The contract packaging market refers to the outsourcing of packaging operations to third-party vendors that handle packaging related tasks on behalf of their clients. Contract packaging services involve activities like secondary packaging, kitting, product assembly, labeling and fulfillment. The personal care industry extensively uses contract packaging services for products like cosmetics, skincare, hair care and toiletries. Personal care brands prefer outsourcing packaging operations to contract packagers due to benefits like scalability, flexibility and cost reduction.
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.
Key Takeaways
Key players: Key players operating 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.
Growing demand: The Contract Packaging Market is witnessing rising demand from industries like pharmaceuticals, food and beverage and consumer goods. Rapid growth of e-commerce is also driving the need for high-quality packaging and order fulfillment services.
Technological advancement: Contract packagers are investing in advanced packaging machinery, robotics, automated storage and retrieval systems to improve efficiency. Technologies like IoT and analytics help optimize packaging line operations.
Market Trends
Sustainable packaging: Companies are focusing on eco-friendly options like recycled content, minimal plastic and compostable/bio-degradable materials to meet sustainability goals of brands and regulations.
Digital printing: Customizable digital printing technology allows creating variable designs and data on pouches, cartons and labels as per customer requirements. This enhances brand appeal and connects better with consumers.
Market Opportunities
Medical/pharmaceutical packaging: Rising healthcare spending and breakthrough innovations in medicines/treatment offer opportunities for medical device and pharmaceutical contract packagers.
Asia Pacific market: Emerging markets in Asia Pacific driven by growing middle class present growth prospects, considering fast expansion of consumer industries and manufacturing sector. Countries like China and India are attractive hubs.
COVID-19 Impact on Contract Packaging Market
The COVID-19 pandemic has impacted the contract packaging market significantly. During the lockdown and social distancing restrictions imposed across the globe, both manufacturing and supply chain activities were disrupted. This led to reduced demand and delays in production schedules for various end-use industries like food and beverage, healthcare, personal care, and others.
However, as restrictions have been eased in many countries post the first wave, the contract packaging market is witnessing steady recovery as production activities resumed maintaining necessary safety protocols. Consumer demand has also started increasing again especially for essential items packaged using contract manufacturers.
The pandemic highlighted the importance of flexible global supply chains for companies. Many brands are now partnering with contract packagers to improve responsiveness and reduce operational costs. Increased healthcare and hygiene spending is boosting demand for packaged medicines and consumer goods. Online shopping has grown exponentially during this time which is favorable for packaged goods.
Key players in the market are focusing on initiatives like dedicated production lines for COVID related items, implementing digital technologies for contactless operations and ensuring worker safety. The crisis underlined the need for partnerships, innovation and sustainability which are expected to drive long-term growth opportunities. While short-term declines are expected, the market is forecast to rebound strongly by 2024 backed by economic recovery and changing consumer preferences in the post COVID world.
Geographical Regions with high Contract Packaging Market Value
The North American region currently holds the largest share of the global contract packaging market in terms of value, estimated at over 35% in 2024. This is attributed to high demand from major end-use industries in countries like the US and Canada. Changing consumer lifestyles and rising health awareness have increased the volumes of packaged goods being produced annually in the region.
Availability of technologically advanced packaging machinery along with presence of leading global brand owners gives the region a competitive edge. Strict governmental regulations regarding packagingquality and safety also benefits contract packagers. Countries like Mexico offer cost advantages attracting investments from multinational companiesfor outsourced manufacturing. With economic stability and consistent innovation, North America is expected to remain the highest revenue generator.
Fastest Growing Regional Market for Contract Packaging
The Asia Pacific region is poised to witness the fastest growth in the global contract packaging market during the forecast period of 2024 to 2031. This can be accredited to its rapidly developing economies including India and China which are global manufacturing hubs. Abundant availability of low-cost skilled labor and land along with business-friendly policies has boosted foreign investments.
Rising domestic consumption, urbanization and increasing middle-class population demanding variety of packaged goods are driving the need for contract packers. Local companies are partnering international brands for exports. Countries like Vietnam, Indonesia and Thailand are emerging as top destinations. As the APAC market matures, technological advancement of facilities will further stimulate growth prospects exceeding over 8% CAGR during the forecast years.
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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)