Contract Packaging Market Size

Contract Packaging Market Analysis

The Contract Packaging Market size is estimated at USD 73.32 billion in 2024, and is expected to reach USD 111.22 billion by 2029, growing at a CAGR of 8.69% during the forecast period (2024-2029).

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.