The global eco-friendly packaging market is estimated to grow from USD 207.86 billion in 2022 at 7.6% CAGR (2023-2032) to reach an estimated USD 430.38 billion by 2032.
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The definition of eco-friendly packaging presents challenges due to its contextual nature. Eco-friendly packaging is any packaging that minimizes harm to both humans and the environment compared to alternative options. It lacks standardized and universally applicable parameters for measurement and benchmarks for comparison. Consequently, the eco-friendly label is subjective and relies on the perspective of the individual assessing the materials. Nevertheless, as a general guideline, eco-friendly packaging encompasses materials intentionally designed to prevent environmental pollution, safeguard the well-being of humans and wildlife, and contribute to a circular economy.
The topic of eco-friendly packaging continues to dominate discussions throughout the entire packaging value chain as corporations prioritize setting ambitious targets to enhance their sustainability performance. This emphasis is reinforced by the findings of our recent global survey conducted among packaging purchasers across various industries. The survey reveals that approximately 75% of organizations have explicitly committed to eco-friendly packaging. However, only a limited 30% of these organizations are adequately prepared to meet regional regulatory standards and fulfill their internal sustainability goals. Furthermore, less than 30% of organizations have established clear metrics pertaining to recyclability, eco-friendliness, or the incorporation of recycled content in their packaging materials. These findings highlight the gap between eco-friendly aspirations and the implementation of sustainable practices within organizations.
Eco-friendly initiatives are gaining increasing attention, particularly from various consumer segments. Consumers now prioritize products that are sourced and manufactured sustainably. This consumer preference has resulted in sustainable products experiencing a remarkable growth rate of 2.7 times faster than traditional goods, despite the price premiums associated with eco-friendly alternatives. Policymakers and regulatory bodies are implementing measures targeting single-use packaging in response to public sentiment. Additionally, they are imposing extended producer responsibility (EPR) on consumer-facing products and emphasizing reducing Scope 3 emissions. Currently, Europe is at the forefront of these regulatory efforts. However, Asia-Pacific and North American governments are also developing similar legislation. The prevailing trends in consumer preferences, regulations, and government actions collectively underscore the growing importance of sustainable packaging in broader sustainability initiatives.
Regarding consumers' most favoured eco-friendly product categories, a substantial majority of millennials (60%) opt for environmentally friendly food options. Additionally, cleaning products and clothing emerge as popular choices, particularly among Generation Z, with 56% expressing a preference for sustainable apparel. Moreover, water bottles and coffee cups are prominently featured on the list of preferred eco-friendly products. It is worth noting that approximately 20% of respondents also indicated a penchant for eco-conscious appliances, indicating a growing trend in sustainable consumer behaviour. Furthermore, a significant proportion of women (34%) prioritize sustainability when selecting makeup and skincare products.
In the realm of consumer preferences for eco-friendly products, the categories mentioned hold substantial appeal. Millennials, in particular, demonstrate a strong inclination towards eco-friendly food choices, highlighting their commitment to sustainable consumption patterns. The popularity of cleaning products and clothing among Generation Z underscores their increasing awareness and adoption of sustainable practices. Additionally, including water bottles and coffee cups as favored eco-friendly products suggests a growing recognition of the importance of reducing single-use plastic items.
Notably, a notable segment of the population, comprising around one-fifth of respondents, prefers eco-conscious appliances. This indicates a noteworthy shift in consumer attitudes, as individuals increasingly prioritize energy-efficient and environmentally friendly options in their households. Moreover, the significant proportion of women actively seeking makeup and skincare products with sustainability in mind emphasizes the rising demand for environmentally responsible beauty options.
Overall, this data signifies the evolving landscape of consumer preferences, where green products are gaining traction across various categories. Businesses must recognize these trends and align their offerings with sustainable practices to cater to the growing demand for environmentally friendly alternatives. By understanding and catering to consumer preferences for green products, companies can capitalize on the opportunities the burgeoning market presents for sustainable goods and services.
Prior to the COVID-19 crisis, sustainability was a major focus across the entire packaging value chain. Consumers were increasingly aware of the environmental impact of the packaging industry, prompting legislative responses worldwide. Recognizing the importance of sustainability as part of their value proposition, fast-moving consumer goods (FMCG) and retail companies made significant commitments to improving the recyclability of their packaging. This combination of consumer demand and regulatory pressure significantly influenced upstream players in the packaging industry, who were expected to contribute to meeting these commitments.
