Contract Packaging Market Size, Share & Growth Report | 2031

Report Description

The global contract packaging market size was valued at USD 55.64 Billion in 2022 and is expected to surpass USD 100.58 Billion by 2031, expanding at a CAGR of 6.8% during the forecast period, 2023 to 2031. The global contract packaging market growth is attributed to the rising stringent quality requirements and outsourcing of pharmaceutical packaging in emerging countries.

Contract packaging, also known as co-packing or simply co-packaging, is when a business hires another company to manage and carry out its packaging needs. The hired company stores the packaging products in a warehouse and distributes them. Many companies, don’t have time to invest or build their packaging facilities. Therefore, these companies hire a contract packaging company with the packaging equipment and the knowledge of managing the packaging supply chain.

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Contract packaging companies include several packaging products such as liquid dispensing & packaging, military-grade packaging, blister packing, sterilization, shrink-wrapping, and cardboard package designs. Contract packaging services help a design company with a cost-effective and attractive packaging system.

A contract packaging company needs to have an experience with various types of packing and offer a various solution to the hiring company. Contract packaging companies provide essential services such as wholesale, bulk manufacturing, cargo shipping, retail, original equipment manufacturing (OEM), and industrial equipment to various industries.

Contract packaging companies or contract packagers focus on different areas and types of packaging services. Large-scale contract packaging companies provide high-volume packaging operations and small-scale contract packaging companies focus on detail-oriented and small-scale promotions. A contract packager can provide additional support in terms of taking on projects beyond the company’s capacity. Contract packager can also be a contract manufacturer. For accompany, the contract manufacturer can provide both creating and packaging products.

Package design has a wide range of contract packaging for product shipment. Some of the services that packaging contractors can offer are packaging design, packaging testing, product packaging, labeling services, and shipping services. Contract packaging offer benefits such as less investment, high profit, flexibility, quick output, seasonal packaging, optimization of the manufacturing process, and guarantee of sustainability.

COVID-19 Impact on Contract Packaging Market

The COVID-19 pandemic had a negative impact on the global contract packaging market, as production by various end-user industries involved in contract packaging had halted during the pandemic. The lockdown, social distancing policies, travel It significantly lowered the growth of the global contract packaging market. This has resulted in the rebuilding of the major end-use industries and contract packaging companies.

Contract packaging manufacturers have started production at their full capacity after the first quarter of 2022 and are expected to boost the global contract packaging market during the forecast period.

Contract Packaging Market Dynamics

The global contract packaging market research report presents a complete overview by providing detailed information about the current market trends, existing drivers, growth opportunities and potentials, and emerging challenges. The contract packaging market report has up-to-date insights about market dynamics and market scenarios that can shape the overall market performance and output during the forecast period, 2023 to 2031.

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Major Drivers

Increasing demand for the e-commerce industry

The increasing demand from the e-commerce industry is expected to drive the global contract packaging market growth. Increasing number of e-commerce companies across the globe demand for packaging solutions to provide the needs of customers in a better way.  Modern and advanced technologies are widely adopted by e-commerce packaging businesses.

It drives the innovation for significant consumer packaged goods and offers end-to-end services for a startup selling through the e-commerce supply channel. co-packers serve as a storage arm, a packaging production arm, and a procurement arm to accelerate the supply chain and the supply chain speed to offer the quickest client experience.

Rising applications in the pharmaceutical industry

The pharmaceutical industry has experienced extreme growth during the pandemic. Drugs that treat virus symptoms and vaccines that help prevent the virus transmission are the two main products that have experienced tremendous demand during the pandemic, which is supporting the growth of the pharmaceutical industry.

Manufacturers are increasingly focusing on the development of vaccines and drugs to combat the virus. There is a great demand for cost-effective and convenient contract manufacturing solutions for these products. The contract packaging ensures that packaging not only secures the product but also fulfills the governing requirements for the local authorities where it will be marketed. In the coming years, these factors are expected to prompt the global contract packaging market growth.

Existing Restraints

High recycling costs and strict government regulations

The pharmaceutical, food & beverage, and cosmetic product industries are the main end users of contract packaging. These products are usually packaged with various materials including metal, plastic, and paper. Due to incorrect concentrations or quality degradation, these materials may cause the packaged items to be damaged, which affects the final product.

Several governmental organizations such as EU food, have established contract materials regulations for exporting, importing, or manufacturing food packaging materials. Europe has launched numerous state and national regulations to decrease the use and disposal of particular packaging materials as well as order the least amount of recycling requirements. Therefore, high recycling costs and strict government regulations will retrain the global contract packaging market in the coming years.

Emerging Opportunities

Developments in the food & beverages industry are anticipated to create lucrative opportunities for the key market players

The rapid growth of the food & beverage industry is projected to bring potential growth opportunities for the key market players in contract packaging. Increasing demand for various packaging products for growing sales such as rigid packaging, pharmaceutical packaging, luxury packaging, and flexible packaging drive the market. The need for contract packaging services, design services, warehousing services, and logistic services boosts global contract packaging market growth.

