The smart packaging market is a diverse segment, with flexible electronics, printed electronics and RFID being just one subset. For example, temperature indicators are a sizable market, and new opportunities for printed electronics are being seen there.

The retail market has long been a good one for RFID. NFC is coming into its own.

Early on, flexible and printed electronics have been found on more luxury items, but new markets have emerged in recent years. In particular, healthcare benefits from the ability to monitor medicine usage and safety.

With the COVID-19 pandemic, the importance of both brand authentication as well as inventory control for omnichannel sales – being able to serve customers who order online and want to pick the items up in the store – have become more prevalent.

Jones Healthcare Group is one of the industry’s leading producers of smart packaging . James Lee, director, Innovation Solutions Group at Jones Healthcare Group, said that Jones is seeing a greater number of applications for flexible and printed electronics in smart packaging for item identification and enhanced intelligence throughout the supply chain and product lifecycle.

“While identification technology is not new, its specific use cases are evolving,” Lee said. “For example, we’re seeing sensors integrated into packaging that can not only identify a product, but can also detect a number of environmental factors that could affect product quality, such as temperature, and match those factors to smart packaging IDs. This allows for pinpoint accuracy while monitoring in the supply chain.

“With the growing focus on sustainable packaging, there is also a strong use case for smart packaging that provides consumers with more information on how to recycle the package at the end of its lifecycle,” Lee added.

In one example of smart packaging connecting with consumers, Lee noted that KraftHeinz launched a “find the golden single” campaign, which deployed 3 million tamper-evident NFC tags on Kraft Singles cheese packaging sold at Walmart locations.

“NFC tags were not only used to collect retail performance data for Kraft, but also user information for promotional marketing programs,” Lee said. “We’ve also seen smart commercial packaging with ‘behind the scenes’ functionality, such as monitoring tags that ensure cold chain compliance for medications like vaccines – of course, a very pertinent application in these times.”

RFID has long been a fixture in the retail space, beginning with the “jeans wall,” as it is ideal for inventory. Now, with COVID-19 changing consumer buying patterns to a more omnichannel approach where shoppers can order the goods online and pick it up at the store, industry leaders are seeing more interest in RFID.

Michael Fein, senior manager of product management for RFID printers at Zebra Technologies, said that RAIN RFID has grown tremendously in the last few years.

“In consumer retail, COVID-19 exposed the challenges retailers have with inventory accuracy as they tried to quickly implement new hybrid approaches for online, in-store and curbside fulfillment models,” Fein noted.

“We’ve seen growth for RFID applications beyond apparel items into additional categories such as home goods, jewelry, footwear, electronics, tools, appliances, car tires and more,” Fein said. “Many of these categories began with a label-based approach and then adding an RFID label to existing packaging. As the use cases mature, retailers and brand owners are increasingly looking to include RFID in the packaging design. In retail, RFID is also being used upstream for shipment verification and even downstream by consumers for item authentication.”

Amir Khoshniyati, GM and VP, Transponder Business for Identiv, said that the use of smartphones is an important driver for smart packaging, especially since Apple has finally adopted NFC in its iPhones.

“As we are experiencing many new social norms from COVID, the reliance on the smartphone is apparent more than ever,” Khoshniyati said. “Nearly all modern smartphones have the foundational hardware and firmware to natively support NFC. This starts with more reliance towards contactless not just for payment purposes, but evolving into interactions with products prior to touching/picking the items off of shelves. This creates many new applications within smart packaging for authentication, product provenance assurance, rewards and rebates, and replenishment.”

Identiv’s recent collaboration with OTACA Tequila is an example of smart packaging at its best. Identiv’s NFC transponders are printed and attached to the top of the tequila bottle. They connect consumers and brands into an Internet of Things (IoT) ecosystem that invites the brand’s loyal customers to engage, track and authenticate their purchase.

“Partnering with Identiv gives us a team of design experts to build out a transparent digital experience that allows us to share the story of our tequila with customers at point-of-sale and in their own home,” said Anthony Accetta, CEO and co-founder, OTACA Tequila, in announcing the partnership. “With one tap, customers can access our tequila’s journey, learn when we’re preparing to harvest, and discover the latest plans for the brand.”

“Our partnership with OTACA Tequila continues our accelerated growth in radio frequency identification (RFID) devices and NFC for smart packaging, consumer engagement, asset tracking, and authentication in the IoT. In this contactless era, people expect to interact with products and brands in new, exciting ways. We deliver on those experiences by turning the physical world digital,” said Khoshniyati.

Fein pointed out that a second driver is consumer engagement.

“Today, most smartphones include an NFC reading capability,” said Fein. “NFC is a very short- range transactional RFID technology that enables new authentication and engagement opportunities for brands to engage directly with consumers.

Product security and authentication is another key use case for RFID and printed electronics.

“Another trend we’re seeing in new RFID applications is the need to go beyond purely item or package ID to ensure condition and quality,” Fein said. “This includes making sure the item has been handled properly throughout the supply chain.

Temperature-sensitive items such as food, pharmaceuticals, vaccines, and chemicals are some of the most critical items in this category. In this case, smart packaging could be a real-time RFID temperature tag , a thin RFID data logger label, a BLE temperature monitor, or even a color-changing visual indicator.”

Top Markets for Smart Packaging

Zebra’s Fein reported that smart packaging is currently being used to monitor several commercial products.

“These products are from varying categories including pharmaceutical, blood banks, emergency medical services (EMS), food distribution, and even biotech,” he added. “Smart packaging can help satisfy compliance on commercial products, to help protect the product’s effectiveness and the end-user’s safety. There are a multitude of factors that can impact a commercial product and render it unusable, such as temperature excursion, humidity, and light exposure. With smart packaging, businesses can more easily track their items and monitor the quality of them during transportation and distribution.”

