The content of this report will be updated with the latest scenarios based on the global COVID-19 Pandemic
The Contract Packaging and Fulfillment Service Market is expected to register a CAGR of 10% during the forecast period (2020 - 2025). The expansion of end-user industries, like Food and Beverage and Pharmaceutical, the growing trend among these companies to outsource their packaging and fulfillment services to gain competitive advantage is expected to drive the market significantly.
- In the recent years, the contract packaging and fulfillment market have witnessed significant growth owing to the changing preference of manufacturing firms toward contract packagers, as they are increasingly focusing on cost optimization, to enhance their core competency. Many industry experts claim that these services can reduce operational costs by 7%-10%, due to the reduced maintenance costs of machines and labor costs.
- Many governments are also mandating stringent laws and regulations on the labeling and packaging of the drugs and food products, which is further expanding the scope of contract packaging. For instance, in the US, due to similar laws, the country witnessed an increase in the demand for contract packaging in the pharmaceutical industry, owing to the inability of an in-house packaging facility for few pharmaceutical companies in this region.
- In developed markets such as Europe and North America, the need to enhance quality is also forcing companies to invest in the studied market. In these regions, the role of contract packaging and fulfillment service providers have shifted from temporary facility for external packaging to a strategic innovation partner, which ensures even shorter delivery times and can produce even smaller production batches.
Key Market Trends
Contract Packing is Expected to Witness Significant Growth
- The growing asset tracking applications and the emergence of smart labels are expected to drive the demand for contract packaging in multiple regions. Although contract packaging services are anticipated to dominate the studied market, however, the market is also witnessing a surge in demand for other services.
- In regions like Asia and Latin America, companies are opting for contract packaging and fulfillment service providers to gain competitive advantage. The recent COVID-19 outbreak has resulted in a surge in demand for the e-commerce sector and online-medicine purchase. This has also resulted in increased investment in the studied market, especially in Europe and Asia.
- Multiple organizations like Unilever, Mars, and Kraft are also opting for the full-service concept, where contract packaging company also purchase materials and raw materials and to take care of logistics in addition to contract packaging.
- The growth of the e-commerce sector, globally, is also emerging as one of the major factors driving the studied market growth. This trend is also motivating fulfillment and logistic company to utilize the packing opportunity to have control over the value chain. Many of the e-commerce fulfillment companies provide fast and easy integration between Web Stores and their in-house WMS (warehouse management system).
Europe is Expected to Witness Significant Growth
- The market is also witnessing the emergence of associations and organizations to create more awareness in the studied market. European Co-Packers Association and Contract Packaging Association are such few examples. There are around 1,000 contract packaging vendors active in Europe, out of which 40-50% are small companies.
- According to the European Co-Packers Association(ECPA) data, the European contract packing market is growing significantly, with 81% of vendors reported growth between 2016 and 2018, and 30% planning to invest in several packaging lines by 2022.
- The e-commerce industry is also growing rapidly across the region by nearly 7% annually, and the UK holds third place worldwide for most parcels delivered each year at 1.9 billion packages.
- The Western European country, France also has a significant online retail market that’s anticipated to reach over EUR 115 billion by the end of FY 2020. According to the Centre for Retail search, online sales in France accounted for 6% of total retail sales, and e-commerce accounted for 4.27 percent of the country’s GDP in FY 2019.
The Contract Packaging and Fulfillment Service Market is highly competitive owing to the presence of multiple players in the market operating their business in domestic and international markets. The market appears to be moderately concentrated with the major players adopting strategies like expansion among others in order to stay competitive and expand their reach. Some of the major players in the market are Aaron Thomas Company, ActionPak Inc., Assemblies Unlimited among others.
- Jan 2020 - Ameripac expanded its presence to the eastern US Region with a new facility in Pennsylvania. This was primarily due to the growing demand the company is witnessing.
- Jun 2019 - Assemblies Unlimited announced that it is expanding its packaging and assembly operations into multiple United States markets. The company is also adding staff and services in Los Angeles as well as in the New York area.
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