Using contract packaging is a great way to save money and time. The end goal of contract packaging is to deliver the product safely to retail locations in a high quality, attractive package. The entire process follow quality control and inventory control procedures.
The global contract packaging market was valued at US$ 55.27 Bn in 2021 and is forecast to reach a value of US$ 97 Bn by 2030 at a CAGR of 10.37% between 2022 and 2030.
North America held dominant position in the global contract packaging market in 2020, accounting for 35% share in terms of volume, followed by Europe and Asia Pacific, respectively.
Figure 1. Global Contract Packaging Market Value Share (%), By Region, 2021
Growing demand from e-commerce industry is a prime factor driving growth of the contract packaging market. The increasing number of e-commerce companies across the world has also been fuelling the demand for packaging solutions by the industry to cater to the needs of customers in a better way. According to SEMrush, in June 2020, the average monthly visit to retail e-commerce websites accounted for 21.96 billion, thereby, driving the global eCommerce industry.
Increasing focus of companies on adopting latest and innovative packaging solution is also anticipated to foster market growth. For instance, companies can avoid the cost of setting up a production facility, packaging equipment, staff training, and purchasing materials, by outsourcing to a contract packager. The European Co-packers Association stated that adopting the strategy to choose for contract packaging solution can save the company up to 7% to 9% of the cost incurred in its complete production cycle.
|Base Year:||2021||Market Size in 2021:||US$ 55.28 Bn|
|Historical Data for:||2017 to 2020||Forecast Period:||2022 to 2030|
|Forecast Period 2022 to 2030 CAGR:||10.37%||2030 Value Projection:||US$ 97 Bn|
Aaron Thomas Company, Multipack Solutions, Pharma Tech Industries, Reed-Lane Inc., Sharp Packaging Services, UNICEP Packaging, Green Packaging Asia, Jones Packaging Inc., Stamar Packaging, Budelpack Poortvliet BV, Complete Co-Packing Services Ltd
|Restraints & Challenges:||
Figure 2. Global Contract Packaging Market Value Share (%), By Packaging, 2021
Strict government regulation regarding packaging of material is expected to restrict the market growth. For instance, the European Agency for the Evaluation of Medicinal Products (EMA) has released various regulations on the labelling and packaging of food, in order to enhance the safety of food distributed throughout the European Union. In March 2019, the parliament of Europe approved a new law banning single-use plastic items, which are also key components of packaging materials significantly being used in the industry.
Competition from in-house packaging is another major key factor expected to have negative impact on the market growth of contract packaging. For instance, companies that use an outside contract packager add up to seven days to their distribution cycle and lose visibility of their product during this time. This is expected to act as a barrier for companies aiming to distribute their products quickly and efficiently.
Rapid growth of food &beverage industry is expected to bring potential growth opportunities for the market players in contract packaging. Also, growing sale of various packaging products such as luxury packaging, rigid packaging, flexible packaging, and pharmaceutical packaging are driving the need for contract packaging services, logistic services, design services, and warehousing services. This will further favour the market growth.
Strong growth in smart packaging technologies is also one of the key factors that are projected to support the contract packaging over the forecast period. This would involve the incorporation of technologies such as desiccants and oxygen scavengers, antimicrobial materials and temperature control packaging, labels, and devices that control or monitor the environmental conditions to ensure the product is maintained at the appropriate temperature.
Market Trends/Key Takeaways:
Increasing use of corrugated boxes with NFC- enabled RFID tags that offer real-time location tracking, alerting a company when something goes somewhere it should not, helping prevent theft is expected to shape the market growth positively.
Growing environmental concern is encouraging companies to take initiatives for reducing disposable costs and environmental impacts. This factor is expected to foster the market growth over the forecast period. For instance, Warren Industries Inc. is recycling its own pallets, thus ensuring cutting down costs for the customers in the market.
When it comes to packaging, contract packaging can be beneficial for many companies. Outsourcing to a third-party company can save a company money until production levels are reached, or until capital expenditures can be approved. Outsourcing can also help a company with their display. A contract packaging company is able to meet the packaging regulations and guidelines of industry. A contract packager understand the FDA and the regulations surrounding packaging, and they know how to properly use child-safe caps and other components.
Growing demand from e-commerce industry and increasing adoption of advanced packaging solution by manufacturing industries are projected to propel contract packaging market. According to the Office for National Statistics (UK), over 70% of the UK population prefer online shopping. Additionally, most of the small vendors in the European region selling through e-commerce lacks in-house packaging and are bound to prefer contract packaging solutions. Moreover, the market is also driven by increasing focus of company on outsourcing their noncore operation to gain a competitive advantage.
On the other hand, competition from in-house packaging and strict regulation regarding packaging solution are major factors expected to restrict the market growth.
Key features of the study: