MARKET OUTLOOK
The global protective packaging market was valued at USD 30.12 billion in 2022 and is expected to reach USD 43.26 billion by 2028, growing at a CAGR of 6.22%. The market growth is recognized by the surge in online shopping sites & applications and the growth of international trade in products such as medical devices, electronics equipment, and other fragile items.
Protective packaging is used in products such as hot drinks, beauty and personal care products, and home care products. The packaging cost is low, innovations have been made in smaller pack sizes, and the consumers appreciate the mini and micro packs in these categories. The products comprise bags, sachets, pillow packs, envelopes, paper fill, protective mailers, bubble packaging, air pillows, and foam packaging. The trends have changed, and packaging today is seen as an integral segment of the product. Efforts have been made towards making it more sustainable for the environment. The increased complexity and number of SKUs demand unique packaging for the products in the protective packaging market.
The protective packaging market in North America is expected to grow moderately. The YOY increase in 2022 over 2020 is significantly higher than the previous year due to the rising food consumption and growth of the retail sector. The U.S. will be the highest revenue generator in the region during the forecast period. The economic data points such as consumer spending, frequency of eating out, retail industry growth rate, and household income indicate that the North American protective packaging industry performance will be above average during the forecast period. Furthermore, protective plastic packaging dominates the global protective packaging market as several polymer resins can create newer packaging. The polymer price fluctuation concerns protective plastic packaging as raw materials (films and resins) constitute more than 50% of the net sales. However, the market can pass on these to customers with price increases. Although the materials used are of low cost, the huge volumes used by the market tend to make a small price fluctuation to have a big impact on the industry.
MARKET TRENDS & DRIVERS
Growing E-commerce Industry
With the rapid growth of the e-commerce industry globally, e-commerce sales have also grown at a healthy rate globally, particularly during COVID-19. This growth has created a demand for safe and efficient protective packaging in various end-user segments such as F&B, pet food, healthcare, and others, as a seamless consumer experience is critical to brand reputation and loyalty and propelled the protective packaging market growth. Sometimes, products sold in the retail environment do not have the same demand when sold online. Hence, it allows manufacturers and retailers to use different packaging formats and branding when sold online. Therefore, the sustainable advantages of lightweight, protective packaging play a crucial role in e-commerce. This lightweight packaging also helps the supply chain as more goods can be distributed easily.
Increasing Demand from the Healthcare Industry
The pharmaceutical industry is one of the major end-users in the protective packaging market. The major packaging products include blister plastic films, aluminum foils, and pouches. The wider adoption of blister packaging, replacing glass and rigid plastics, has resulted in higher usage of lidding films. Paper and plastic films are widely used in blister packs, followed by aluminum foil, mainly because of the higher cost associated with aluminum foils. A combination of all three or any two is also adopted based on the product to be packaged. The pharmaceutical packaging market in the United States is a major revenue contributor as most pharmaceutical players are in the region. North America is expected to have around 40-45% of the global pharma market value. The need to comply with FDA norms concerning packaging materials drives the pharmaceutical packaging market.
INDUSTRY RESTRAINTS
Recycling Challenges with Protective Packaging Products
Recycling protective pouches and other products is cumbersome and not economically viable, as separating those materials involves many processes. The recycling process involves the collection of sorting, waste, and recycling. The materials undergo shredding, washing, and categorizing plastic and extruding in these processes. The multilayer films include a combination of paper, foil, and plastic. Also, a combination of different polymers is possible, which would require investments in terms of machinery and technology. Unlike rigid plastic products, recycled protective packaging cannot be used for packaging pharmaceuticals and food as per FDA regulations. The recycled material can be used for other applications. The materials that are of low quality are disposed of or transported to energy recovery centers. End-users use only high-quality material output.
