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
Nov 25, 2024 - Steady Growth for Package Printing Market
- The global market for packaging printing was valued at $512 billion in 2024 and is projected to post average annual growth of 6.3% through 2029, reaching a value of $695 billion, according to market research firm Smithers. Key demand drivers include population growth and increased urbanization. Populations migrating to cities tend to boost packaged goods consumption, especially for food and beverage products. As the ranks of the global middle class grow, higher discretionary income, particularly in Asia, is expected to boost demand for printed packaging.
- Amid higher advertising costs and struggles for shelf space, some smaller consumer product brands are differentiating themselves through unconventional packaging, according to The Wall Street Journal. Examples include sunscreen in whipped cream canisters, gin in a motor oil can, and water in tallboy aluminum beer cans instead of plastic bottles. Packaging that surprises consumers can help new brands stand out on crowded shelves and even generate free advertising if they catch fire on social media. However, unusual packaging design is primarily confined to start-up brands. Established brands are often limited by large runs on standardized production lines, and jarring shifts in packaging design can confuse or turn off existing customers.
- 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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