The biodegradable packaging market is estimated to be valued at USD 111.55 billion in 2024, growing at a CAGR of 6% over the forecast period (2024-2031). Furthermore, the increasing consumer demand for sustainable packaging will also augment the market growth during this period.
Market Dynamics:
Government regulations and initiatives to curb pollution: Stringent government regulations towards the use of conventional plastic have propelled the adoption of biodegradable materials across industries. Governments are implementing bans on single use plastic and providing incentives for using sustainable packaging alternatives like biodegradable materials. For instance, the European Union passed directives to achieve the recycling target of 55% of plastic packaging by 2030.
Rapid urbanization: The growing urban population has increased the consumption of packaged food and other consumer goods. This has boosted the demand for packaging from FMCG and other industries. However, mounting plastic waste is a challenge for waste management in urban areas. Biodegradable packaging helps tackle the plastic pollution issue, while catering to the packaging needs of the burgeoning urban population. Governments are also promoting biodegradable alternatives considering environmental challenges faced by urban centers.
Growing Concerns about Environmental Pollution is Driving Growth in the Biodegradable Packaging Market
With rising awareness about climate change and its impact, consumers are increasingly demanding sustainable packaging options. Plastic litter has become a serious problem worldwide as most conventional plastics take centuries to decompose in landfills or nature. Biodegradable packaging offers a viable solution as it breaks down into natural elements like water, carbon dioxide, and biomass within a short timeframe when disposed of properly. Manufacturers are responding to this consumer demand by introducing more plant-based and compostable packaging materials. Strict government regulations banning harmful single-use plastics are also nudging companies to shift toward eco-friendly alternatives. As environmental consciousness grows globally, the biodegradable packaging segment is projected to experience accelerated adoption rates.
Increased Health Concerns Related to Poor Waste Management are Propelling the Biodegradable Packaging Industry
Plastic waste clogging landfills and flowing into water bodies has emerged as a major public health issue. Degrading plastics release toxic chemicals that contaminate soil and water sources. Improper waste disposal methods also allow the breeding of disease-carrying insects and rodents. Researchers have linked various long-term health problems to microplastic consumption and chemical exposure from conventional plastics. Biodegradable packaging made from renewable biomass breaks down naturally without releasing hazardous substances. It provides a hygienic solution for packaging, distribution, consumption, and disposal. The ability to compost and degrade completely eliminates health risks stemming from poor waste management. Rising disease prevalence due to pollution is boosting the demand for safe and eco-friendly biodegradable options.
High Material and Production Costs Pose Financial Challenges
While biodegradable packaging serves vital environmental and social needs, its cost-effectiveness remains a concern. Production of compostable materials from plant-based sources like corn, sugarcane, bags, etc. involves complex processing which drives up expenses. Manufacturers also struggle to achieve economies of scale due to limited supply chains and specialized production methods. This makes biodegradable options more expensive than traditional plastics in many cases. High costs act as a barrier for widespread adoption, especially in price-sensitive sectors. Improving yields and developing low-cost biomass sources can help lower material prices over time to boost commercial viability. However, in the short term, the premium pricing of biodegradable packaging restrains broader market growth.
Lack of Composting Infrastructure Hinders Proper Waste Disposal
For biodegradable packaging to provide full environmental benefits, the waste needs proper composting facilities. However, most cities and countries currently do not have the infrastructure required to process large volumes of organic waste. If compostable items end up in landfills or regular trash streams without optimal conditions, they may not fully decompose. This ambiguity around appropriate disposal limits consumer confidence in such products. It also raises concerns about inconsistent or ineffective waste management undermining sustainability claims. Standardizing commercial and municipal composting infrastructure worldwide remains a challenge deterring faster uptake of biodegradable options. Overcoming these constraints needs coordinated efforts from all stakeholders.
Rapid E-commerce Growth Presents Commercial Opportunities
The e-commerce boom, accelerated by the pandemic, has significantly increased packaging consumption. However, single-use plastics predominantly used for protective coverings, mailers, air pillows, etc., end up as litter. Biodegradable packaging provides a sustainable solution aligned with the expanding online retail industry's goals. It offers properties like moisture protection and cushioning equivalent to plastics while ensuring environmental stewardship. Leading e-tailers are proactively adopting renewable alternatives to bolster their green credentials and cater to eco-conscious customers. As online shopping habits persist long-term, biodegradable packaging manufacturers can tap into massive volumes through strategic tie-ups. E-commerce growth opens lucrative business opportunities for scaling production and further cost reductions through economies of scale.
Growing Demand for Sustainable Packaging from Food Chains Spurs Commercial Possibilities
Changing consumer priorities and stringent regulations are driving food giants to pursue sustainable packaging. Biodegradable and compostable materials offer viable green options for various applications in this sector without compromising on performance, safety, or cost. Foodservice establishments and retailers actively partner with bioplastic suppliers to replace plastic-based packaging with renewable alternatives. Manufacturers get long-term commercial commitments through dedicated supply relationships. Quick service restaurants, cafes, supermarkets, and delivery chains are steadily expanding their footprints worldwide presenting wider market access on a global scale. Their sustainability goals and bulk purchase volumes offer sustainable and lucrative business.
Link - https://www.coherentmarketinsights.com/market-insight/biodegradable-packaging-market-395
Key Developments
- In 2023, Pakka launched India's first compostable flexible packaging, a major step in sustainable packaging. This aligns with the global shift towards eco-friendly options. Compostable packaging breaks down into natural components when composted, reducing environmental impact compared to traditional plastics.
- The joint venture agreement between Karat Packaging Inc. and Happiness Moon, Co. Ltd. in April 2022 marked a significant step towards sustainable manufacturing in Taiwan. The collaboration aimed to establish a new factory dedicated to producing compostable foodservice products using bagasse, a byproduct of sugarcane processing. This initiative not only promotes eco-friendly alternatives to traditional plastic food packaging but also supports the circular economy by utilizing agricultural waste in the production process. By investing in the manufacturing of compostable products from bagasse, Karat Packaging Inc. and Happiness Moon are contributing to reducing plastic waste and fostering a more sustainable approach to food packaging in the region.
- In March 2022, Mondi, a global packaging and paper group, announced a significant investment of US$ 285 Million in corrugated packaging. This investment was aimed at accelerating the company's sustainable growth plans. The decision to invest in corrugated packaging, which is a sustainable and recyclable material, aligns with Mondi's commitment to environmental sustainability and its overall strategy to grow in packaging.
- Tetra Pak's partnership with the FINISH Society in June 2021 aimed to enhance the collection of used carton packages in Udaipur, Rajasthan, India. This collaboration involved FINISH Society working alongside the Municipal Corporation of Udaipur to retrieve used juice or milk cartons from the corporation's sorting centers for recycling. Additionally, Tetra Pak and FINISH Society focused on educating the waste-picker community about the importance of collecting and selling used beverage cartons to recyclers.
Key Players
BASF SE, Smurfit Kappa Group, Mondi Group, Rocktenn, Stora Enso, Clearwater Paper Corporation, Amcor, Novamont S.P.A., Kruger Inc., Reynolds Group Holding Limited, International Corp., Solenis, DuPont, Ball Corp, Novamont, Tetra Pak International SA, Biopak PTY, Imex Packaging, and Elevate Packaging Inc
