to op�mize opera�ons, boost sales, verify authen�city • Mostly to augment packaging design • Create an immersive shopping experience virtually • The power of QR codes are being leveraged across industries to analyze purchase pa�ern of customers, improve consumers engagement & sales, study brand loyalty, deliver authen�c product and prevent sales of counterfeits by providing unique iden�fica�on code to the product Holographic Future at Fingertips • Holograms offer businesses opportunity to catch the eye of the consumer through its crea�ve appeal Machine Learning Simplifies Automation • Packaging manufacturers are employing machine learning in data labeling as it helps them prepare be�er standardized procedure, reduce manual error and reduce consumer dissa�sfac�on 13

14. GRAHAM PACKAGING'S INNOVATIONS: SOLVING THE PLASTIC WASTE COLLECTION CONUNDRUM AND ENABLING CIRCULARITY THROUGH PACKAGING Based on an interview with Mr. Ken Chrisman, President Beverages, Graham Packaging

15. Whitepaper - Intelligent Packaging for Circular Economy GRAHAM PACKAGING'S INNOVATIONS: SOLVING THE PLASTIC WASTE COLLECTION CONUNDRUM AND ENABLING CIRCULARITY THROUGH PACKAGING Plas�c waste is the “environmental in terms of proper handling and menace” of 21st century. Surge in controlling packaging waste genera�on, as produc�on of disposable plas�c products of 2019, packaging waste generated was has significantly strained the world’s es�mated at 177.4 kg per inhabitant in ability to recycle and reuse them. the EU. To avoid such colossal wastage, Around 9.2 Billion tons of plas�c has been companies are rapidly adop�ng intelligent produced, of which only 9% has been packaging solu�ons, which include ac�ve recycled properly. & smart packaging (RFID tags, absorbers, Developing na�ons are suffering the most barcodes and scavengers), user friendly from plas�c pollu�on as their garbage alterna�ves (QR Code, NFC, AR & VR and collec�on and recycling system is almost interac�ve tags), interac�ve & connected non-existent. Most of the global plas�cs technology (sensors, indicators, IoT and waste ends into incinera�on (25%) and AI) and eco-friendly material (sustainable, landfills (40%). zero-waste, PCR and composite Developed economies have low recycling packaging). rates and are facing problems of collec�ng Top packaging companies are looking to discarded plas�c packaging. design intelligent packaging op�ons that Containers and packaging make up a directly speaks to the intelligence behind major por�on of municipal solid waste, how plas�c packaging would be used, how amoun�ng to 82.2 Milliontons of it can be reused, and how it can create genera�on (28.1%of total genera�on). new streams of post-consumer recycled European Union is figh�ng an uphill ba�le plas�c packaging. Intelligent packaging 15

16. Whitepaper - Intelligent Packaging for Circular Economy circularity. Majority of commingling is op�ons like PET bo�les can communicate experienced during collec�on of shrink different value proposi�ons like sleeve bo�les. In some cases sustainability, environment friendly, commingling is with different material. reusability, and an�-counterfei�ng. Intelligent packaging solves these issues Packaging manufacturers are using with digital watermark. These clear intelligent packaging solu�ons like digital watermarks can be scanned by barcodes, QR codes, and digital the smartphone and upon scanning watermarks to solve the plas�c waste displays all the important recycling collec�on conundrum. People can scan related informa�on. the barcode or QR code a�ached to the Intelligent packaging is also bo�le or the bag and proac�vely sign up, revolu�onizing exo�c mul�-layered register, or subscribe to the plas�c materials, as it can readily display the deposit or sor�ng program and they are exact material composi�on of the then held accountable to properly sort package thus, streamlining the recycling the plas�c waste from mingled material. process or reprocessing process. This is The subscribers get the money back a nice way to think about digital when they return the bo�les for consumer influence but also about recycling. what’s the end of product life while However, commingling is one of the trying to create circularity. biggest challenges in establishing 16

