Global Contract Packaging Market - Segmented by Packaging (Primary, Secondary, and Tertiary), End-user Industry (Food, Beverage, Pharmaceutical, and Household & Personal Care), and Region - Growth, Trends and Forecast (2018 - 2023)
The Global Contract Packaging Market was valued at USD 40.65 billion in 2017, and is expected to reach a value of USD 78.14 billion by 2023 at a CAGR of 11.51%, over the forecast period (2018 - 2023). Growth in the global contract packaging market is mainly determined by the changing preference of manufacturing firms toward contract packagers, as they are increasingly focusing on cost optimization, and their core business. The operational costs can be reduced by 7% to 9% through this strategy, due to the reduced machinery-maintenance and labor-costs. The global contract packaging market is highly fragmented, with the presence of many small and large vendors. The entry of third-party logistics companies in the contract packaging market is one such trend, which helps in reducing the total delivery-cycle time and also the combined cost of packaging, transportation, and distribution. Globally, there is an increase in the number of e-commerce companies, and contract packagers are experiencing the growing demand from these companies.
Growing Consumption of Pharmaceuticals is Driving Market Growth
The growth in advancement and research in the pharmaceutical industry has resulted in the introduction of new drugs, with greater performance compared to their predecessors. Recent improvements in medical sciences and additions to medicines already available for numerous diseases and deficiencies, is driving the contract packaging market, indirectly, as the necessity of packaging the medicines has multiplied rapidly. Pharmaceutical organizations are now outsourcing the job of packaging end-products to organizations skilled labor, specialized in handling the packaging of medicines. Pharmaceutical packaging of drugs is a vital aspect, as the product should be safe for patient’s consumption. This may not be a forte in the pharmaceutical organization, but for contract manufacturing. The need to create specialized packaging has boosted contract manufacturing. Furthermore, increasing old population, stringent regulations by governments for packaging, and escalating public interest toward innovative packaging are some of the factors that are driving the pharmaceutical contract packaging segment.
Food End-user Industry has the Largest Market Share
The contract packaging industry serves diverse functions, furnishing solutions for FMCG across nearly every consumer sector, with the food industry being a major beneficiary. As a result, packaging reflects a range of influences, from personal consumer preferences to larger economic forces, like free-market competition and mass marketing. Food products continue to furnish a large share of contract packagers’ business, and it won’t shift dramatically in the coming years.Consumers are becoming increasingly demanding and with short of time are seeking out convenience food solutions that display a progress from the more traditional processed foods. The expectations of food quality is increasing, and the growing awareness presents new challenges to retailers, packers, and packaging suppliers. Rising sales of convenience-foods and developments in convenience-food packaging have been a major feature of the packaging markets, recently. In order to cope with the rising demand, major food industry players are depending on contract packagers to package their products, so that they can focus on providing more quality food, to satisfy the consumer. These factors are set to boost the growth of the contract packaging market in the food industry.
North America to Dominate the Market over the Forecast Period
North America holds the major share in the contract packaging market. The United States holds majority share in this region. The contract packaging sector in the United States is rapidly growing due to the increasing demand for packaging in segments, like food & beverages, pharmaceuticals, beauty care, and others. Contract packaging companies in the United States have learned to adapt to challenging business conditions. The companies are also becoming aware of the intense global competition, cost pressures, and highly variable demand from OEMs. This environment is rapidly boosting the contract packaging market in the United States. Many European companies, like the Langen Group and Persson Innovation, are invested in the United States segment.
Key Developments in the Market