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Contract Packaging Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Contract Packaging Market is segmented by Packaging (Primary, Secondary, and Tertiary), End-user Industry (Food, Beverage, Pharmaceutical, Household and Personal Care), and Geography.

Market Snapshot

Contract Packaging Market Overview
Study Period: 2018 - 2026
Base Year: 2020
Fastest Growing Market: Asia Pacific
Largest Market: North America
CAGR: 10.18 %
Contract Packaging Market Major Players

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Market Overview

The global contract packaging market was valued at USD 49.89 billion in 2020, and it is expected to reach USD 89.74 billion by 2026, registering a CAGR of approximately 10.18% during the forecast period (2021-2026). With the outbreak of the COVID-19 pandemic, the contract packaging market has witnessed tremendous growth, as the e-commerce market has taken a boom, owing to lockdown and social distancing norms where the majority of the consumers has been preferring online channel for shopping, and companies have been outsourcing their packaging end to end or standalone services to meet the growing demand.

  • However, the pandemic impacted the automation plans for various company, which has some minimalistic effect in the market studied. According to the Association for Packaging and Processing Technologies (PMMI) survey, around 67% of CPG companies have put automation plans on hold than win comparison to 23% of SMEs.
  • Growth in the global contract packaging market is mainly influenced by the changing preferences of manufacturing firms, who usually outsource packing activities to third-party players. This is because manufacturers are increasingly focusing on cost optimization and their core business. Contract packaging provides several advantages. Firstly, it reduces the operational costs of the manufacturers. In many cases, it is estimated that the operational costs can be reduced by as much as 7% to 9% through outsourcing packaging activities to contract packagers and the decreasing costs of machines and labor costs.
  • Secondly, packaging regulations, especially in the case of food and beverage products, are evolving rapidly. Meeting such stringent rules and norms require several inspection and quality check operations. By outsourcing packaging activities, the hectic task of meeting such regulations (also known as mil-spec packaging) is passed on to the contract packaging agency, motivating more manufacturers to prefer contract package over in-house packaging activities.
  • Moreover, the packaging industry is rapidly growing, with many new products and technologies being introduced. Therefore, packaging companies need to stay updated to meet the changing needs of customers. Factors, such as urbanization, increasing disposable incomes, and preference for convenient and easy-to-open packages, shape new trends in the market.
  • Raising consumer awareness about environmental concerns, along with the producers’ demand for economical packaging options, is impelling contract packagers to adopt earth-friendly alternatives and eco-sensitive package designs. Furthermore, sustainability and customization are likely to continue to positively impact the contract packaging market, leading to growth in use in consumer-packaged goods, such as personal care and food and beverages, over the forecast period. In June 2020, CPA, The Association for Contract Packagers, and Manufacturers and The European CoPackers Association (ECPA) collaborated to increase the awareness and use of the contract packaging and contract manufacturing industry in their respective regions. This presents an opportunity for the members of each organization to invest in new technologies and introduce sustainability into their operations.
  • To remain relevant in the market, vendors are also focusing on acquisitions and geographical expansions, due to which the market is gradually consolidating. For instance, in March 2020, South Atlantic Packaging Corp. (SAPC) in Winston-Salem, a contract packaging company that offers to package, kitting, assembly, and warehousing solutions, bought Florida-based Versatile Packagers. It provides an excellent location for SAPC.

Scope of the Report

Contract packaging is the process of assembling a product or good into its final finished packaging. Depending on the product, the final packaging constitutes a variety of forms, such as thermoformed/plastic clamshell/blister packaging, a plastic bag, a standing corrugated retail point-of-sale display, or a transport tray. Sometimes, contract packagers are tasked with something as simple as adding a bar code sticker to a product or as complex as planning, designing, producing, and fulfilling the entire package. The study covers primary packaging, secondary packaging, and tertiary packaging among several end-user industries across countries in as North America, Europe, etc. The scope of the report for the purpose of market estimation on contract packaging excludes the design, testing, fulfillment, and other segments that are outsourced under the contract packaging segment. The study also covers the impact of the COVID-19 pandemic on the market.