However, during the early stages of the pandemic, hygiene concerns took precedence over the push to reduce single-use packaging in several jurisdictions. Consumer sentiment shifted, and there was an increased emphasis on food safety, particularly in countries heavily impacted by the pandemic. This shift in consumer behavior is also reflected in surveys, which indicate heightened concerns regarding food safety.
It is important to note that while the pandemic temporarily shifted focus away from sustainability, the long-term commitment to sustainability in the packaging industry remains strong. The industry is continuously adapting to find innovative solutions that balance the need for hygiene and safety with environmental concerns.
The increasing market demand for biodegradable packaging, primarily driven by the food and beverages industry, presents significant growth opportunities. Food and beverage manufacturers increasingly embrace sustainable practices by adopting reusable and recycled packaging materials. This strategic shift is driven by the objective of reducing packaging waste and aligning with stringent government regulations surrounding sustainability.
For instance, on April 6, 2023, California Olive Ranch introduces a new line of recyclable aluminium oil bottles, catering to the growing consumer demand for sustainable packaging solutions in the food industry.
By opting for green and eco-friendly packaging solutions, food and beverage manufacturers contribute to environmental conservation and cultivate a positive brand image among consumers—this consumer perception of brands committed to sustainability further fuels market expansion and fosters customer loyalty. The convergence of these factors has propelled the growth trajectory of the biodegradable packaging market in recent years.
According to Oaklins the biodegradable packaging is projected to witness substantial growth, reaching an estimated value of US$118.85 billion by 2026. This expansion is anticipated to be driven by a compound annual growth rate (CAGR) of 6.35% from 2021 to 2026.
The market's positive trajectory can be attributed to several factors, including increasing consumer awareness and demand for sustainable packaging solutions, stringent regulations promoting eco-friendly practices, and various industries' growing adoption of biodegradable materials. With these factors in play, the biodegradable packaging market is poised for significant expansion and presents lucrative opportunities for businesses operating in the sector.
For example, a prominent food and beverage company reduced its overall life-cycle emissions by transitioning to bio-based packaging materials. This strategic move allowed them to effectively minimize the environmental impact associated with their product packaging. By embracing sustainable alternatives, they demonstrated their commitment to eco-conscious practices and improved their brand reputation among environmentally conscious consumers. This proactive approach highlights businesses' potential to achieve sustainability goals and operational efficiencies through responsible packaging choices.
While biodegradable plastic is designed to be 100% compostable, the reality is that only a limited number of recycling plants possess the optimal conditions necessary for effectively composting it. This discrepancy between the intended compostability of biodegradable plastic and the need for suitable composting facilities poses a challenge in achieving widespread recycling and proper disposal of such materials. It underscores the importance of developing a comprehensive infrastructure that supports the proper handling and processing of biodegradable plastics, including expanding recycling plants with the conditions to effectively compost these materials. Addressing this gap in recycling capabilities is crucial to successfully integrating biodegradable plastics into the circular economy and maximize their environmental benefits.
Technological advancement plays a pivotal role in driving the growth of the eco-friendly packaging market. Recognizing the importance of sustainable practices, major market players have been proactively investing in research and development to create innovative technologies that enable a shift towards environmentally friendly packaging solutions, particularly in the food packaging sector.
Instance, an illustration of this is Huhtamäki Oyj, which introduced a ground-breaking ice cream packaging solution in 2022, leveraging paper-based technology.
This solution boasts a remarkable 95 percent composition of renewable bio-based material. By harnessing this innovative approach, Huhtamäki Oyj addresses the pressing issue of packaging waste and mitigates environmental pollution, thus reinforcing its commitment to sustainability.
The elevated cost of eco-friendly packaging represents a significant obstacle impeding market growth throughout the projected period. This can be primarily attributed to the substantial expenses associated with the recycling processing of packaging materials, coupled with the inherent volatility in the prices of raw materials. These factors are significant challenges for the market's expansion in the foreseeable future.
Instance, Jan 2023, Cascades, a renowned packaging solutions provider, unveils its latest offering of eco-friendly packaging specifically designed for fresh fruits and vegetables. By utilizing eco-friendly materials and employing sustainable production practices, Cascades aims to reduce the environmental impact of packaging while ensuring the freshness and protection of perishable produce. This launch further solidifies Cascades' commitment to sustainability and positions them as a trusted partner for businesses seeking environmentally friendly packaging solutions in the fresh produce sector.
