The term "It's all in the..." means "everything depends upon".
In this case "It's all in the packaging" means that the success of the product depends entirely on its packaging.
You will find many sayings like this:
Magicians: "It's all in the hands." The trick depends on how good you are at sleight of hand.
Dancers: "It's all in the hips." Successful dancers know how to move their hips.
Chefs: "It's all in the nose." Great chefs have an advanced sense of smell.
Computer Programmers: "It's all in the coding." The best programmers use the most optimized code.