By Packaging
Primary
Secondary
Tertiary
By End-user Industry
Food
Beverage
Pharmaceutical
Household and Personal Care
Other End-user Industries
By Geography
North America
United States
Canada
Europe
Germany
United Kingdom
France
Netherlands
Italy
Spain
Rest of Europe
Asia Pacific
China
India
Japan
Rest of Asia Pacific
Latin America
Middle East & Africa

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Key Market Trends

Pharmaceutical is Expected to Hold Significant Growth

  • The growth in advancement and research in the pharmaceutical industry has resulted in the introduction of new drugs, with more exceptional performance compared to their predecessors. Recent improvements in medical sciences and additions to medicines already available for numerous diseases and deficiencies drive the contract packaging market, indirectly, as the necessity of packaging the drugs has multiplied rapidly.
  • Various pharmaceutical companies are now outsourcing the job of packaging end-products to companies skilled labor specialized in handling the packaging of medicines. The pharmaceutical packaging of drugs is a vital aspect, as the product should be safe for patient's consumption.
  • In North America, it is estimated that by the end of 2020, nearly 50 well-known, highly-prescribed drugs will go off-patent, which creates opportunities for contract packagers. Poor patient compliance or medication adherence can lead to increased hospitalization and worsening of the disease. Manufacturers' ongoing focus on drug safety and protection, and the latest government regulations, are the factors for the outsourcing packaging requirements. As per the Food and Drug Administration (FDA) regulations in the United States, pharmaceutical drugs need high barrier packaging materials and sealants that are impermeable and resistant to solvents, grease, chemicals, and heat for better security protection.
  • Since late February 2020, U.S. pharmaceutical manufacturers, being dependent on China, have a high risk of supply shortages, which may continue over the next three months. In the meantime, the FDA asked U.S. pharmaceutical and medical device manufacturers to evaluate and plan for API sourcing alternatives.
  • Concerning medical devices, FDA recognized 63 manufacturers and 72 facilities across China, which were contacted for essential devices inventory pileup, to avoid shortage in case of a supply disruption. However, contrary to such measures being taken, C2 Pharma, an API supplier outsourcing manufacturer, observed that the U.S. government's coronavirus response could realign the country's pharmaceutical supply chain.
Contract Packaging Market Trends

North America to Account for the Largest Share

  • The contract packaging sector in North America is rapidly growing due to the increasing demand for packaging in segments, like food and beverages, pharmaceuticals, beauty care, and other sections. Various contract packaging companies in the United States and Canada have learned to adapt to challenging business conditions. The companies are also getting aware regarding the intense global competition, cost pressures, and highly variable demand from OEMs. This environment is significantly increasing the contract packaging market in the United States. Many European companies, such as Langen Group and Persson Innovation, have already invested in the United States.
  • Owing to the stability, rising demand, and changing the preference of manufacturing firms toward contract packagers, the U.S. contract packaging market is expected to witness steady growth. Also, the U.S. government has placed various laws and regulations on the labeling and packaging of the drugs. This could create a positive impact on the demand for contract packaging, owing to the inability of an in-house packaging facility for few pharmaceutical companies in this region.
  • In February 2020, Big Beverages Contract Manufacturing (BBCM) announced the opening of its new beverage co-packing facility in North Carolina. In their new facility, BBCM will begin with one highspeed can-line capable of producing 1,200 cans per minute with plans to add lines two and three over the next 18 months. BBCM plans to provide a variety of canned beverage products for large national and regional customers. BBCM will be fully operational in late Q2 2020, and its first production line is 80% sold out.
  • In January 2020, MSI Express, backed by HCI Equity Partners, which is headquartered in the United States, has acquired Power Packaging. MSI Express is a provider of contract packaging and contract manufacturing services for well-known brands in the shelf-stable human and pet food space. The acquisition of Power Packaging further expands MSI Express’s geographical presence, capabilities, and customer relationships. Power also brings MSI Express into new food categories such as powdered beverages, soups and bases, baking mixes, beverage mixes, coffees and teas, foodservice beverages, dinner kits, pasta, rice, side dishes, and salad dressings.
Contract Packaging Market Growth

Competitive Landscape

The contract packaging market is moderately fragmented, with the presence of many domestic and international vendors. The companies in the market are continually expanding their geographical proximity with the help of partnerships and mergers. With the growth of outsourcing activities among various established players, as well as SMB, the market studied has been witnessing significant competition, in terms of providing reliable and speed of services, making it a competitive market. Overall, the threat of substitutes is moderate and is expected to grow during the forecast period.