The cost of eco-friendly packaging is influenced by multiple factors contributing to its higher price than conventional packaging alternatives. One of the key contributors is the intricate recycling process involved in producing eco-friendly packaging materials. Unlike traditional packaging materials, eco-friendly options require specialized recycling facilities and technologies to ensure proper treatment and transformation into reusable or biodegradable forms. The infrastructure and equipment necessary for such recycling processes entail significant capital investments, resulting in higher costs.
Moreover, the availability and accessibility of recycling facilities can also impact the cost of eco-friendly packaging. Transportation costs may rise in regions with limited recycling infrastructure as materials need to be transported to distant recycling centers. This logistical challenge further adds to the overall cost of eco-friendly packaging.
Fluctuations in the prices of raw materials, such as bio-based polymers or recycled materials, also contribute to the higher cost of eco-friendly packaging. Various factors, including market demand, supply chain disruptions, and regulatory policies, can influence the availability and cost of these materials. Uncertainties in the availability and pricing of raw materials pose challenges for manufacturers, making it difficult to maintain stable and competitive pricing for eco-friendly packaging solutions.
The rigid packaging segment has emerged as the leading player in the market, commanding a significant market share of approximately 56.2% in 2021. This segment is projected to maintain its dominance throughout the forecast period. The increased awareness and focus on environmental protection activities have driven customers to adopt bioplastics-based flexible packaging films across various end-use sectors, including food and beverage, agriculture, and other industries. This growing inclination towards bioplastics-based packaging materials in rigid packaging applications is expected to fuel the growth of the bioplastics market.
The surge in environmental consciousness among consumers has led to a shift in their purchasing behaviour, favouring products packaged in sustainable materials. Bioplastics, derived from renewable resources, offer a viable alternative to traditional plastic packaging. They are known for their eco-friendly properties, including biodegradability, compostability, and a reduced carbon footprint. As a result, businesses operating in the rigid packaging sector increasingly incorporate bioplastics into their packaging solutions to meet evolving consumer demands and adhere to sustainability goals.
The adoption of bioplastics in rigid packaging applications provides several advantages to businesses. Firstly, it enables companies to align their packaging practices with environmental regulations and standards. Governments and regulatory bodies are implementing stricter guidelines to promote sustainable packaging solutions, and by utilizing bioplastics, businesses can ensure compliance and avoid potential penalties or reputational damage. Secondly, incorporating bioplastics in rigid packaging allows companies to enhance their brand image and reputation. Consumers are becoming more conscious of the environmental impact of packaging materials and appreciate brands that prioritize sustainability. By utilizing bioplastics, businesses can showcase their commitment to environmental stewardship, attracting eco-conscious consumers and gaining a competitive edge in the market.
Furthermore, adopting bioplastics in rigid packaging can result in cost savings and operational efficiencies for businesses. While bioplastics' initial cost may be higher than traditional plastics, advancements in technology and economies of scale are driving down production costs. As bioplastic demand continues to grow, manufacturers are investing in research and development to improve production processes and reduce costs. Additionally, bioplastics offer opportunities for lightweight, which can lead to reduced transportation costs and lower carbon emissions throughout the supply chain.
In the business world, prioritizing sustainability and cost efficiency is crucial. One of the fundamental steps towards achieving these goals is reducing the number of materials used in packaging solutions. By embracing the principle of the three R's (reduce, reuse, recycle), businesses can effectively address the issue at its source and reap multiple benefits.
Reducing material consumption is a straightforward yet powerful strategy. Businesses generate less waste by consuming less, leading to immediate cost reductions. Additionally, this approach minimizes energy consumption and mitigates the by-products associated with disposal processes, contributing to a more environmentally friendly operation.
To achieve material reduction, businesses can start by avoiding unnecessary plastic wrappings and opting for more straightforward custom rigid setup boxes. This shift towards streamlined packaging solutions not only reduces the number of materials required but also enhances the overall customer experience. By focusing on functionality and eliminating unnecessary frills, businesses can achieve packaging that is both efficient and appealing to consumers. Furthermore, material reduction strategies have a direct impact on cost savings. Businesses can reduce their packaging costs and optimize their supply chain operations by using fewer materials. This, in turn, contributes to improved profitability and a competitive edge in the market.
Implementing material reduction practices also aligns with the growing consumer demand for sustainable products. Today's environmentally conscious consumers actively seek out brands that prioritize eco-friendly practices. By reducing packaging materials, businesses can strengthen their brand reputation, attract new customers, and foster long-term loyalty. In conclusion, adopting material reduction strategies is crucial to achieving sustainable and cost-efficient packaging solutions. By embracing the principles of the three R's and prioritizing material reduction, businesses can experience immediate cost savings, reduce energy consumption, and minimize waste generation. Moreover, this approach aligns with consumer expectations for eco-friendly products, providing companies with a competitive advantage in the market. Embracing simpler, custom packaging options will benefit the bottom line and contribute to a greener and more sustainable future.
