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
                                      Source: Vertical IQ and Inforum

                                      Recent Developments

                                      May 22, 2024 - Steady but Flat Industry Growth
                                      • The packaging and labeling services industry is expected to experience slower sales growth in 2024 after a softening of demand in 2023. The industry’s year-over-year sales growth rose 33.2 in 2022 then fell to 5.82% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is expected to moderate further to about 1.8% in 2024 before rising to 4.1% in 2025. The industry is expected to post average annual sales growth of about 5.1% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                      • Consumer packaged goods firms are making progress in developing a paper-based bottle, according to The Wall Street Journal. Packaged goods firms, including Procter & Gamble, Coca-Cola, Diageo, and PepsiCo, hope to develop a shelf-stable paper bottle that can tempt consumers concerned about plastic pollution and the carbon emissions of glass. However, making a purely paper bottle that keeps drinks fizzy and doesn’t get soggy or leak has proven challenging. Paper bottles currently on the market have a plastic liner, which can make them hard to recycle. Danish packaging firm Paboco is working on a paper bottle with a plastic liner that’s less than 5% of the package’s weight, which the company says is thin enough not to interfere with the recycling process.
                                      • Even with the pandemic in the rearview, e-commerce spending has remained robust, and much of that online shopping is being fueled by hybrid workers who make purchases during the workweek, according to The Wall Street Journal. According to a report by researchers at Stanford University, Northwestern University, and the Mastercard Economics Institute, in 2023, consumers spent $375 billion more on online shopping than they would have if the pandemic had never happened. The study’s authors suggest much of that increase is due to people who still work hybrid or fully remote schedules. Sustained e-commerce demand is a significant business opportunity for contract packaging and labeling firms.
                                      • In 2024, the global thermal printing market has an estimated value of $35.8 billion, and the industry is expected to experience an average annual growth rate of 4.3%, reaching sales of $44.2 billion in 2029, according to a recent report by market research firm Smithers. Thermal printing uses heat to print human- and machine-readable images on plastic films and papers. Primary applications include labels, tickets, tags, receipts, records, and others that require just-in-time printing of lot numbers, transaction data, or other crucial information.
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