17. Whitepaper - Intelligent Packaging for Circular Economy THE SUCCESS STORY TOWARDS PACKAGING FOR CIRCULARITY Graham Packaging, a global leader in the As environmental sustainability acquires packaging industry, has stepped up to this precedence, leading packaging challenge and has rebranded itself to manufacturers are doubling their reinforce and elevate its commitment to commitment towards producing essen�al intelligent, and sustainable packaging. As products from recycled and reusable a company their macro sustainability goals material. include Designing for recyclability and minimizing • Designing for 100% recyclability by environmental impact by undertaking 2025 across all their products ini�a�ves are some of the meaningful • Incorpora�ng an average of 20% PCR changes observed among packaging across all bo�les by 2025 manufacturers in past few years. However, • Achieving 25% energy reduc�on by mi�ga�ng climate change is not enough. 2028 It is necessary for packaging • 30% reduc�on in green-house gases manufacturers to incorporate intelligent (GHG) by 2030 packaging solu�ons and develop a novel With sound crea�ve problem solving and approach to solve the socio-economic applied imagina�on, the company aims at issues and design packaging that meets developing solu�ons that meet the important governance standards. consumers’ need and fulfils their own Packaging manufacturers are reviewing sustainability objec�ves. the en�re plas�c supply chain to iden�fy the areas of improvement and execute strategies at every point from supplier to consumer and recycler to ensure that circularity is maintained. 17

18. Whitepaper - Intelligent Packaging for Circular Economy PART OF HOLY GRAIL 2.0 INITIATIVE Driven by AIM - European Brands are looking to integrate digital watermarks Associa�on and powered by the Alliance into mold with no environmental impact. to End Plas�c Waste, the Digital Other top packaging leaders such as Watermarks Ini�a�ve Holy Grail 2.0 is a Amcor, Avery Dennison, in addi�on to pilot project aimed to analyze and prove consumer brands such as Unilever, P&G, the technical viability of digital PepsiCo, and Kellogg’s are part of this watermarks for accurate packaging waste ini�a�ve. sor�ng, while taking into account the Through their work with Holy Grail 2.0 economic viability of the business case. project, Graham Packaging directly Holy Grail 2.0 project is a con�nua�on of addresses consumer concerns regarding the ini�al Holy Grail project started by the recyclability. Ellen MacArthur Founda�on. Using the The branded goods industry is touted to concepts of digital watermarks from Holy be the primary beneficiary of Holy Grail Grail 1.0, the project aims to introduce 2.0, as prominent giants seek to ini�ate a new techniques for sor�ng plas�c cross-value chain ini�a�ve to assess how a packaging waste which at present appear pioneering digital technology facilitates unfeasible. Employing smart and enhanced sor�ng and higher-quality intelligent packaging technologies, it recycling rates. possesses the poten�al to be deployed across other areas, such as consumer engagement, retail opera�ons and supply chain visibility. Graham Packaging joined the Digital Watermarks Ini�a�ve Holy Grail 2.0 project in 2020, with the objec�ve to show the u�liza�on of digital watermarking technologies and its poten�al benefits in improving recycling opera�ons, especially for difficult to recycle materials like black plas�c. They 18

19. Whitepaper - Intelligent Packaging for Circular Economy Digital watermarks are codes carrying wide range of information like recycling instructions and consumer information. These codes are invisible to naked eye and are roughly the size of a postage stamp. These codes sometime cover the surface of a product packaging. Upon entry of container in waste sorting facility, the digital watermark can be detected by high resolution cameras on the sorting line, which reads codes and segregates the packaging into the appropriate recycling stream. This process enables precise sorting and improves traceability. INNOVATIONS LIKE THERMASET® PACKAGING AND PET CANS Graham Packaging introduced a novel equivalent, compared to 557 kg from packaging solu�on “ThermaSet® glass. Packaging, a patented heat-set process Graham Packaging’s PET cans were that allows PET to be used instead of glass introduced as a convenient and innova�ve with upgraded packaging performance alterna�ve to aluminum cans. With these especially in thermally demanding cans, the company has pushed the applica�ons. This packaging solu�on is envelope in the rigid plas�c packaging around 80-90% lighter than glass which domain while providing the same classic directly translates to increased cost saving convenience to customers. Graham’s PET with respect to transporta�on. Cans are BPA free, visually appealing to Sha�erproof quali�es of ThermaSet® lead the consumer, and offer more premium to less produc�on down�me during filling, feel compared to aluminum cans. These limited product loss during transit and novel PET cans can improve consumer consumer handling. ThermaSet® PET is experience with the ability to be formed also 100% recyclable and requires less into unique shapes, including a spiral material and energy during produc�on design. They are calibrated for exis�ng phase. The global warming poten�al of produc�on lines, for easy conversion from ThermaSet® PET is 347 kg of CO2 aluminum to plas�c. 19

