With the country still in the grip of recession, it could be a bleak winter for retailers and the packaging supply chain, but, asks Jill Park, will the traditional boom time of Christmas provide any seasonal cheer?

Tough times have meant shorter lead times, destocking and capacity reduction across the packaging industry, but for many firms the winter months hold some relief as they gear up for Christmas. But how do companies prepare for the festive season and have things been different this year?

The postal strikes have been just one of the curveballs thrown at companies this winter. With these seemingly resolved in time for Christmas, businesses now have to contend with finding temporary staff, fluctuating capacity and increasingly late-in-the-day orders - a feat even Santa's elves would find a logistical nightmare.

Food is a core part of Christmas for retailers as many shoppers fill freezers and fridges to bursting point at this time of year. Gary Aslam, beverage can manufacturer Rexam's European customer services and regional sales director, recognises the impact this has on can sales. "I think the UK feels a spike that other EU countries don't," he says. "We buy a multipack at Christmas and put it in the garage."

Over the past five years, seasonal promotions have moved to secondary packaging in the can market, says Aslam. Yet it's business as usual for Rexam, which stays in constant contact with its customers throughout the year so it can flex production to allow for fluctuations in demand over the Christmas period.

Anticipating demand
In comparison, preparation for the Christmas period begins 15 months in advance for carton manufacturer Chesapeake. "Demand comes later and later every year," says corporate marketing and communications manager Bob Houghton. "We have set up systems to be highly responsive to changes in demand. This means having an agile raw materials supply chain in place and a can-do attitude to satisfy customers."

But there are times when it is necessary to turn to a co-packer. Rodney Steel, chief executive of the British Contract Manufacturers and Packers Association (BCMPA), believes 2009 will follow in the footsteps of 2008 and be a good year for his members.

"So many brands, even if they have their own in-house packing facilities, as soon as there's anything out of the ordinary that could interfere with standard production, they much prefer to farm it out to contract packers," says Steel.

One such company is Leeds-based contract packer Mailway. As demand for the seasonal period begins to pick-up in August, the company relies on its own recruitment firm Source to help boost its ranks with workers who are both dextrous enough to hand pack and capable of manual handling.

"A big element is obviously language because these days a lot of workers are of Eastern European origins," says commercial director Steve Whitehouse. "We offer English lessons and have multi-lingual line managers."

Flexpac's managing director Andrew Holmes agrees, adding that staffing used to be the biggest headache the company faced at this time of year. "Since the Eastern Bloc has opened up, it's a lot easier than it used to be to get staff. It's predominantly Polish workers."

Holmes' main challenge now is to decide how much work the company takes on over the seasonal period, balancing existing and new customers. "It's a difficult balance deciding how much work to go for," he says. "Companies look at Christmas a long time in advance, but take their time to commit." This is surprising when you consider that many of the products are shipped in from China long in advance.

Last-minute rush
Drinks gift packaging specialist WBC in London has experienced the shift to later and later orders. The business peaks in November through to Christmas week as companies become ever more reliant on the firm to hold stock. "It frees up cashflow for them and allows them much more flexibility - the better we are at this, the later our customers leave it every year," says WBC marketing director James Hayward.

The company ensures it carries stock of all its core products to cater for customers' last-minute orders. "However, it can be a challenge to manage one-off high-volume orders that can hit stock levels when there is simply not enough of a window to produce and ship more in time for Christmas," says Hayward.

So as the temporary staffing issue was resolved by the opening up of the Eastern Bloc, customers decided to embrace shorter lead times so as to avoid holding stock. While the increasing number of contract packers that are part of larger logistics companies with warehouses stand to benefit from this, the standard packaging supplier may struggle. Overall, though, if Santa's sack may be a bit lighter this year, filling it is not a problem for the packaging industry.

DECK THE HALLS OR VALUE TROLLEY?
Retailers are waiting with bated breath to see whether shoppers will keep up the Christmas tradition and fill freezers, fridges and stockings full to bursting this winter. According to the British Retail Consortium, last Christmas was the worst recorded since it began running its Retail Sales Monitor 15 years ago, and this year isn't looking much better. "Consumer confidence has not significantly improved," says BRC spokesman Krishnan Rama.

Asda, meanwhile, published a survey in September claiming that almost  half of shoppers had already begun buying their presents. More worryingly, 80% said that they would spend less this year than last.