Market Trends of Europe Contract Packaging Industry
E- commerce to Show Significant Growth
- Western Europe is the most developed e-commerce market in Europe, accounting for about 70% of the total e-commerce value in Europe, increasing the need for fulfillment services like logistics and warehousing. E-commerce sales in Europe have grown briskly in the last decade, creating a demand for safe and efficient protective packaging, as a seamless consumer experience remains critical to brand reputation and loyalty. According to Fevad, the Federation of E-commerce and Distance Selling, e-commerce sales in France were expected to reach EUR 146.9 billion (USD 159.98 billion) in 2022. This is a nearly 14% growth over the previous year when online sales were slightly over EUR 129 billion (USD 140.48 billion).
- Countries in Europe like Spain, Italy, Germany, France, the United Kingdom, Turkey, and Switzerland were all significantly affected by the COVID-19 outbreak. E-commerce sales performed well despite the nationwide lockdown. The European government shut down most physical retail locations as a careful step as a component of a progression of lockdown intended to contain the spread of COVID-19. Thus, the Internet became famous for looking for fundamental and trivial items like food, dress, and extras.
- The demand for packaged food products is rising quickly due to working professionals' growing time limitations and the availability of more convenient food options. Packaged food products provide better barrier protection, containment or accumulation, advertising, detailed ingredient information, safety, appropriateness, and other benefits. Compared to typical big-box stores, online shopping includes benefits like free delivery, speedy deliveries, and straightforward, uncomplicated returns. Eventually, this speeds up the market's expansion for packaged food goods. As a result, the demand for packaged foods and the growing inclination for online shopping is expected to drive growth in the Europe contract packaging market throughout the forecast period.
- Moreover, German consumers are extremely demanding and well-informed. Value for money is a key concept in the German worldview before purchasing, and consumers evaluate prices and search for the best offers. E-commerce platforms drive the nation's market since they offer great value, convenience, and the newest fashion trends. Furthermore, consumers are prioritizing sustainability over other issues, including fashion. Consumers are becoming more interested in learning where items come from and how they are created. In response, many businesses are strengthening their sustainable initiatives and attempting to make their local supply chains more sustainable.
- In addition, many big brands are expanding their business in Europe. For instance, in May 2022, the Chinese e-commerce behemoth Alibaba expanded its Lazada marketplace into Europe. Lazada will likely focus on local merchants rather than cross-border sales, such as AliExpress. Cainiao, Alibaba's logistics company, is new to Belgium. Alibaba's marketplace AliExpress is currently present in the European market. However, cross-border sales from China are AliExpress's most profitable source of revenue. Lazada instead focuses on local European sellers.
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United Kingdom is Expected to Witness a significant Growth
- The packaging industry in the United Kingdom has been witnessing significant growth owing to the increased manufacturing activities in the country. Also, rising e-commerce sales, increased demand from food and beverage makers for eco-friendly and recyclable packaging, rising desire for product personalization, and a growing industrial packaging sector are propelling the country's contract packaging market forward.
- Consumer packaged goods (CPG) vendors in the country have been actively looking to vertically integrate to offer packaging solutions, including buying raw materials and logistics, to stand out as a one-stop contract solution provider. Food processors turned to contract manufacturers when the demand for ready-to-eat food goods during COVID-19's early waves skyrocketed. Manufacturing was increasingly outsourced due to OEMs' constrained manufacturing capacity and increased food producers. Food enterprises can now quickly expand because of the value-added services that food contract manufacturers have begun to provide, including packaging, research, advising, and warehousing.
- Further, pharmaceutical contract packaging in the United Kingdom is rapidly increasing the adoption of different packaging methods to meet the expectations of changing consumer preferences. Rising environmental concerns have stimulated the pharmaceutical industry's demand for sustainable contract packaging. In addition, the rising penetration of automation in pharmaceutical contract packaging has minimized human handling errors, catalyzing market growth in the country. Additionally, increased disposable incomes and rising consumer health awareness propel the demand for pharmaceutical contract packaging in the area.
- In the last decade, there has been an increase in regulations for plastic use is anticipated to have a significant effect on the market. Several contract packaging manufacturers are constantly working in line with government regulations. For instance, Alloga, a contract packaging company based out of the United Kingdom, their facilities housed in the same regulatory-approved, GDP-compliant storage facility as the logistics service. Alloga has Manufacturer's (Assembly) Licences (MIA and ManA) and has years of experience in the healthcare contract packaging industry.
- The United Kingdom is also now committed to environmental conservation and sustainable development at the highest levels of government. Contract packaging is a good combination of efficiency and effectiveness for CPG companies aiming to avoid big capital expenditures and instead focus on innovation, sustainable practices, customer experience, and speed-to-market. Supply chain efficiencies contribute to material and structural improvements such as cost reduction, waste reduction, and production cycle optimization. According to eBay, 37% of the consumers in the United Kingdom during 2022 were to consider sustainable packaging to reduce its environmental effect on the country.
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