20. Whitepaper - Intelligent Packaging for Circular Economy ACTIVE BASE TECHNOLOGY THAT USES UP TO 100% POST-CONSUMER RECYCLED MATERIAL One of the merits of this technology is Another prominent packaging approach that it can use upto 100% post-consumer from Graham Packaging is Ac�ve Base recycled material, thus helping brands technology, which provides the ul�mate meet their recycling requirements. MAB solu�on in light weigh�ng. While technology assists in elimina�ng the ribs tradi�onal hot-fill bo�les require vacuum from the side of the bo�le. Other benefits panels and heavyweights to prevent of MAB technology include high design distor�on during the cooling process, flexibility, product freshness and quality Graham’s Ac�ve Base allows for enhanced protec�on, reduc�ons in material use, design freedom and sustainability. These increase in PCR content, and improved Ac�ve Base bo�les can operate with less shipping performance. material and s�ll have professional, robust bo�le feel. Their Mechanically Ac�vated Base (MAB) technology is set to emerge as sustainability leader in lightweight PET hot-fill packaging. MAB technology produces containers that are at least 20% lighter than exis�ng hot-fill solu�ons. Active Base technologies allow the base of the bottle to flex during the fill process and respond to changes in the pressure of the container while cooling. This removes the need for traditional sidewall features that limit design freedom. Ken Chrisman, President Beverages, Graham Packaging on Ac�ve Base Technology 20

21. HOW AVERY DENNISON IS INNOVATING TO ADVANCE CIRCULAR PACKAGING This white paper is based on an Interview with Flor Peña Herron, Senior Manager, Sustainability & Circular Economy EMEA and Tyler Chaffo, Manager, Global Sustainability at Avery Dennison Smartrac.

22. Whitepaper - Intelligent Packaging for Circular Economy which, among other objec�ves, calls for the company to deliver innova�ons that HOW AVERY DENNISON IS INNOVATING TO ADVANCE CIRCULAR PACKAGING advance the circular economy, and includes targets for all of the company’s standard label products to contain recycled or renewable content, and for all opera�ng regions to offer labels that enable the circularity of plas�cs. Avery Consumer packaging is evolving. Dennison is offering its sustainability Regula�ons, par�cularly in Europe, are solu�ons primarily through two product combining with public concern to compel lines: its Sustainable ADvantage por�olio brands to make packaging-and of label materials, and its Intelligent par�cularly plas�c packaging-more circular Labels pla�orm. and sustainable. Materials scien�sts at Avery Dennison are developing innova�ons that support a circular packaging economy. These Our goals help us in include conven�onal label materials, identifying what kind of services that enable the recycling of label digital triggers and other waste, and intelligent labels, which intelligent labeling solutions combine conven�onal and digital we can provide that will components to drama�cally expand a increase the packaging’s label’s capabili�es and support ability to be reused and sustainability and regenera�on. recycled, while satisfying the SUSTAINABILITY AS BUSINESS STRATEGY sustainability requirements. Tyler Chaffo, Manager, Global Sustainability at Avery Dennison Smartrac As part of its business strategy to “lead in an environmentally and socially responsible manner,” Avery Dennison has integrated sustainability throughout its business. Its commitment to sustainability is codified in its 2030 sustainability goals, 22

