The contract packaging market involves companies that package products on behalf of their clients. It allows brand owners to focus on core competencies while leveraging professional packagers’ expertise and infrastructure. The demand for outsourced packaging services is growing across industries like food & beverage, cosmetics, pharmaceuticals, and consumer goods. Manufacturers view contract packaging as a cost-effective strategy for small production runs, new product launches, and seasonal items. It provides flexibility to scale operations up or down quickly based on demand fluctuations.
The global contract packaging market was valued at US$ 60.5Bn in 2022, and is expected to exhibit a CAGR of 9.7%, in terms of revenue, over the forecast period (2023-2030) to reach US$ 127.1 Bn by 2030.
Rapid e-commerce growth and the need for warehouse automation are driving manufacturers to find packaging partners that can handle complex fulfillment tasks. Contract Packaging Market help brands improve supply chain responsiveness with just-in-time inventory management and reduced minimum order volumes. Their multi-client production models allow optimized facility utilization.
Key Takeaways
Key players in the contract packaging market include 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. These companies have strong technical expertise across various packaging formats. They are making heavy investments in automated packaging lines and warehouse management systems.
There are significant opportunities for contract packagers in the healthcare sector given the complexities of packaging temperature-controlled drugs and medical devices. They can assist pharmaceutical manufacturers achieve regulatory compliance while streamlining packaging operations. E-commerce growth is another key opportunity as online retailers require flexible multi-channel fulfillment from packaging partners.
Globally, countries like China, India, and Mexico are attractive destinations for contract packagers looking to expand. Their lower costs and growing consumer markets are encouraging Western brands to switch to Asian contract manufacturers. At the same time, many Asian packagers are setting up facilities in the US and Europe to better serve local and export clients.
Market Drivers
One key driver for the contract packaging market is the trend of outsourcing non-core activities. Manufacturers want to focus on R&D, branding and sales while leveraging the expertise of specialist packagers. This helps optimize capital and reduces fixed costs.
Market Restraints
Over-reliance on a single contract packager can be risky if there are issues with quality, capacity or delivery timelines. Setting up multiple packaging partners requires higher coordination costs. There is also a lack of standardization in regulatory guidelines for packaging certain products like medicines across countries. This poses compliance challenges.
Segment Analysis
For contract packaging market, the dominating sub segment is flexible packaging which holds around 60% market share. Flexible packaging provides convenience of re-sealability and easy handling to end users. Products such as baked foods, snacks, confectionery items are mostly shipped in flexible pouches or bags. Emerging e-commerce sector further propels the demand for flexible packages as such packages protects the product from external damage during shipping and distribution.
Another major sub segment is rigid plastic packaging which holds around 25% share. Rigid plastic packaging involves use of materials such as plastics, glass for rigid containers. Products from industries like food, beverage, pharmaceutical among others widely use rigid plastic packs for sturdiness during transportation. Rising demand for packaged consumables drives the need for rigid plastic containers in contract packaging market.
Global Analysis
The Asia Pacific region holds the largest share in global contract packaging market currently. Growing middle class population, changing lifestyles and urbanization in countries like China and India augments the demand for packaged food and beverage items. This drives the contract packaging needs in Asia Pacific region. North America follows Asia Pacific in terms of market share. Rapid uptake of online shopping and increasing preference for small pack sizes supplements the contract packaging sector growth in North America. Europe, Latin America and Middle East & Africa also create profitable opportunities for contract packaging market players owing to expanding manufacturing industries and consumer base in these regions.
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About Author:
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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