Fein noted that on the RFID side, some of the top markets where RFID is currently being used for smart packaging is retail apparel, footwear, home goods, consumer electronics and food.

“The pharmaceutical market, which includes the distribution of vaccines, is another hot market for RFID in smart packaging, where temperature-sensitive medications need to be kept stable the entire length of their journey,” Fein noted. “According to Zebra’s Pharmaceutical Supply Chain Vision Study, nine in 10 surveyed patients responded that it’s somewhat or very important they can verify a medication is not tampered with or counterfeit, and that they can confirm their medication stayed within the prescribed range. Pharmaceuticals at all levels, from distribution to retail pharmacies, clinical pharmacies and even dose level, benefit from smart packaging.”

Lee observed that pharmaceutical products and luxury goods have been the initial markets to take advantage of smart packaging. This is likely due to higher price points and margins for products in these markets, which can support the addition of smart features.

“That said, flexible and printed electronics for smart packaging will continue to grow into cosmetic and personal care markets, and eventually into a larger share of food products,” Lee added. “Growing economies of scale will continue to reduce the cost of adding smart features. We should see a shift from high-value goods toward commodity products, especially sensors that detect food spoilage to provide a safer product for consumers, and help reduce food waste from a sustainability perspective.”

Benefits of Smart Packaging

Ultimately, what will drive the growth of smart packaging will be the benefits it provides brand owners and consumers.

“Smart packaging benefits the entire value chain by providing assurance on the products through the respective supply chain,” Khoshniyati said. “It creates an ecosystem of trust and draws brands closer to consumers with more confidence in product validity and brand loyalty.”

Lee provided healthcare, particularly pharmaceuticals, as an example.

“With a focus on the healthcare sector, which can realize significant benefits from smart packaging, I’ll update that question to: ‘How can smart packaging benefit patients, pharmacies and pharmaceutical companies?’” said Lee. “Jones has developed a system of connected packaging and software that allow a patient to be reminded when it’s time to take a medication dose – either through SMS text message, email or a push notification from an application.

“When a patient takes a dose, we have several options for collecting data related to the ‘dosage event’ – either passively through sensors, or actively by the patient engaging with the package. The data can then be evaluated in real time, prior to the patient finishing the medication therapy. It’s a solution that allows patients, healthcare providers and caregivers to truly monitor medication adherence,” Lee added.

“To benefit the patient, this smart and connected packaging solution reduces the potential for poor medication adherence – and therefore improves medication efficacy – by helping the patient remember to take their meds,” noted Lee. “The patient can also see his or her adherence results through the solution, which helps understanding of whether a medication is working.”

Lee pointed out that the pharmacy benefits, as this solution allows pharmacy teams to actively monitor which patients require refills and prepare refills ahead of time, since they can actually see that meds are (or aren’t) being taken.

“This means pharmacies only refill prescriptions that are necessary to refill, reducing drug waste and enhancing operational efficiency,” Lee observed. “On the other hand, if patients are not taking their medications as prescribed, connected adherence packaging provides the information pharmacists need to reach out to a patient and reinforce a care program as necessary. Pharmacists can also report back to doctors and caregivers to ensure they can see if the medication is having the desired results, for more evidence-based outcomes.

“Finally, pharmaceutical companies can understand the efficacy of their medication against concrete adherence data, while also forecasting required inventory of specific drugs as they are depleted,” Lee said. “The data provides pinpoint accuracy as far as where drugs are depleted in specific geographies in order to optimize the supply chain and reduce waste. This kind of packaging also supports evidence-based medicine, since medication usage can be tied to a medical record and patient health outcome.

“Overall, everyone realizes a range of benefits with an unwavering focus on patient wellness. From a societal point of view, connected adherence packaging solutions can improve sustainability by decreasing drug waste, optimizing the supply chain and better deploying healthcare resources,” Lee concluded. “Through our trials with pharmacies and patients so far, our connected adherence packaging solutions have improved medication adherence by roughly 60% in 90 days, while reducing missed doses by around 35%. This is just one healthcare use case for smart packaging, but more are available and easily translatable into CPG /FMCG use cases as well.”

Fein said that smart packaging benefits retailers, brand owners and the end consumer.

“For retailers, inventory accuracy is critical and making sure they have smart packaging on temperature- or light-sensitive items can help protect products from damage and enable them to easily pull them from shelves if they are compromised,” Fein said.

“This is important in maintaining the retailer’s brand and customer satisfaction. With smart packaging, the number of ineffective or damaged products that reach the end consumer can be drastically reduced. For brand owners and retailers, smart packaging makes it easier for them to coordinate product availability, help ensure authenticity, and provide the quality product their customers are expecting.”

So, what will lead to further growth in smart packaging? Sustainability is one key aspect.

“Products need to continue down their innovation path of flexibility into packaging, take a turn for even more sustainable options and streamlined supply chain processes need to be implemented to efficiently fit into the growing framework for fast moving consumer packaged goods,” Khoshniyati said.

“Historically, smart packaging has been growing at a CAGR of over 4+% – based on the adoption we have seen with some prominent customers, we believe this will accelerate even more aggressively as we rely more on our smartphones and connected devices,” Khoshniyati said.

“It’s important smart packaging components incorporate sustainable materials, so making a pack ‘smart’ does not impact its ability to be recycled or affect its overall environmental footprint,” Lee said.

“We believe there will be significant growth in flexible and printed electronics for smart packaging,” Lee added. “So far, the main adoption challenges are related to the cost of producing smart packaging, and the learning curve that is always associated with using new technologies. As more smart packages become available, however, challenges will be overcome by introducing economies of scale to lower cost. Consumer use of smart packaging will also become more commonplace, with less of a learning curve involved.”