Contract packaging refers to outsourcing the packaging process to third-party packaging companies. It involves activities such as product formulation, packaging design development, packaging, warehousing, and distribution. Contract packaging helps brands and manufacturers focus on their core competencies rather than investing heavily in packaging infrastructure and machinery. It provides cost benefits and greater flexibility to companies. The COVID-19 pandemic has further fueled the need for outsourcing non-core activities to stabilize supply chains.
The global contract packaging market is estimated to be valued at US$ 76.46 million in 2024 and is expected to exhibit a CAGR of 7.1% over the forecast period 2024 to 2031.
Key players operating in the Contract Packaging Market Trends are SUSI Studio, Insecta Shoes Canada Inc. ROMBAUT, In The Soulshine, Della La LLC, Reformation, Alabama Chanin, Wawwa, Doshi FCSA, Hiareth Collective, Komodo Fashion, Brave Gentle Man, ECOALF, Rapanui, and Tact & Stone.
Key Takeaways
Key players: SUSI Studio is a leading player focused on sustainable fashion. Insecta Shoes Canada Inc manufactures footwear using insect leather. Reformation is a prominent brand catering to eco-friendly apparel.
Key opportunities: Growing demand for sustainability and customized packaging solutions presents lucrative opportunities for contract packagers. Emerging markets offer untapped potential driven by rising consumerism.
Global expansion: Leading players are expanding globally through acquisitions and new facilities to tap international markets. Contract packagers based in low-cost regions are gaining large multinational clientele.
Market Drivers:
Increasing outsourcing of packaging functions, rising e-commerce sales, and focus on core competencies are driving the contract packaging market. Shortening product lifecycles necessitate flexibility which contract packaging provides.
Market Restraints:
Concerns around IP protection, quality control issues, and price volatility can restrain market growth. Regulatory compliance management challenges vendors and brands alike in different geographies.
Segment Analysis
The contract packaging market can be segmented into primary packaging, secondary packaging, and tertiary packaging. Primary packaging sub-segment dominates the market as it involves direct contact with the product being packaged. Primary packaging protects the product from potential damage and prevents contamination. It also carries important information required by end-users such as ingredients, expiration date, usage guidelines, etc. This makes primary packaging an essential part of the supply chain.
Global Analysis
Regionally, North America dominates the contract packaging market with the largest share. This is attributed to the extensive outsourcing activities by pharmaceutical and food companies in the region. Growth in the health consciousness among consumers is also driving the demand for packaged food and pharmaceutical products in North America. Rising costs of in-house packaging are further encouraging companies to seek contract packaging services. Asia Pacific contract packaging market is expected to grow at the fastest rate during the forecast period due to expanding manufacturing industries in countries such as India and China. Ongoing infrastructure development across industries will augment the regional market growth over the coming years.
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Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. (https://www.linkedin.com/in/ravina-pandya-1a3984191)
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