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 1,500 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 $6-7 million annually.

    • The packaging and labeling services industry consists of about 1,500 firms that employ 69,700 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

                                      Jan 17, 2024 - Packaging, Print Market Poised for Growth
                                      • Some end users of packaging machinery are pausing orders for new equipment amid high interest rates and growing economic uncertainty, according to a recent State of the Industry Report by PMMI (The Association for Packaging and Processing Technologies). The report estimates packaging machinery shipments grew 3.4% in 2023, down from the 12.4% growth in 2022. However, the longer-term outlook is brighter. Demand for packaging machinery between 2022 and 2027 is forecast to experience average annual growth of 6.7%, led by pharmaceuticals (7.8% annual growth); food (7.3%); household, industrial, and agricultural chemicals (6.1%); personal care, toiletries, and cosmetics (6%), and beverages (5%).
                                      • US manufacturing activity contracted in December 2023 for the 14th consecutive month, according to the Institute for Supply Management (ISM). The ISM’s Purchasing Managers Index (PMI) in December rose to 47.4% from a reading of 46.7% in November. A reading above 50% indicates manufacturing expansion. December’s New Orders Index decreased by 1.2 percentage points to 47.1%. The December Production Index rose 1.8 percentage points to 50.3%. Of the 18 manufacturing industries tracked by the ISM, only primary metals reported growth in December. Sixteen industries reported contractions in December, including printing & related support activities; apparel, leather, and allied products; plastics & rubber products; machinery; nonmetallic mineral products; textile mills; petroleum and coal products; paper products; wood products; fabricated metal products; computer & electronic products; miscellaneous manufacturing; furniture and related products; electrical equipment, appliances, and components; transportation equipment; and chemical products.
                                      • The global value of the print and printed packaging market is expected to rise from $889.4 billion to $1.16 trillion by 2028, according to a recent report by market research firm Smithers. Over the forecast period, inkjet printing is expected to post the strongest gains with a compound annual growth rate (CAGR) of 9.7%. Print volume is expected to increase from 44.1 trillion A4 size (the metric version of 8.5”x11” paper) prints to 44.7 trillion by 2028.
                                      • Stakeholders – including consumer packaged goods (CPG) firms, packaging suppliers, and recyclers – will need to work together to improve recycling rates, according to speakers at the recent Packaging Recycling Summit. In a recent survey by PMMI (The Association for Packaging and Processing Technologies), about 18% of GPGs and contract packaging firms said they change packaging materials more than six times per year, up from 3% who said so in a similar survey at the start of the year. Frequent packaging changes can create consumer confusion around packaging recyclability and make efficiently sorting materials more difficult for recyclers. Industry experts suggest OEMs and packaging partners should collaborate with recycling firms to ensure packaging is easier to recycle.
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