As I prepared my remarks on forces shaping the future of packaging for my earlier talk

today, the theme of intelligent packaging seemed to push its way into the picture, so I

wanted to use this talk to explore it in detail. For at least 20 years I have said that “Yes,

intelligent packaging is possible, but it is not useful enough to pay for its added cost!” I

can’t say that the cost has come down, but its usefulness has gone up so that its

prospects are good.

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I this talk, I want to share my objective for you, to explore the expectations that

packaged goods companies and consumers themselves have for intelligent packaging, to

look at current examples and near term possibilities, and to look at the implications of

all of this for the segments of our industry here.

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What I would like for you today is simple:

To inform and motivate the industry about intelligent packaging in time for you to

benefit from its potential.

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First:

What do the suppliers and users of intelligent packages expect from flexible packaging?

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I want to think about expectations in the context of how packaging changes to meet new requirements:

On this chart, the right column lists the traditional package format and on the left, I have paired these with an innovative format that marketplace dynamics have encouraged to a very strong market position:

For flexible packaging, retort pouches provide sterilized, shelf stable foods with less weight and more space efficiency than metal cans. Similarly, flexible pouches with easy-open/recloseable fitments now function much as glass bottles for fruit juices and condiments.

The glass bottles were also the target of rigid plastic bottles and succeeded because of lighter weight and safer use. In addition, the compressible walls of plastic bottles allow dispensing liquid soaps, lotions and shampoos with snap open and close fitments that leave the closure on the bottle and allow one-handed use.

Metal cans have improved recently as well. The 2-piece draw and iron process eliminates some of the costs and hazards of 3- piece soldered cans, and some cans can be opened without a special tool.

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What are now everyday commercial packaging realities like these examples have come

to pass in my 30-year career. The innovative forms evolved to serve traditional

functions with new materials and technology. These now seem common place.

I want to point out that the beer can in the upper right corner here….its 3-piece

construction opened forcefully with what was humorously called a “Church Key”, served

as the source of many different comedy routines in American TV and movies prior to the

‘70s.

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As I’ve suggested, intelligent packages have long been envisioned for consumer goods…

These were materials that monitor the condition packaged goods or the environment

surrounding them. Its intelligence dealt with the distribution environment, its

Temperature and the length of time above or below a critical level or alternatively with

the product’s quality as food aged and generated unwanted taste and odor components.

(my “Old” definition here is taken from official European Union regulations for intelligent

packaging, but its concepts extend beyond food into other products for which time and

environmental conditions can have detrimental effects.

The more recent intelligent packaging function adds this to the old ones: identify and

validate the product’s history or relationship to a distributor. It helps

to authenticate a product’s source, trace its path through the supply chain should a

problem, like allergen contamination occur, and to provide users and consumers with

access to promotional programs managed in the Internet or

through social media.

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We have already seen (literally!) a visual version of this intelligent packaging function in

the many uses of Quick Read Codes (QRCs) that are printed on a package, read by a

user’s smart device and link the user to on-line information from the producer. I believe

QRC technology is only about 10 years old, but already, I can use an “app” to generate

this QRC that directs you to my website.

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I hope these contrasting diagrams help put this new function in clear perspective for all

of you:

In both cases, the consumer is the intended user of information provided by the

intelligent package, but the new definition adds data about the source of the product to

its user.

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Here’s a snapshot of the immediacy that the new intelligent packaging provides to the users.

Systems that prevent against counterfeit product are generally considered “covert” (only recognized by a specially equipped representative of the source) or “overt” (easily recognized in the marketplace by a would be buyer). Obviously, “overt” indicators are visible to the counterfeiter (as well as the consumer) who can then copy it and add it to his counterfeit packages. The new intelligent package provides an overt signal to a consumer who can use it to access on-line confirmation of the product’s authenticity.

Current traceability requirements call on each step in a supply chain to identify the source of any material in a product sold and the destination of any material bought. This 1-step forward and back system can become tedious and time consuming, but intelligent packages offer the prospect of a real-time database with essentially a full description of the type and source of components in a product at any stage of its production and/or distribution.

