Packaging and Labeling Services

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.

Jul 27, 2026 - Judge Temporarily Blocks California Packaging Recyclability Law

• Packaging Dive reported that a federal judge temporarily blocked California from enforcing SB 343, a 2021 law restricting recyclability symbols and claims on packaging. Judge William Q. Hayes found merit in the packaging groups' First Amendment challenge and said the law may be broader than necessary, vague in its definition of recyclability, and likely to discourage companies from sharing environmental information. Supporters argue the measure prevents misleading claims and rewards businesses that invested in recyclable packaging, while industry groups say its standards do not reflect real-world recycling conditions. The pause may reduce immediate compliance and redesign work for packaging and labeling services providers, but continued litigation and differing state rules could sustain demand for regulatory reviews, label revisions, and market-specific packaging. A proposed federal labeling framework could eventually provide more consistent national requirements.
• A recent report by market research firm Smithers and UPM Specialty Materials projects that sustainability mandates, extended producer responsibility (EPR) fees, and recycling compatibility will increasingly shape food packaging through 2045. Based on responses from more than 230 packaging professionals, the study forecasts that fiber-based packaging's market share will rise from 37% in 2025 to 42% by 2045, while polymer-based packaging's share will fall from 53% to 33%. Plastics are expected to remain important but shift toward simpler, recyclable mono-material formats. Advances in barrier coatings should expand the use of fiber in food applications, although cost, performance, and compatibility with recycling systems remain challenges. Respondents expect recycling rates to improve, but collection, sorting, consumer participation, and infrastructure investment will limit progress. Packaging strategies must account for regional regulations, EPR exposure, and the recyclability of coatings, labels, adhesives, and other components.
• Packaging Dive reports that the war with Iran is driving sharp increases in plastic prices, supply disruptions, and prolonged instability across global packaging supply chains. Polyethylene and polypropylene costs have risen rapidly, and some manufacturers of flexible plastic packaging have implemented price hikes. These conditions could significantly strain the packaging services industry by increasing input costs, limiting material availability, and forcing companies to raise prices, delay production, or reconsider sourcing strategies. The conflict has tightened resin supply, disrupted petrochemical infrastructure, and slowed shipments through key routes like the Strait of Hormuz, while North American producers face rising demand and export pressure. Experts warn impacts could persist into 2027, with potential shortages, margin pressure, and long-term market turbulence affecting converters and suppliers alike.
• The Sustainable Packaging Coalition's (SPC) Impact 2026 event drew more than 800 packaging professionals to Nashville in April to address policy, materials, and recovery challenges shaping the industry’s future, according to Packaging World. Hosted by GreenBlue, the conference featured 45 sessions focused on looming policy deadlines, shifting material choices, and evolving recovery systems. Extended Producer Responsibility dominated with 12 sessions, while flexible films, paper packaging, and composting also received significant attention. Opening on Earth Day, GreenBlue executive director Paul Nowak called 2026 the "Year of the Relationship," urging realistic optimism, practical action, and collaboration. Speakers emphasized that progress depends on coordination among brands, suppliers, policymakers, and recovery systems, as companies work to turn sustainability goals into functional, scalable solutions.

Industry size & Structure

The average packaging contractor operates out of a single location, employs fewer than 40 workers, and generates $8-9 million annually.

• The packaging and labeling services industry consists of about 1,600 firms that employ 64,400 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.