Market Challenges And Opportunities
Packaging Testing Market Drivers
- Stringent regulations for packaging quality and safety: Government authorities across the globe are implementing stricter regulations pertaining to the quality and safety of packaging used across various end-use industries. For instance, the U.S. Food and Drug Administration has established stringent norms for packaging used in the pharmaceutical and healthcare applications. Such regulations necessitate rigorous testing of packaging to ensure compliance, which is driving the demand for packaging testing services. The introduction of strict regulatory protocols has compelled manufacturers to adopt packaging testing as a mandatory procedure before product release. This external obligation is a major factor propelling the growth of the packaging testing market. For instance, the Indian government plans to notify stricter product safety rules under the newly passed Consumer Protection Act by 2023, according to officials at the Department of Consumer Affairs. More packaging attributes will be examined and threshold limits for contaminants lowered. This will compel brands to ensure compliance through packaging testing.
- Rising demand for packaged food and beverages: The globally rising demand for packaged food and beverages is a key driver for the packaging testing market. Packaged foods such as ready-to-eat meals, snacks, confectionery, dairy products, and bakery items require high-quality packaging that preserves the taste, texture, and freshness of products. Testing helps ensure the packaging used for such food products maintains product properties during their stated shelf life. Moreover, the growing demand for packaged beverages including carbonated drinks, juices, and health drinks also contributes to the increasing need for beverage packaging testing. For instance, according to the Food and Agriculture Organization (FAO) of the United Nations, the global food packaging sales jumped by over 15% in 2020 compared to the previous year. The FAO report attributes this partly to stockpiling of packaged staples by households during pandemic-related lockdowns.
- Growth of the e-commerce sector: The e-commerce industry has witnessed exponential growth worldwide in recent years. Online shopping platforms rely extensively on packaging material to ship their products safely to customers. Testing is vital to ensure the packaging used for shipping can withstand transit-related risks including shocks, vibrations, and compression. E-commerce companies conduct packaging testing to optimize logistics costs, reduce returns due to damage, and improve customer satisfaction. The continuously rising global e-commerce sales will remain a key driving factor for packaging testing services. For instance, according to statistics by the United Nations Conference on Trade and Development (UNCTAD), the global B2C e-commerce sales surged from US$25.6 trillion in 2019 to US$27.7 trillion in 2020 highlighting increasing preference for online shopping driven by pandemic. The pandemic further accelerated this trend as more people turned to e-commerce for safety and necessity.
- Increasing counterfeiting and piracy: The growing risks associated with counterfeiting and piracy is compelling manufacturers, especially in the fashion goods and pharmaceutical industries, to adopt packaging testing as an effective anti-counterfeit solution. Testing packaging attributes such as traceability features, labeling, warning signs, and material composition helps differentiate authentic products from counterfeits. Packaging testing also aids in intellectual property protection by identifying fake or pirated products. The growing number of counterfeiting incidents globally will continue to generate significant demand for packaging testing and authentication services.
Packaging Testing Market Opportunities
- Integration of smart technology and digital tools: Integration of smart technologies such as RFID, NFC tags, smart sensors with digital platforms and analytics tools provides huge scope for innovation in packaging testing domain. Smart packaging testing solutions enabled with automation, robotics, Internet of Things, and artificial intelligence can revolutionize quality checks with rapid, non-destructive testing, data analytics, and improved efficiency. They provide user-friendly interfaces, generating a high return on investment. Packaging manufacturers have an opportunity to partner with technology companies to develop next-gen smart testing solutions and strengthen their position in the market. For Instances, According to the World Health Organization (WHO), over 30% of vaccines were wasted worldwide in 2020 due to issues in packaging and logistics underscoring the need for innovations in this market.
- Growing demand for sustainably sourced packaging: Sustainable packaging is gaining traction driven by circular economy goals, eco-conscious consumers and stricter environmental regulations. Testing bio-based, recyclable and compostable packaging made from materials like bioplastics requires specialized capabilities. Packaging testing providers have the opportunity to develop testing methodologies aligned with sustainability goals and offer services tailored for green packaging. Collaborating with material manufacturers in eco-friendly packaging development can help tap into the fast-growing sustainable packaging market.
- Rising applications of digital printing in packaging: Digital printing technology is enabling faster design changes, variable data printing, targeted marketing, and customization in packaging. Packaging testing providers have the opportunity to upgrade their testing competencies to handle the specific demands associated with digitally printed packaging such as assessing print quality, accuracy, barcodes, graphics, and texts. Offering testing capabilities aligned with digital printing can help gain competitive edge and attract packaging companies using this technology. For instance, according to United Nations Educational, Scientific and Cultural Organization data for 2020-2021, cross-border e-commerce sales jumped by 26% during the COVID-19 pandemic as lockdowns increased online shopping. This points towards continuing demand for validated customizable packaging globally.
- Growing demand for testing in emerging economies: High growth markets like China, India, Brazil, Indonesia present significant opportunities for packaging testing due to rapidly growing manufacturing, improving economic conditions, rising consumer class and urbanization in these countries. Developing testing expertise for traditional packaging styles preferred in regional markets and aligning testing methods to region-specific industry standards and regulations can help testing companies strengthen foothold in emerging economies. Localization initiatives through partnerships are also crucial to tap into these high-potential markets.
Packaging Testing Market Restraints
- High capital investment requirements: Setting up packaging testing laboratories requires substantial investment in equipment, facilities, tools, and skilled workforce. Advanced universal and functional test instruments, testing automation, accreditations, and tech infrastructure involve high costs. The need for periodic upgrades to meet advancing test methodologies also impacts capital budgets. Moreover, the highly-fragmented market limits economies of scale. For small companies, the high investment requirements hamper market entry and expansion. For instance, according to statistics sourced from World Bank, capital investment as a percentage of GDP stands at 22% for advanced economies like U.S. and Germany compared to just over 20% for the global average. The higher costs of doing business in developed packaging markets restrict the entry of new testing facilities, thereby slowing capacity additions. This acts as a brake on the testing needs of proliferating packaged goods sectors in these regions and poses challenges for market growth.
- Limitations of conventional testing methods: Traditional physical, mechanical, and chemical testing methods have limitations like being destructive, slow, and labor-intensive. They lag in mimicking complex real-world conditions. For instance, shock testing through drop tests has drawbacks in consistency and human errors. Moreover, many conventional techniques have low fault detection rates. The inability to conduct predictive analysis using legacy testing methods restricts their application scope. This is compelling end-users to seek more advanced testing solutions. For example, according to a 2020 report by the United Nations Environment Program (UNEP) on sustainable packaging, the failure rates of produce packages during supply chain transportation were estimated to be as high as 25-30% when assessed through traditional lab-based tests only.
- Shortage of skilled testing personnel: There is an acute shortage of qualified personnel with the specialized skills needed to operate state-of-the-art instruments and technologies used in packaging testing. Moreover, expertise is required for conducting complex test procedures and accurately analyzing results. Lack of proper training and education infrastructure poses challenges in building an adequate skilled workforce. The limited availability of competent lab technicians, scientists, and researchers is affecting the capability expansion plans of testing laboratories.
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