The contract packaging market refers to the industry that provides packaging services to companies on a contract or outsourcing basis. Contract packaging companies specialize in packaging products for their clients, typically manufacturers or distributors, who prefer to outsource their packaging needs to external service providers.
The contract packaging market refers to the industry involved in providing packaging and related services to businesses and product manufacturers on a contract basis. In this business model, contract packaging companies, also known as co-packers or contract packagers, take on the responsibility of packaging products on behalf of their clients, relieving them of the need to invest in packaging machinery, facilities, and labour.
Contract packaging companies offer a wide range of packaging services, including product packaging, labeling, assembling, and other related activities. These services can be customized based on the specific requirements of the client and the product being packaged. Contract packaging companies may handle a variety of products, such as consumer goods, food and beverages, pharmaceuticals, cosmetics, electronics, and more.
The "Contract Packaging Market" to a segment of the packaging industry where companies, known as contract packagers or contract packaging service providers, offer specialized packaging and related services to other businesses. In this market, businesses outsource their packaging needs to third-party companies that specialize in packaging and related services, allowing the business clients to focus on their core operations while benefiting from the expertise and capabilities of the contract packaging providers.
This market has seen significant growth due to several factors:
Cost Efficiency: Outsourcing packaging services allows companies to save costs on equipment, labour, and materials. Contract packagers often have specialized machinery and skilled personnel that can streamline the packaging process and reduce overall expenses.
Flexibility: Contract packaging companies can handle short-term or seasonal packaging needs without clients having to invest in additional resources or infrastructure.
Expertise: These service providers are experienced in the packaging industry and can offer valuable insights and best practices to enhance product packaging, ensuring that products are well-presented and protected during distribution and retail.
Scalability: Contract packaging services can scale their operations to meet fluctuations in demand, providing a reliable solution for businesses with varying production volumes.
Focus on Core Competencies: By outsourcing packaging, businesses can concentrate on their core activities, such as product development, marketing, and sales.
Contract Packaging Market size was valued at $52.1 billion in 2021, and is estimated to reach $102.8 billion by 2031, growing at a CAGR of 6.9% from 2022 to 2031.
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Commonly observed types of packaging offered by contract packaging firms are primary, secondary, and tertiary. Among these, the primary segment accounted for the largest contract packaging market share share in 2021, owing to surge in global trade. The market is analyzed with respect to different materials used for manufacturing packaging such as, plastic, glass, metal, and paper & paperboard. The market is mainly driven by rise in e-commerce and manufacturing sector. However, negative impacts of packaging materials constraints the contract packaging market growth.
In 2021, Asia-Pacific dominated the global contract packaging market, in terms of revenue, followed by North America and Europe. Moreover, the market in Asia-Pacific has grown with a high CAGR, owing to growth in use of contract packaging for pharmaceutical and consumer goods industry.
The advancements in packaging materials that have enabled the packaging to be more eco-friendly have increased their usability in many sectors, especially in food processing sector. Moreover, advancements in IT sector have also opened new opportunities for the contract packers and manufacturers to schedule their work more efficiently.
Furthermore, on the basis of end users, the food & beverage is anticipated to grow rapidly, during the forecast period, owing to introduction of eco-friendly packaging and rise in sales via e-commerce.
Furthermore, co-packers have adopted various strategies to enhance their position in the market and sustain the harsh competition. For instance, in January 2022, Sharp Services, LLC., a global provider of contract packaging and clinical supply services, opened a production facility in Heerenveen, The Netherlands. This new facility is established in order to facilitate packaging, storage and distribution of gene therapies.
However, during the pandemic lockdown, various service providers of contract packaging had to stop their business in countries such as China, the U.S., and India. This break directly impacted their sales. In addition, lack of manpower and raw materials, constricted supply of raw materials for packaging; and negatively influenced the growth of the market. However, after two years of COVID-19 outbreak and introduction of vaccinations, the severity of the pandemic has significantly reduced and key players in the market are recovering rapidly.
The key players profiled in the contract packaging market forecast report include Aaron Thomas Company Inc., AmeriPac Inc., Assemblies Unlimited Inc., Co-Pak Packaging, Assured Edge Solutions, Deufol, DHL, Hollingsworth, Green Packaging Asia, Jones Packaging, Kelly Products Inc., Sharp Packaging, Sonic Packaging Industries, Stamar Packaging, Sterling Contract Packaging Inc., Silgan Holdings Inc., and Wepackit Inc.
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