Several prominent countries and regions have embarked on a significant journey to establish regulatory frameworks that prioritize sustainability, while others continue to adhere to the existing norms with minimal or no regulations in place. For instance, in the United States, 16 states have implemented comprehensive regulations focused on managing packaging waste, specifically addressing issues related to single-use plastics, shopping bags, and escalating recycling objectives. Numerous additional legislative proposals are currently awaiting approval within the next three years. In contrast, Europe has made remarkable progress in advancing sustainability initiatives compared to other regions. The "New EU Directive for Single-Use Plastics" has introduced measures to mitigate the release of the ten most commonly found single-use plastic items on European beaches. Moreover, specific countries, notably France, Germany, and the United Kingdom are surpassing the already stringent recycling regulations set by the European Union by implementing Extended Producer Responsibilities (EPRs). These countries are adopting more aggressive targets, imposing fees for non-recyclable packaging, and enacting supplementary legislation that mandates the use of recyclable packaging, establishes higher recycling objectives, and so forth.
In the Asian region, Thailand has made a significant move towards environmental sustainability by announcing a nationwide prohibition on the usage of single-use plastic bags at major retail establishments. This ban, effective from January 1, 2020, is part of Thailand's broader objective to completely eradicate single-use plastics by 2021 and mitigate plastic pollution in the environment. On the other hand, India has temporarily set aside its plans for a complete ban on single-use plastics. Still, it actively promotes heightened awareness campaigns and establishes more collection points to enhance waste collection and management.
In China, strict measures have been implemented to address plastic waste. The country has banned the import of plastic waste and enacted legislation to prohibit or reduce the usage of single-use plastics. Additionally, China has strongly emphasized enhancing recycling, recovery, and the reutilization of used plastics.
Historically characterized by limited sustainability commitments and sparse regulations until the early 2000s, Latin America has witnessed a notable shift in recent years. Between 2016 and 2019, several countries across the region approved or proposed various local and federal bills to promote sustainability. Noteworthy examples include Chile's ban on plastic bags within commercial establishments and Mexico City's prohibition on single-use plastics.
Overall, these developments in Asia, particularly in Thailand and India, as well as in China and Latin America, signify the growing recognition among businesses and governments of the need to address environmental concerns and embrace sustainable practices. Such initiatives present opportunities for businesses to adapt their operations, adopt eco-friendly alternatives, and contribute to a more sustainable future.
The competitive landscape of the eco-friendly packaging market is characterized by the presence of both established players and emerging startups. Several large multinational companies have recognized the market potential and have integrated sustainable packaging solutions into their product portfolios. These companies leverage their extensive resources, distribution networks, and research and development capabilities to develop innovative, eco-friendly packaging options.
Numerous specialized eco-friendly packaging companies have also emerged, focusing solely on providing sustainable solutions. These companies often leverage cutting-edge technologies and materials to develop biodegradable, compostable, recyclable, or renewable packaging. They cater to the specific needs of environmentally conscious businesses and consumers.
Major key players in the eco-friendly packaging market are: Mondi (U.K.), Segezha group (Russia), Klabin SA (Brazil), Billerudkorsnas (Sweden), Stora Enso (Finland), Daio Paper construction (Japan), Nordic Paper (Sweden), Glatfelter (U.S.), Gascogne Papier (Austria), Glatfelter, Corporation (U.S.), Tokushu Tokai Paper Co., Ltd. (Japan), Goodwin Robbins Packaging Company Inc. (U.S.),Oji Holdings Corporation (Japan), CTI Paper USA (U.S.),Canfor (Canada), Genus Paper and Boards Limited (India), Georgia-Pacific (U.S.), Canadian Paper packaging Ltd.(Canada), Fujian Qingshan Paper Co., Ltd. (China), Smurfit Kappa(US), WestRock Company (Ireland), SCG PACKAGING (Thailand), International Paper (U.S.)
Instance, May 2023, Holz-Bauer and Mondi introduce PelletBag: replacing plastic with paper.
Instance, March 2023, Mondi and ATS-Tanner launch paper band for food bundles and multipacks.
Segments covered in the report:
By Material Type
By Product Type
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