23. CONVENTIONAL LABEL MATERIALS DESIGNED FOR CIRCULARITY PROGRAMS FOR RECYCLING LABEL WASTE As part of its business strategy to “lead in an environmentally and socially responsible manner,” Avery Dennison has integrated sustainability throughout its business. Its commitment to sustainability is codified in its 2030 sustainability goals, which, among other objec�ves, calls for the company to deliver innova�ons that advance the circular economy, and includes targets for all of the company’s standard label products to contain recycled or renewable content, and for all opera�ng regions to offer labels that enable the circularity of plas�cs. Avery Dennison is offering its sustainability solu�ons primarily through two product lines: its Sustainable ADvantage por�olio of label materials, and its Intelligent Labels pla�orm. Despite the fact that label waste is recyclable, many tons of it—the liners and matrix le�over a�er label materials have been printed and applied to packaging—are sent to landfills and incinerators every year. Avery Dennison has created several programs to make it easy and cost-effec�ve for converters and brands to recycle their label waste. Because regions around the world differ in their regula�ons and systems for collec�ng, sor�ng and recycling materials, Avery Dennison’s programs are tailored to align with local needs. 1. North America: RoadRunner Matrix Waste Program In collabora�on with RoadRunner Recycling, Avery Dennison has launched a matrix waste recycling program that helps label converters cost-effec�vely recycle label matrix, which can be difficult to recycle because of its chemical composi�on. Through a venture investment in RoadRunner, Avery Dennison has expanded matrix recycling to several ci�es across the United States. 23

24. Whitepaper - Intelligent Packaging for Circular Economy BRIDGING THE PHYSICAL AND THE DIGITAL WITH INTELLIGENT LABELS 2. Europe and Latin America: AD Circular Through AD Circular, brands use a web-based applica�on to schedule Avery Dennison’s Intelligent Labels pla�orm provides a complete solu�on for harnessing the power of digital labeling and unlocking new possibili�es for efficiency, sustainability, authen�ca�on, communica�on, and more. The pla�orm includes pressure-sensi�ve labels inlaid with an radio-frequency iden�fica�on (RFID) technology or some other “digital trigger,” and atma.io, the company’s connected product cloud. atma.io enables brands to assign unique digital iden��es to every item they produce, providing unparalleled end-to-end transparency by tracking, storing and managing all the events associated with each individual product, from source to consumer and beyond. Six of the world’s Top 20 apparel brands and four of the Top 10 quick-service restaurants use atma.io, and more than 22 billion items are connected to it across apparel, retail, food, healthcare, and other segments. Partnerships with brands include one with adidas, in which atma.io is managing the unique digital iden��es for the 1.5 billion products that adidas produces annually, and enabling their recommerce and takeback ini�a�ves known collec�vely as the Infinite Play program. In addi�on, atma.io helps combine its item-level collec�ons of used Avery Dennison label liners by an Avery Dennison recycling partner. The web app also provides analysis and cer�ficates for the volume of recycled liner material and avoided associated carbon emissions. The collec�on and transporta�on of used liners by AD Circular complies with local regula�ons and costs are comparable to exis�ng waste treatment services. The material made from recycled liners is used in new packaging and other high value products. The AD Circular program has found great ini�al success in La�n America, par�cularly with approximately 3,000 tons of waste recycled in Brazil alone in the early months of its opera�on. 24