Allergen labelling regulation require disclosure that a product may have been made on equipment or in the arear of allergen-containing products. As we saw with the QRC code on the Zego bar this morning, intelligent packaging can link a concerned users to data that describes the actual—not just—potential state of cross-contamination (if any).

Promotions now take 1 to 2 months to plan, print, package, and distribute. Intelligent packaging can link product and consumer to popular events (such as sporting competitions) in real-time.

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Intelligent packaging represents a powerful element of an integrated supply chain. This

diagram attempts to highlight how the new intelligent packaging ties the chain together

with useful, low-cost information.

Older intelligent packaging x give up their information (e.g. the color-changing label for

meat from this morning’s talk) only when read at transaction points (deliveries and point

of sale). Information at such interfaces is only available locally and then only to react to

any negative expectation message that the intelligent system revealed.

The new intelligent package is ‘wired-in” and provides real-time data that allows an

intervention before product harm is done.

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The current state allows reacting to situations while new intelligent packaging allows

managing conditions to avoid damage. Information is available from producer to user,

not just from one last supply chain element to the next.

Supply chain management has taken more cost out of consumer goods at the retail level

than any other factor in the past 20 years. The new intelligent packaging offers even

more savings.

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So, to paraphrase an old euphemism about influence in social settings:

It is not so much what you know,

or who you know

but who is in your network

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The new intelligent package links producers and users with reliable, actionable, needed

data using state of the art data management techniques.

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With that look at the promise, I want to help set your expectations for what is now in

play and how and when this technology potential will become real.

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The new intelligent packaging is ready to begin its own journey of providing value in

planned and unexpected ways.

I consider the former systems “chemistry”-based…using a very limited number of color-

changing chemical reactions to reflect environmental conditions. This Chemistry–

Generated Imagery (CGI) is much less impressive than the CGI effects (Computer–

Generated Imagery) of our current movie industry.

The new intelligent packaging is electronics-based, and looks to be adaptable to some

familiar packaging-industry processing.

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Again, I want to use the past as prologue for the future.

Consider the ubiquitous bar Code systems. Adding this element to packaging was

originally justified on the basis of linking a packaged product to its unit price to save

labor and time at retail shelves and checkout. As difficult as it is to imagine, every

package needed a label with its current price and every priced had to be manually keyed

in at the cash register.

40 years later, the bar codes certainly fulfill their initial promise, but they also keep track

of consumer preferences with customer loyalty programs, they provide real time

inventory to drive just in time deliveries, they allow retailers to take goods on

consignment, without the need to use their own money o finance their inventory; and of

course marketing data derived directly from scanned products has become a product of

its own.

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In the near term (2-3 years), electronic intelligent packaging can:

Add memory to packages for brand authentication and medication control

Provide Near Field Communication (NFC) messaging . These systems use power from an external source (such as a smart device signal) to direct the device to a URL or other information source. They can also capture and communicate temperature abuse.

I have already remarked on the rapid spread of Quick Read Codes for

Promotions, recipes, use suggestions

Batch-specific allergen cross-contamination

Sense & Detect

This is similar to the RFID that was to company all packages 8-10 years ago

Inventory management at both wholesale and retail levels

Food chain traceability across the e entire supply chain

Time/temperature records with real time access

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I find this to be a very compelling chart.

Most of the data is from Mr. Davot Sutija, the CEO of the Thinfilm Company, who talks

about the “Internet of everything”.

In this case, what he calls “Everything” includes about 43 million devices such as auto,

computers and controllers. These now use about $315 billion of “electronic

intelligence(EI)…sort of generically “computer stuff”

But he identifies another 5-10 trillion consumer items, such as apparel, and packaged

goods. He expects that these items can consume about $100 billion of “electronic

intelligence”.

What I found most compelling was to take the next step and compute the average EI

investment per item in his two groups…the former can bear about $15 per item of EI

cost, but the consumer products not now “on the web”, can only pay ~$0.001 (one-one

thousandths of a dollar) each!... That’s more than 5 orders of magnitude difference in

the ability to pay for on-board EI, and a place in the Internet of things.

