Market Trends of Australia Contract Packaging Industry
FMCG Domain Remains a Key Driver for Growth of Co-Packing Services
- FMCG products often experience seasonal fluctuations in demand, such as during festivals or specific promotional periods. Contract packing services allow businesses to scale up or down their packaging operations based on these fluctuations without investing in additional infrastructure or labor.
- According to the Australian Bureau of Statistics, Australian supermarket and food retail industry annual sales increased year-on-year from 2017 to 2022 and increased significantly from 2021 to 2022. In 2022, the sales reached a value of more than AUD 132 billion (USD 93.4 billion). Growth in sales at supermarkets and grocery stores shows that demand for FMCG goods is increasing. As retail sales increase, the production and distribution of FMCG goods are also likely to increase. This increased product volume often requires more efficient and scalable packaging solutions, which a contract packaging service can provide.
- With the increasing revenue in the FMCG sector, companies are likely looking for cost-efficient ways to manage their packaging needs. Contract packaging services can offer economies of scale and cost savings by outsourcing packaging operations, allowing FMCG businesses to allocate resources more efficiently.
- In the quarter ending June 2023, the gross operating profit of businesses in the retail trade industry in Australia amounted to approximately AUD 8.18 billion (USD 5.27 billion) compared with June 2019, when the gross operating profit of businesses in the retail trade industry was AUD 5.18 billion (USD 3.34 billion). The FMCG sector is highly dependent on effective supply chain operations. As the retail industry grows, companies may need to adjust their supply chain strategies to meet the increasing demands. Contract packaging services can provide specialized packaging and distribution services to enhance supply chain productivity.
- The growth in the retail trade industry in Australia signifies a growing demand for FMCG products, which can be advantageous for contract packing services. These services can assist FMCG companies in adapting to changing market conditions, improving supply chain efficiency, and delivering customized packaging solutions, ultimately contributing to the FMCG sector's growth and success.
Understand The Key Trends Shaping This Market
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Food Industry to be the Largest End User
- The need for various industries, such as food and beverage, is projected to favorably affect the contract packaging industry. The demand for packaging to carry these products will rise as more individuals buy from supermarkets, grocers, and other retail establishments. According to the Australian Bureau of Statistics, the annual revenue of supermarkets and grocery stores was AUD 125.85 billion (UD 80.24 billion) in 2021, reaching AUD 132.75 billion (USD 84.64 billion) in 2022. Such revenue growth in supermarkets and grocery stores is expected to drive the contract packaging market.
- Australian food and beverage production is a significant economic and employment contributor to the country. Due to the high quality of the items it generates, the sector is appealing to Australian exporters. The meat, fresh vegetable, and processed food industries are witnessing growth. Health and wellness trends continued to support the development of fresh food produced nationwide. The contract packaging market is anticipated to benefit from expanding Australia's food and beverage sector as retailers and consumers look for packaging options that meet their requirements. The demand for inventive and environmentally friendly packaging grows as the industry develops and adjusts to shifting consumer expectations.
- Consumers in Australia are increasingly concerned about the environmental impact of food packaging. As a result, there is a growing shift toward sustainable packaging materials and practices. A study by the Australian Packaging Covenant Organization (APCO) reported a 15% increase in the use of recyclable and eco-friendly materials in food packaging between 2020 and 2022.
- Veolia's recent research has uncovered that 80% of Australians are influenced in their purchasing decisions by the composition of a product's packaging. 62% of the population expresses their willingness to pay a higher price for everyday consumables if it guarantees that the packaging will not end up in a landfill. 89% of individuals believe that manufacturers should be obligated to use recyclable product packaging. These trends reflect the evolving consumer landscape and stringent regulatory requirements, prompting food manufacturers to seek specialized contract packaging services.
- The capacity to package uncooked food in climate-controlled, refrigerated, and frozen products/conditions, combined with a highly automated secondary co-pack plant, presents a unique opportunity to the market. Transforming into an all-inclusive supplier allows customers to minimize their supply chain and lessen their dependence on imported products. Customers are requesting a more extensive range of products and those that are considered "better for you." The growth of this market is accelerating due to social media. Contract packaging offers the possibility of launching several new products on a small scale to determine their viability and then scale up successful launches to full national rollouts.