  • June 2020 - Jones Healthcare Group made a major investment in its packaging services offering which includes a fully integrated two-lane Uhlmann blister packaging line. The fully automated equipment will improve the firm’s capacity to manage surges regarding the demand and unique blister combinations, as more complex pharmaceutical dosage forms and regimes are evolving clinically and commercially.
  • May 2020 - Sharp (UDG Healthcare PLC) acquired a pharmaceutical packaging facility from Quality Packaging Specialists International LLC (QPSI). The facility covers an area of 160,000 sq. ft and has full regulatory approval. It encompasses 12 primary production sites for multiple secondary packaging lines to offer both primary and secondary pharmaceutical packaging, including bottling, blistering, vial labeling, and medical device kitting, as well as serialization services.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions and Market Definition

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Market Overview

    2. 4.2 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.2.1 Bargaining Power of Suppliers

      2. 4.2.2 Bargaining Power of Buyers

      3. 4.2.3 Threat of New Entrants

      4. 4.2.4 Threat of Substitute Products

      5. 4.2.5 Intensity of Competitive Rivalry

    3. 4.3 Industry Value Chain Analysis

    4. 4.4 Impact of COVID-19 on the Market

  5. 5. MARKET DYNAMICS

    1. 5.1 Market Drivers

      1. 5.1.1 Companies Looking to Gain Competitive Advantage by Outsourcing Non-core Operations

      2. 5.1.2 Increasing Demand from the E-commerce Industry

      3. 5.1.3 Increasing Need for Latest Technology and Innovative Packaging

    2. 5.2 Market Restraints

      1. 5.2.1 Stringent Government Regulations

      2. 5.2.2 Competition from In-house Packaging

    3. 5.3 Industry Regulations and Standards

    4. 5.4 Evolution of Contract Packaging

  6. 6. MARKET SEGMENTATION

    1. 6.1 By Packaging

      1. 6.1.1 Primary

      2. 6.1.2 Secondary

      3. 6.1.3 Tertiary

    2. 6.2 By End-user Industry

      1. 6.2.1 Food

      2. 6.2.2 Beverage

      3. 6.2.3 Pharmaceutical

      4. 6.2.4 Household and Personal Care

      5. 6.2.5 Other End-user Industries

    3. 6.3 By Geography

      1. 6.3.1 North America

        1. 6.3.1.1 United States

        2. 6.3.1.2 Canada

      2. 6.3.2 Europe

        1. 6.3.2.1 Germany

        2. 6.3.2.2 United Kingdom

        3. 6.3.2.3 France

        4. 6.3.2.4 Netherlands

        5. 6.3.2.5 Italy

        6. 6.3.2.6 Spain

        7. 6.3.2.7 Rest of Europe

      3. 6.3.3 Asia Pacific

        1. 6.3.3.1 China

        2. 6.3.3.2 India

        3. 6.3.3.3 Japan

        4. 6.3.3.4 Rest of Asia Pacific

      4. 6.3.4 Latin America

      5. 6.3.5 Middle East & Africa

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Company Profiles

      1. 7.1.1 Aaron Thomas Company

      2. 7.1.2 Multipack Solutions LLC

      3. 7.1.3 Pharma Tech Industries Inc.

      4. 7.1.4 Reed Lane Inc.

      5. 7.1.5 Sharp Packaging Services

      6. 7.1.6 UNICEP Packaging LLC

      7. 7.1.7 Green Packaging Asia

      8. 7.1.8 Jones Healthcare Group

      9. 7.1.9 Stamar Packaging Inc.

      10. 7.1.10 Budelpack Poortvliet BV

      11. 7.1.11 Complete Co-Packing Services Ltd

    2. *List Not Exhaustive
  8. 8. INVESTMENT ANALYSIS

  9. 9. FUTURE OUTLOOK

**Subject to Availability

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Frequently Asked Questions

The Contract Packaging Market market is studied from 2018 - 2026.

The Contract Packaging Market is growing at a CAGR of 10.18% over the next 5 years.

Asia Pacific is growing at the highest CAGR over 2021- 2026.

North America holds highest share in 2020.

Aaron Thomas Company, Multipack Solutions LLC, Pharma Tech Industries Inc., UNICEP Packaging LLC, Jones Packaging Inc. are the major companies operating in Contract Packaging Market.

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