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In packaging terms, this means that there is an additional $100 billion of value to be

added to packaged products—and the packaging that takes them to market. In

delivering the current $315 billion that puts the EI in the current Internet connected

markets, the standard silicon based computer chip fabrication is hard pressed to deliver

factor of 100,000 rimes savings that the new items need…

-Throughput is relatively slow, compared o the production of consumable goods

- The End product costly relative to the $0.001 target

- But (in favor of the new internet-connected items), the size of any one device is lesser

concern, that in for example, a smart phone

The response to this challenge is likely to be found in Printed electronics, here…

- Throughput potential much higher

- Engineering feasibility demonstrated

- Functional breadth of devices very wide, but this EI can piggy-back on the power of

other smart devices and Internet programs themselves.

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The 2013 business plan of Mr. Sutija for Thinfilm is very ambitious:

In the market already, they have ongoing shipments of printed on-package memory, and

market tests for pharmaceuticals, toys & games, and so forth). These tests help deal

with:

•brand protection

•refill authentication

•grey-market tracking

Under evaluation were sensors for the shelf life status of pharmaceuticals and foods

This year the firm planned to have NFC applications in market, using the Samsung Galaxy

S5 that will be NFC enabled when its sold.

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Now my thoughts on packaging supply chain impacts…

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The technology roadmap for The Internet of things: where each and every thing in a

package is linked to databases is likely to involve…

1. Tags and labels (these are available at present

2. Eventually this will be integrated into packaging material of a product itself

• This research underway

• but there is little/no visibility of it

3. So I will tart with packaging converting equipment….

•First, tag and label printing

•And then scaling to wide web converting

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Beginning with tag and label converting, narrow web presses (300-800 mm wide), these

printed electronics components will be integrated with pressure-sensitive labels.

Now these labels are applied at the package filling step, but high speed registered

application of the labels to wide webs is in development.

The power of the on-board electronics become apparent when you consider that most

of the information now provided to the consumer by the packaging must be printed on

the material months before a product is offered-for sale, but if the package carries

read/write memory media, product-relevant information can be adjusted as it goes

though distribution and marketing.

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I think its important to understand that an intelligent package is not an end in itself, but

rather the means to deliver package product information.

The current information system is supported by “code-dating” a product’s as it is

filled…it captures the origin of the product, and if you know how to decode the numbers,

it tells you when it was packaged. This image is from a metal can containing olive oil.

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As an example of why anyone should care, consider this example…

This product was suspected of contamination with salmonella, and had to be recalled by

the USFDA. This “blue” oval includes the detail that USFDA had to supply consumers to

tell them if their package came from the contaminated lot.

With intelligent packaging, a smart device “app” can retrieve the information for the

consumer, compare it to the US FDA warning, and tell the consumer whether or not it is

safe to use.

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Static, one-time printed electronic enabled packages can store data, transmit it as

required, change it as appropriate.

Electronic enabled packages can also store energy in battery form and act as other

electronic devices. For example, I am aware of a wholesale fresh fish package system

that converts atmospheric gases to electricity and water as it inhibits degradation of the

products as they are shipped from South America to the US.

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Packaging machinery impacts in the short term are likely limited to applying labels more

often to packaged goods production.

In 3 to 5 years, packaging lines will start “electronically code dating” smart packaging

materials. We have already seen on-demand-digital inkjet code-dating with QRC access

to the internet, but electronic code dating will involve no consumable supplies, rather

computer programming of the smart materials.

All of this may cause changes in material thicknesses and properties: for example,

metallized films may create problems with programming and reading smart packaging.

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Packaging materials themselves will avoid metal, so aluminum and steel cans, and

aluminum foil laminations present electronic interference in the smart package system,

so non-conductive barrier (i.e. ceramic) coatings may be favored.

Overall, better manufacturing precision in packaging materials is called for, gauge

uniformity, impurities, uniform distribution of additives .

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So in conclusion, as consumers, we are regularly interacting wit the Internet of things.

Packaged goods must become connected to this information web,

The functionality of intelligent, networked packages is a new necessity in the

marketplace.

The technology is already demonstrated

The need now is for goof, engineered solutions for the opportunity.

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I thank you for your time and attention

And invite any questions.

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