Packaging and Labeling Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 1,600 contract packaging establishments in the US generate revenue by charging fees (or a "toll") for packaging customer products in finished form. Turnkey packaging refers to projects in which the contract packager purchases inventory for the customer and takes responsibility for final packaging services. Firms may also generate revenue through telemarketing services or the resale of merchandise.
Unpredictable Work Flow From Customers
Demand for contract packaging firms can be extremely unpredictable.
Capital-Intensive Operations
Packaging operations require significant investments in plants, equipment and machinery.
Industry size & Structure
The average packaging contractor operates out of a single location, employs fewer than 20 workers, and generates $8-9 million annually.
- The packaging and labeling services industry consists of about 1,600 firms that employ 65,000 workers and generate $10 billion annually.
- Firms that generate less than $10 million annually account for 88% of industry participants but only 25% of revenue.
- Firms that generate between $10 million and $25 million annually account for 7% of participants and about 19% of revenue.
- Firms that generate more than $25 million annually account for 5% of participants and about 56% of revenue.
- Some large contract manufacturers, such as Aphena Pharma Solutions and Hearthside Food Solutions, have integrated contract packaging operations.
Industry Forecast
Packaging and Labeling Services Industry Growth
Recent Developments
Sep 23, 2024 - Printed Label Market to Notch Solid Growth
- The global market for printed packaging labels is projected to reach $44.8 billion in 2024, then post average annual growth of 3.8% through 2029, reaching a value of $54.1 billion, according to market research firm Smithers. Over the same period, printed label volumes are expected to rise 4.4% per year from 1.34 trillion A4 print equivalent (the European equivalent to a US letter-size sheet of paper) in 2024 to 1.66 trillion in 2029. Food and beverage are the largest end-use printed packaging label markets; together, they have a market share of nearly 65%. Trends driving the printed packaging label market include new graphic and embellishment techniques, and improved interactivity and security features.
- US retail sales, a demand driver for packaging and labeling services, rose 1.4% in August 2024 compared to July. Retail sales improved in most major categories, led by sporting goods, hobby, musical instrument, and book stores, which saw sales increase by 11.5%. Some other retail segments that experienced the most significant growth in August included clothing and clothing accessories stores (7.5%), furniture and home furnishings stores (4.5%), electronics and appliance dealers (2.8%), motor vehicles and parts dealers (2.8%), and health and personal care stores (2.5%). Pockets of retail sales weakness in August included building material and garden equipment and supplies dealers (down 2.6%), gasoline stations (-1%), and food and beverage stores (-0.1%).
- Contract packaging insiders shared tips for leveraging AI in the industry during a panel discussion at a recent trade event of the Association for Contract Packagers and Manufacturers (CPA) and the Chicagoland Food & Beverage Network, according to Packaging World. To glean valuable insights from operations, experts suggest identifying the firm’s most valuable machinery and connecting them, possibly including remote access. An early win is to leverage machine data to predict machinery breakdowns before they occur and perform predictive maintenance to reduce downtime and waste. Contract packagers must also identify cybersecurity risks to protect their data and that of their customers and suppliers. Industry experts also suggest hiring an AI specialist to oversee the company’s AI integration efforts.
- While ecommerce sales have slowed in 2022 and 2023, worldwide online sales are forecast to see average annual growth of 8.9% and reach $6.8 trillion by 2028, up from $4.4 trillion in 2023, according to a recent report by Forrester. US ecommerce sales are projected to rise from $1 trillion in 2023 to $1.6 trillion by 2028 when online sales are forecast to account for 28% of total US retail sales. Ecommerce sales are expected to rise amid the growth of online marketplaces, the popularity of buy-online-pick-up-in-store (BOPIS), social commerce, and online grocery purchases. Improving online sales could spell an opportunity for packaging and labeling firms that provide services to internet retailers.
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