Strong growth in smart packaging technologies

Strong growth in smart packaging technologies is one of the key factors that are anticipated to support the contract packaging market over the forecast period. Contract packaging would involve the incorporation of technologies such as desiccants &oxygen scavengers, labels &devices, antimicrobial materials, and temperature control packaging that controls or monitors the environmental conditions to confirm if the product is sustained at the proper temperature.

Scope of Contract Packaging Market Report

The report on the global contract packaging market includes an assessment of the market trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Market Segment Insights

Plastic material segment to expand at a significant growth rate

Based on material, the global contract packaging market is segmented into glass, metal, plastic, paper & paperboard. The plastic segment is expected to expand at a significant growth rate during the projected period, due to its lower cost. Contract packaging has resulted in high demand. Plastics are generally lightweight and durable, commonly used plastics such as PET, LDPE, and HDPE. Plastic material used for contract packaging are chemical resistant, corrosion resistant, strong, resistant are fairly high temperatures and recyclable.

Paper & paperboard segment is also anticipated to hold a key market share in the coming years, due to increasing awareness regarding the negative impact of the excessive use of plastic materials on the environment. Paper & paperboard are easy to dispose or recycle, which increases the demand for packaging products made with these materials. Paper & paperboard are matted or felted sheets, usually composed of plant fiber. Paper & paperboard care used to make custom folding cartons, mailers & displays, rigid boxes, thermoform packaging, and others.

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Primary packaging segment to register a considerable CAGR

On the basis of packaging type, the global market is segregated into secondary, primary, and tertiary. The primary segment is projected to grow at a considerable CAGR of 10.47% during the forecast period. By using primary packaging, a user can protect and maintain the product from any external condition, spoilage, and damage.

Primary packaging comes in direct contact with the product, and it is the first packing layer in which the product is wrapped. Primary packaging is essential to many businesses including the food & beverage industry to retain the freshness of food products. The primary contract packaging solutions are used in several industries to concentrate on producing the highest quality product and to meet consumer standards.

The secondary packaging segment is anticipated to expand the market, due to increasing demand for safety, secondary containment, physical &barrier protection, protection, and compliance with regulations. Secondary packs are the consumer’s first experience with the brand. Common secondary packaging goods such as cardboard boxes, loose-fill, small inflatable air pillows, cardboard cartoons, plastic crates, labels, and bubble wrap.  Brands combine secondary packs with a normal packing style for the products to be recognized on aisles.

Tertiary packaging segment is anticipated to register rapid growth in the coming years, as tertiary packaging helps to protect the secondary packaging. Tertiary packaging speeds up the transportation process and confirms the safe handling of commodities or grouped packaging. The primary uses of tertiary packaging are for product protection and transportation.

Food & beverage segment holds the significant growth

Based on the end-user, the global contract packaging market is segmented into pharmaceutical, personal care & household, agriculture, food & beverage, cosmetics, and others. The food & beverage segment is expected to dominate the market during the forecast period and is projected to cover a market share of 70% in 2022.

Consumers are increasingly focusing on the labels on food & beverage products, which makes the food industry a profitable target for labeling and other contract packaging services. The food & beverage industry is the major end-user for contract packaging all across the globe. Product packaging is available at the moment of purchase and is only responsible for the product reputation of the producers like groceries and beverages. The packaging determines the product value and how well it sells.

The personal & household segment is estimated to hold a key market share during the forecast period, owing to increasing demand for personal and household products across the globe. The personal care & household segment includes products such as lotions, body balms, deodorants, and lip balms for contract packaging. While focusing on their primary business several manufacturing companies also outsource the packaging of their products to third-party packaging.

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Boxing & cartoning segment to dominate the market share

On the basis of service, the global contract packaging market is divided into boxing & cartoning, labelling, bottling & filling, wrapping & bundling, bagging & pouching, clamshells & blisters, and others. The boxing & cartoning segment is projected to have ahigh CARG and to dominate the market share during the forecast period.

The boxing & cartooning segment includes case forming & loading, case sealing, product weighing & loading, and vertical bagging & boxing system integrates bag forming fully automated systems, which significantly lowers labor costs and increases the material. Increasing the packing rates, lower labor costs, and lower material prices are particularly creating with high-speed packaging lines.

North America to dominate the market

In terms of regions, the global contract packaging market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. The market in North America is expected to dominate the global market during the projected period, due to the rapid industrialization and wide presence of large number of players in the region. Growing disposable income leads to high consumer spending, which boosts the contract packaging market growth in North America.

Europe holds the second-largest market share and is expected to surpass USD 36.51 billion by 2030, expanding at a CAGR of 10.25%. The most populated country in the region is Germany. Germany holds the largest market share in the region for products used in home care and health care.

Businesses in Germany are implementing new packaging strategies to improve aesthetics and ensure sustainability. Due to the increase in viral infections and many strict government safety standards, hospitals are focusing increasingly on the sterile and disinfected packaging of medical devices, and the packaging of healthcare devices is growing in Germany. The retail industry in the UK is increasing steadily and providing plenty of opportunities for the packaging business to develop.

Asia Pacific holds a significant share of the global contract packing market, due to rising consumer spending in the region. The market in Asia Pacific is a fast-growing market across the globe, due to the rising per capita income and growing population int the region. The governments are promoting marginal small and medium-scale industries, resulting in rapid industrialization and urbanization. This is expected to propel the market over the forecast period.

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