The PMMI report highlights a strong growth forecast for contract packaging and manufacturing, driven by consumer demand for innovative products, rising costs, and regulatory requirements.
The latest PMMI report reveals that the contract packaging and manufacturing (CP/CM) sectors are poised for significant growth. According to the report, over two-thirds of brand owners plan to maintain or expand their use of CP/CM services, a trend influenced by market demands, regulatory pressures, and the need for cost-effective production solutions.
One of the primary drivers of this growth is the increased complexity of consumer preferences, which requires frequent product updates and variations. Contract packagers can adapt quickly, offering the flexibility that brands need to remain competitive without making large capital investments in new equipment or facilities.
“For larger CPGs, outsourcing seasonal or limited-time products is far more efficient than setting up dedicated lines,” says Rebecca Marquez, PMMI's Director of Custom Research.
Moreover, Extended Producer Responsibility (EPR) legislation is expected to drive further change. As more states introduce laws mandating sustainable packaging and holding brands accountable for product lifecycle management, CP/CM providers are increasingly prioritizing recyclable materials and efficient, sustainable production practices.
PMMI’s research also highlights the importance of automation and AI integration within the industry. Automation not only helps reduce labor costs, a critical factor given ongoing labor shortages, but also supports the complex packaging demands of retail giants, which often require mixed product pallets with diverse configurations. Advanced robotic systems are being employed to meet these specific demands while enhancing speed and accuracy in palletizing and other packaging tasks.
Challenges, however, remain. For instance, switching to recyclable or post-consumer recycled materials can be difficult due to compatibility issues with existing packaging machinery. Companies often find that these new materials do not run smoothly on equipment designed for conventional packaging materials, adding to operational costs.
The report underscores a pressing need for investments in digital infrastructure, especially for smaller CP/CM providers. The integration of digital systems is essential for real-time monitoring, quality assurance, and maintaining operational efficiency as product variations increase.
- Growing Market Demand: Companies are increasing their reliance on CP/CM for flexibility and rapid product iteration.
- Sustainability Requirements: EPR laws are pushing CP/CM providers toward greener materials and practices.
- Technology Challenges: Upgrading to AI-enabled and automated systems remains costly but essential.
PMMI will showcase these trends and innovations at its upcoming Pack Expo event, where industry leaders will discuss solutions to challenges like greenwashing and the use of compostable materials.
This growth trajectory not only illustrates the expanding role of CP/CM services in the packaging industry but also reflects the evolving consumer and regulatory landscapes driving innovation.
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