25. Whitepaper - Intelligent Packaging for Circular Economy label solu�ons that support refilling traceability data with environmental impact data from the Higg Index, to help one of the world's largest brands get 360 degree visibility of its carbon footprint, from suppliers to consumers. Overall, Avery Dennison is the world’s largest UHF RFID partner, with more than 50 billion tags produced to date and more than 1500 patents and applica�ons worldwide. packaging at minimal cost, including one in partnership with Chilean startup Algramo, which has created a system enabling shoppers to purchase cleaning products by weight in refillable containers. The solu�on is based on reusable packaging that comes with an Avery Dennison RFID inlay, which links the container to each consumer’s online By providing a digital identity to account. Consumers purchase products, the product, intelligent labels schedule refills, and track their can complete the circularity loop associated environmental impact from an education standpoint. through a smartphone app. Electric These labels can provide product vehicles equipped with RFID readers and information to the consumer; product dispensers bring cleaning enrich their interaction with products to consumers’s doorsteps. The packaging and ultimately Algramo project is just one example of improve the sortation process. how intelligent label solu�ons might be used to manage the many components Tyler Chaffo, Manager, Global Sustainability at Avery Dennison Smartrac of a refillable container system and track its impact. HOW IT WORKS 1. An RFID-powered solution for single-use packaging The world is shi�ing away from single-use plas�c packaging towards reusable op�ons. More than 125 countries have established direc�ves to tackle the issue of disposable plas�c waste. S�ll, less than 2% of plas�c packaging is refillable or reusable. Avery Dennison is developing intelligent 25

26. Whitepaper - Intelligent Packaging for Circular Economy 2. Intelligent labels that enable better plastic sorting with near-field communica�ons (NFC) technology could be used to increase the sor�ng accuracy of plas�c waste at One of the biggest challenges of recycling material recovery facili�es. The study plas�c packaging is ensuring that it is sent showed that 79% of items could be to a recycling facility and not a landfill. A successfully detected or “read” when widespread lack of proper sor�ng using an array of three NFC readers technology has been a major hindrance. posi�oned over a conveyor belt carrying Since 1950, only about 9% of total plas�c waste material. From the items that packaging has been recycled in the were read, 100% were correctly United States, and poor sor�ng iden�fied and sorted. Following the capabili�es might be one reason why. ini�al study, the approach will be Avery Dennison has worked with a further tested in actual opera�ng partner in the UK to inves�gate, in recycling facili�es. simulated condi�ons, how labels inlaid labels to increase the re-use of clothing. 3. Richer Consumer Communication through QR Codes The labels contain a QR code that links to an app detailing how a par�cular garment was manufactured, how it Some�mes the intelligence in an should be cared for, and finally, where it intelligent label can be a simple QR can be sent for recycling. The app is code. Avery Dennison is partnering powered by atma.io, Avery Dennison’s with apparel brand UpWest and connected cloud pla�orm. apparel resale innovator ReCircled to leverage Avery Dennison’s digital care 26

27. Whitepaper - Intelligent Packaging for Circular Economy TOWARD GREATER CIRCULARITY 3. Increasing Consumer Awareness With the onus of recycling and reuse s�ll mainly falling on As markets move toward reusable and consumers rather than brands, refillable packaging designed for longer enlis�ng consumers in promo�ng life cycles Avery Dennison is circularity is essen�al. As one encouraging these three steps to example, Avery Dennison launched advance progress in circular packaging: its #CareToBeTheChange campaign 1. Designing the right solution for the package. to raise awareness of digital care labeling in apparel. The primary focus of the campaign is to change There is no one solu�on that fits all the way consumers view tradi�onal packaging. Each package type care labels, and how digital care requires its own balance of labels will help build a bridge to a sustainability, convenience, more circular economy. efficiency and cost. 2. Getting a better handle on the data Op�mizing data collec�on and analysis is cri�cal to improving the efficacy and efficiency of packaging circularity. Avery Dennison is bringing together diverse partners to gather informa�on such as the number of �mes a reusable package is used, how much reuse lowers a package’s carbon footprint, and more. By leveraging atma.io, brands can create a digital replica of their supply chain. This helps them closely track and be�er understand the lifecycle journey of each item. 27

