CONTRACT PACKAGING MARKET ANALYSIS

Market Challenges And Opportunities

Global Contract Packaging Market: Growth Drivers

• Growing demand from the e-commerce industry: The growth of the e-commerce sector has also increased the need for tertiary packaging globally; thus, the contract packaging market is expected to grow. Other packaging intensive industries, such as pharmaceuticals, consumer goods and food & beverages, and electronics, are also experiencing a surge in demand due to various factors, such as increasing disposable income, a growing population, and favorable government policies, towards business in many countries. The growth of the above industries is expected to positively impact the contract packaging market growth. The government of India has launched Production Linked Incentive (PLI) scheme in 2021 for different industries, which is expected to drive the contract packaging market during the forecast period.
• Growing popularity of innovative packaging solutions: The packaging industry is growing at a fast pace. New products and technologies are being introduced all the time. Packaging companies need to keep up with the ever-evolving needs of their customers. New trends in the packaging market are driven by urbanization, rising disposable income, and the need for convenient and easily open packages. In the last few years, there have been many innovations in packaging technology including smart packaging, antimicrobial packaging, water-soluble packaging, and corn starch based packaging. These innovations in packaging media are low-carbon, eco-friendly, and sustainable and are expected to offer lucrative growth opportunities to contract packaging firms in the coming years. For instance, companies can avoid the cost of setting up a production facility, packaging equipment, staff training, and purchasing materials, by outsourcing to a contract packager. The European Co-packers Association stated that adopting the strategy to choose for contract packaging solution can save the company up to 7% to 9% of the cost incurred in its complete production cycle.

Global Contract Packaging Market: Market Restraints

• Competition from in-house packaging: Competition from in-house packaging can have a number of effects on the global contract packaging market. First, companies that decide to handle packaging internally may decrease their reliance on in-house contract packaging services. This could result in a decrease in the demand for in-house providers. Second, companies that handle packaging internally have more control over the overall packaging process. This can lead to increased efficiency and lower costs. Third, companies may see in house packaging as a means to protect their valuable information and retain control over the design and branding of their packaging. Contract packaging providers can offset this competition by providing specialized expertise and flexibility that in-house providers may not be able to provide. Fourth, they can develop strategic partnerships that allow them to provide custom packaging solutions that in-house cannot replicate. All in all, competition from in-house packaging presents challenges, but contract packaging can continue to grow by providing unique value propositions for companies looking for specialized packaging solutions.
• Strict regulations regarding packaging materials: Strict regulations regarding packaging materials can have a negative impact on the global contract packaging market. These strict regulations can increase the compliance cost of packaging companies. For example, strict regulations may mandate that packaging materials meet specific environmental or safety standards. This can lead to additional compliance testing costs and material sourcing expenses for packaging companies. Strict regulations may also restrict the market by limiting the range of options available for packaging solutions. For instance, strict regulations may limit the range of approved packaging materials. On the other hand, strict regulations can have a positive effect on the global contract packaging market. Regulations on packaging material can encourage innovation in the industry. Companies can develop new, eco-friendly, and sustainable packaging solutions to meet the requirements of the regulations. It also creates a level playing field by ensuring that all packaging companies meet the same standards. This can increase consumer confidence and trust in the market.