Time-efficiency and Customization – Key Aspects to Distinguish Brand Image
In recent times, the success rate of e-Commerce channels has become the yardstick to determine the growth potential of the contract packaging market. Numerous industries – food, cosmetics, pharmaceuticals, and agriculture – are progressively switching to online distribution channels to broaden their exposure in other parts of the world.
At the same time, co-packers, or market players, are hard-pressed to work on their time-efficiency and customization approach to improve the brand images of their clientele. However, the environmental implications of materials used for packaging could derail the contract packaging market from realizing its true revenue potential.
Analyzing the various growth determinants and impeders at a microscopic level, analysts at Transparency Market Research (TMR) foresee an above-average expansion pace of the contract packaging market, at an estimated CAGR of ~7% during 2019-2027.
Bottling to Remain Leading Service in Contract Packaging Market
The TMR study finds that, in 2019, revenue from bottling services will account for ~32% of the market share, while the prominence of labelling will grow at a significant rate during the forecast period. Bottles remain the preferred choice of consumers, on account of the greater transparency offered by them, which implies that, players in the contract packaging market need to intensify their focus on bottling services. However, as labelling becomes a crucial marketing instrument, end users demand specific labelling on their products to disseminate proper brand information to consumers.
Besides this, as consumers begin to read the labels on food products and beverages, the food industry turns into a lucrative end user to target labelling and bottling services. While, the recent uptake in the online sales of cosmetics is projected to augur sustainable growth opportunities for the labelling segment.
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Acquisition-oriented Growth Strategies – Pursuit of Scope and Quest for Scale
Co-packers rely on the horizontal growth strategy to strengthen their vertical market movements. Among the other horizontal growth tactics that include partnerships and collaborations, strategic acquisitions are found to have a profound influence on the growth of market players. At a granular level, acquisition is further segmented on the basis of scope and scale, and co-packers in the contract packaging market illustrates both these strategies.
The merger of Cloud Packaging Solutions LLC and Ryt-way Industries represents a scale-oriented acquisition strategy since both companies offer contract packaging services. This acquisition resulted in a better market position for these companies. On the other hand, scope-based acquisition involves two or more companies with different purviews and application areas. While the scale-based strategy offers broad geographical exposure, a scope-oriented strategy bundles the packaging services, which widens the application areas of these companies.
Other effective strategies to compete in the contract packaging market include the integration of automated processes and investments in packaging equipment, in order to optimize uptime by avoiding frequent maintenance and breakdown costs. In addition, efforts expended towards the development of customized and new design packaging models will help achieve higher retention of the clientele base.
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Continuous Regulatory Changes in Packaging Industry to Escalate Market Growth
- According to Transparency Market Research’s latest market report on the contract packaging market for the historical period of 2014-2018 and forecast period of 2019-2027, increased complexity of package requirements is expected to drive market growth.
- Globally, revenue generated by the contract packaging market is anticipated to reach ~US$ 34 Bn in 2019 and is projected to expand at a CAGR of ~ 7% in terms of value during the forecast period.
- The global contract packaging market is projected to reach a value of ~US$ 56 Bn by the end of 2027.
- One of the key drivers pushing the growth of the contract packaging market is the increased complexity of package requirements. Changes in regulations in pharmaceutical companies, such as new serialization requirements, demand huge amount of expertise to effectively and efficiently package pharma products. Pharma companies usually don’t have this kind of expertise internally, which is driving them to approach contract packers.
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