28. SOLVING GLOBAL CHALLENGES OF FOOD WASTE AND LOSS WITH INTELLIGENT PACKAGING

29. Whitepaper - Intelligent Packaging for Circular Economy SOLVING GLOBAL CHALLENGES OF FOOD WASTE AND LOSS prevent prolifera�on of bacteria and other An�-microbial packaging and pathogens. In 2021, SGK Anthem, Vrijdag �me-temperature indicators are some of Premium Prin�ng, Generous Minds, the intelligent packaging op�ons that aid Neurensics, Kurz and Merck teamed up to in preven�on of food-borne diseases and form the Packadore Collec�ve for chemical contamina�on by controlling the Food waste has become a global concern, Modern intelligent packaging solu�ons implemen�ng desirable and sustainable vapor exchanges between atmosphere as rapid increase in world popula�on is can ensure that the food is not just food packaging solu�ons. Their DeXel and food item, maintaining the food overwhelmingly deple�ng agricultural properly delivered but also consumed conceptual design innova�on deploys quality during storage and transport, and prowess and other natural resources before spoiling. With introduc�on of connected technology to transform extending food shelf life. This helps in required to feed them. As per the report modern technologies like RFID, advanced exis�ng jars and bo�les into intelligent minimizing the environmental footprint of from the United Na�ons Environment sensors, ar�ficial intelligence and machine packaging. packaged food. Program (UNEP), food waste amounts to learning in packaging industry, an The food saving �mer device magne�cally Food manufacturers are also incorpora�ng roughly US$ 680 Billion in industrialized intelligent package will be able to iden�fy a�aches to the packaging lids, using highly advanced approaches, including countries and US$ 310 Billion in which stored packaged foodstuffs are mo�on sensor technology and an LED nanotechnology, to translate concepts developing countries. Also, the Food and about to spoil or rot and suggest light system to help consumers reduce into implementable solu�ons. For Agriculture Organiza�on es�mates that appropriate recipes for convenient and their food waste. Prior to opening the jar instance, companies are developing �me more than 1/3rd of the world’s food is easy consump�on of stored food items. or bo�le, users can scan the QR code on temperature indicators based on silver wasted every year. RFID and sensors alone have been shown the pack with their smartphone, enter the overgrowth on gold nanorods, which not These sta�s�cs highlight the importance to reduce food waste anywhere from 5 to color of the device and the date into the only assist in preven�ng food wastage but of intelligent packaging in comba�ng the 7%. app. Once entered, the �mer can track also reduce costs associated with �me escala�ng problem of food waste. and advise on the extended use of the temperature indicators. Typically a packaging can resolve food product. Addi�onally, these components create waste in one of the following ways - an�microbial materials which help RFID, IoT, sensors are coming to the forefront in combating food waste by providing more transparency, and inventory visibility with accurate data 1. Indica�ng the end of shelf-life of a product to avoid disposing food that is s�ll safe or advise on extended use 2. Being responsive to reduce spoilage by indica�ng the same 3. Packaging that protects the food during rota�ng stock and throughout Tyler Chaffo, Manager, Global Sustainability at Avery Dennison Smartrac the value chain 4. Interacts with the buyers by providing informa�on on food pairing op�ons, or direc�ons for recycling 29

30. Whitepaper - Intelligent Packaging for Circular Economy prevent prolifera�on of bacteria and other An�-microbial packaging and pathogens. In 2021, SGK Anthem, Vrijdag �me-temperature indicators are some of Premium Prin�ng, Generous Minds, the intelligent packaging op�ons that aid Neurensics, Kurz and Merck teamed up to in preven�on of food-borne diseases and form the Packadore Collec�ve for chemical contamina�on by controlling the implemen�ng desirable and sustainable vapor exchanges between atmosphere food packaging solu�ons. Their DeXel and food item, maintaining the food conceptual design innova�on deploys quality during storage and transport, and connected technology to transform extending food shelf life. This helps in exis�ng jars and bo�les into intelligent minimizing the environmental footprint of packaging. packaged food. The food saving �mer device magne�cally Food manufacturers are also incorpora�ng a�aches to the packaging lids, using highly advanced approaches, including mo�on sensor technology and an LED nanotechnology, to translate concepts light system to help consumers reduce into implementable solu�ons. For their food waste. Prior to opening the jar instance, companies are developing �me or bo�le, users can scan the QR code on temperature indicators based on silver the pack with their smartphone, enter the overgrowth on gold nanorods, which not color of the device and the date into the only assist in preven�ng food wastage but app. Once entered, the �mer can track also reduce costs associated with �me and advise on the extended use of the temperature indicators. product. Addi�onally, these components create an�microbial materials which help 30