SEGMENTATION INSIGHTS
INSIGHTS BY MATERIAL
The protective plastic material segment holds the largest global protective packaging market share. Protective plastic pouches consume 60% less plastic than rigid packaging, with a higher product-to-package ratio. Consequently, it requires less energy to manufacture with lower emissions. The barrier properties of protective plastic pouches are enhanced by using a single substrate or a combination of different substrates. Co-extrusion or lamination are the two methods used in the industry to manufacture multilayer and multi-material protective packaging with the highest protective plastic weight. Multi-material products garner the highest share in the protective packaging market in 2022, majorly due to the belief in virus protection with many layers of packaging, with protective plastics having a larger volume consumption than protective paper and foil.
INSIGHTS BY TYPE
The global protective packaging market by type segments as flexible protective packaging, foam protective packaging, and rigid protective packaging. Flexible protective packaging will dominate the market during the forecast period. Flexible packaging includes protective packaging made from paperboard, plastic, foil, wax-coated paperboard, paper, and similar materials. These flexible packaging products are used in various applications such as personal care, pet food, healthcare, etc. There are various types of flexible packaging in the market, such as re-closable plastic bags, poly woven bags, etc. The flexible protective packaging market has prominent packaging trends in product protection, packaging design, consumer convenience, performance, and sustainability.
INSIGHTS BY APPLICATION
The consumer packaging application segment held the largest global protective packaging market share in 2022 and is growing moderately due to increased consumption. Pouches, blister packs, and strip packs, among others, are the major product categories that cater to the consumer market and are sold at retail stores. Industrial packaging includes packaging products used to transport goods from warehouses to retail outlets. The major industrial packaging products include FIBCs, stretch, and shrink films. The consumer packaging market is expected to grow faster than industrial packaging in protective packaging. As more industries adopt protective solutions, the two end-users are expected to bring in more volumes in the consumer protective packaging market, including the non-food and beverage industries. The pharmaceutical and medical devices industries mainly require pouches and blister packaging that utilizes protective plastic materials. The other application areas are also gaining traction. In personal care, rigid protective packaging is replaced with protective packaging, which is expected to increase in volume during the forecast period.
GEOGRAPHICAL ANALYSIS
The global protective packaging market is dominated by APAC, Europe, and North America, which held more than a 79.25% market share in 2022. The APAC market is largely volume-driven due to the growing retail landscape and organized packaging growth. The organized retail and packaging market has been pushing for advanced and expanded packaging techniques to provide quality products that can be sustained for longer. North America and Europe are the regions with more awareness of advanced packaging technologies and equipment and are the first to adopt any new trend.
In Europe, all the market segments are undergoing significant growth in protective packaging. Smaller households need single-serve options, and consumers significantly demand more product selections. This supports the general trend from rigid to protective packaging, providing greater convenience and fitting in better with current lifestyle needs. Innovative, protective packaging styles are meeting the trend for more convenience. High-volume trade countries such as Germany and France are expected to face challenges with Brexit, apart from countries such as Belgium and the Netherlands. The Brexit deal is expected to be disruptive during the forecast period when it is finalized. The packaging industry witnessed the highest consumption of plastics in 2022. The competition in Europe is intense on account of the highly fragmented market. Differentiation is the key factor for vendors operating in the low-cost, protective packaging market.
COMPETITIVE LANDSCAPE
Small and medium enterprises dominate a vast segment of the protective packaging market. The larger players have adopted an inorganic growth tactic to expand their operations in many regions. Moreover, the larger players have technological high-volume and strength product lines that have helped offset the cost differences. The smaller vendors in the global protective packaging market focus on customization, as the rivalry in the market is mainly based on features and price. The niche segment that does not have large volumes is largely dependent on smaller packaging companies.
The global protective packaging market has witnessed many M&A transactions in the last several years; the consolidation is expected to grow further, especially in Europe. More than 80% of the companies in the global protective packaging market have revenues of less than USD 200 million. The regulatory policies will favor vendors with the infrastructure to recycle and reuse packaging materials. Currently, the market lacks the infrastructure to recycle packaging materials.