31. Whitepaper - Intelligent Packaging for Circular Economy As reducing food waste has become the with the least amount of cost. Intelligent number one priority in today’s world, packaging is expected to revolu�onize intelligent packaging is going far beyond food produc�on and help in iden�fying the boundaries of recyclability to find the various touch points where the food answers for difficult ques�ons like what waste is taking place in any given supply will reduce the most amount of waste chain. We can call a packaging truly Intelligent in combating food waste, when we have another dimension of its connectivity - if it can communicate with the device where it is stored, the refrigerator for instance Robert Lilienfeld, Execu�ve Director at SPRING, the Sustainable Packaging, Research, Informa�on, and Networking Group 31

32. MARKET SENTIMENT ANALYSIS

33. Whitepaper - Intelligent Packaging for Circular Economy MARKET SENTIMENT ANALYSIS ABOUT INTELLIGENT PACKAGING Intelligent packaging is in the nascent stages of evolu�on however, its poten�al and benefits are immense. Today, out of every US $1,000 spent on packaging, ~US$ 20 is spent on intelligent packaging and these numbers are expected to grow quickly, largely because intelligent packaging is capable of solving wide array of high value business problems. We conducted a survey amongst packaging manufacturers, end use industries and buyers about the market percep�on and impact of Intelligent Packaging. Following is a summary of key findings - • 85% of Gen Z and millennials are op�ng for intelligent packaging solu�ons which further highlight the popularity of intelligent packaging among younger genera�ons. • Younger genera�ons (Gen Z and millennials) have shown greater inclina�on towards sustainable and recyclable packaging solu�ons. • Nearly 50%of popula�on has shown preference towards eco-friendly material. • Younger popula�on is likely to buy products with intelligent packaging as they are the leaders of tomorrow in sustainability and are willing to spend extra money on intelligent packaging. Inclination towards Intelligent Packaging enabling sustainability show willingness to spend more on sustainable eco-friendly packaging Inclined towards Intelligent Packaging • Intelligent enormous value as it communicates with the real world, thus adding diagnos�c func�onality to it. These quali�es have led to 4 out of 5 packaging manufacturers intelligent packaging will be the next major packaging industry. packaging creates and indicator believe that 4/5 breakthrough in packaging manufacturers believe Intelligent Packaging is the major breakthrough in Packaging 33

34. Whitepaper - Intelligent Packaging for Circular Economy • Barcodes, QR codes, RFID, NFCs, �me temperature indictors, sensors, and an�microbial packaging will be the most sought a�er features in end use industries Most sought after technologies • In terms of formats, 35% of suppliers believe that boxes, bags, and pouches are going to be the early adopters of intelligent packaging, while 20% of suppliers opine that bo�les, trays, and cans are the formats soon to be integrated with intelligent packaging features in the upcoming years. Popular formats for Intelligent Packaging • Ar�ficial intelligence, machine learning, augmented reality, and virtual reality based technologies are expected to gain maximum trac�on over the decade. Packaging companies are working on developing these technologies and are also looking to experiment and see how these technologies can serve the consumers and probably create a new buying and packaging experience for all the consumers and buyers. 34

35. Whitepaper - Intelligent Packaging for Circular Economy • 59% of intelligent packaging technology & manufacturing will be outsourced as opposed to 37% being done in-house 59 Intelligent Packaging Manufacturing: Outsourced Vs In-house? Outsourced In House 37 • Enabling circularity, promo�ng sustainability will remain the primary driver for adop�on of intelligent packaging. Maintaining product integrity, improving shelf life, tracking and tracing, are the other factors promo�ng adop�on • Food and beverage, consumer products, healthcare, and logis�cs are at the forefront when it comes to adop�on of intelligent packaging thus, crea�ng the most lucra�ve end-use investment pockets for packaging manufacturers. Front runners in Intelligent Packaging Adoption Food & Beverage | Consumer Products | Healthcare | Logistics 35

36. THE WAY FORWARD The global packaging industry is at the cusp of a sea change. With over 80% of the development directed towards ushering in sustainability, significant evolu�ons are becoming commonplace across the en�re value chain. While circular economy oriented intelligent packaging aims to reduce the quan�ty of packaging waste generated, there is also heightened emphasis on mi�ga�ng recycling and reprocessing costs. Manufacturers are likely to experiment with cross-func�onality of intelligent packaging and focus on exploring its abili�es to reduce wastage and incur significant cost savings. There are packaging companies who understand what consumer interests are and are also aligned on consumers’ preferences. These organiza�ons are se�ng the example for others across the world by showcasing the effec�ve u�liza�on of intelligent packaging solu�ons in solving environmental and socio economic issues. Also brands are using intelligent packaging and sustainable packaging in their new product branding strategies. Eco-friendliness is the new differen�ator marke�ng tool for buyers, as eco-friendly is preferred across all age groups and demographics. Packaging manufacturers and technology providers are expected to lead the way striking a perfect balance between radical innova�ons and prac�cality in order to introduce offerings that are cost effec�ve, personalized and sustainable. 36

37. BASED ON INTERVIEWS WITH Flor Peña Herron Senior Manager, Sustainability & Circular Economy, EMEA, Avery Dennison Ken Chrisman President Beverages, Graham Packaging Robert Lilienfeld Executive Director at SPRING,The Sustainable Packaging Research, Information, and Networking Group TYLER CHAFFO Manager, Global Sustainability at Avery Dennison Smartrac AUTHORS Aditi Basu Chief of Marketing, Future Market Insights Ismail Sutaria Packaging Consultant, Future Market Insights Hakimuddin Bawangaonwala Content Writer, Future Market Insights 37

38. FURTHER READING • The Latest Innovation Techniques Driving theSustainable Packaging Industry • How Smart Packaging Technology ResolvesShipping and Logistics Challenges • The Role of Intelligent Packaging inCombating Food Waste through SupplyChain Transparency • 7 Top Sustainable PackagingTrends to Watch • Sustainable Packaging Trends • Adoption of IntelligentPackaging across Industries • Packaging Sustainability Trends • Intelligent Packaging Market By Technology: Forecast 2021-2031 • Active, Smart and Intelligent Packaging Market: Forecast 2022-2027 • Pharmaceutical Packaging Market by Product Type: Forecast 2021-2031 • Webcast recording: Intelligent Packaging Adoption: Who are the frontrunners? • Smart Labels Market: Forecast 2022-2030 • QR Code Labels Market: Forecast 2022-2027 38

39. ABOUT FUTURE MARKET INSIGHTS FUTURE MARKET INSIGHTS (FMI), is an ESOMAR-cer�fied market research and consul�ng company. FMI is a leading provider of market intelligence and consul�ng services, serving clients in over 150 countries; its market research reports and industry analysis help businesses navigate challenges and make cri�cal decisions with confidence and clarity amidst breakneck compe��on. Now avail flexible Research Subscrip�ons, and access Research mul�-format databooks, infographics, charts, interac�ve playbook for data visualiza�on and full reports through MARKETNGAGE, the market research subscrip�on pla�orm from Future Market Insights. SIGN UP for a 7 day free trial! through downloadable Why us? 1.2+ Million Insights INCISIVE INSIGHTS CUTTING ACROSS SECTORS, CATEGORIES, AND GEOGRAPHICAL HORIZONS 70 60 50 40 30 20 10 0 80%+ Fortune 1000 Clients SUCCESSFUL EXPERIENCE OF WORKING WITH WORLD’S LEADING ENTERPRISES ON AN AVERAGE, OUR CUSTOMERS WITNESS 1.5X GROWTH PER SUBSCRIPTION RENEWAL AND ARE OUR REPEAT CUSTOMERS 75%+ Renewal Rate 1200+ Niche Markets THE GO-TO RESEARCH SOLUTION PROVIDER FOR COMPLEX, HARD-TO-FIND INSIGHTS 39