Market Trends of Middle East And Africa Contract Packaging Industry
Increasing Demand in E-Commerce will Significantly Drive the Market
- E-commerce packaging companies are significant adopters and drivers of modern technology. The increasing number of global e-commerce companies is also fueling the industry's demand for packaging solutions to better cater to customers' needs.
- Additionally, with high variability requirements from Consumer-packaged goods (CPG) providers, customization along with speed in the supply chain creates a challenge for product offering companies via e-commerce, thus escalating the requirements from contract packaging companies for a customized e-commerce packaging solution, as they are built for flexibility, agility, and resourcefulness.
- Contract packers and fulfillment service providers operate on a smaller scale with limited volumes and fewer people involved in decision-making. As a result, they can implement e-commerce-ready packaging innovations more quickly. Furthermore, collaborating with e-commerce companies can shorten the path to optimized packaging for this rapidly growing channel.
- According to the USDA Foreign Agricultural Service, in 2023, the retail value, excluding sales tax of retail e-commerce in the United Arab Emirates, reached around USD 6.2 billion, up from USD 5.6 billion in the previous year. As retail sales increase, there is typically a higher demand for packaged goods, leading companies to outsource their packaging needs to contract packaging firms. This surge in demand can lead to increased opportunities for contract packaging providers, potentially prompting them to expand their operations or invest in new technologies to meet the growing needs of retailers.
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Beverage Industry to Witness Significant Growth
- With the increasing demand for essential infrastructure to process, beverage, and juice manufacturers have started focusing more on core activities. Manufacturers are looking forward to packaging vendors with a dedicated area to store the raw material by providing the right technical expertise and timely and cost-effective solutions while keeping in mind hygienic processing standards, which has given rise to the demand for contract beverage packaging services in the region.
- Many new-age beverages have widespread distribution but limited volume, necessitating multiple manufacturing locations for volumes far too small to justify plant involvement. Due to the high demand for hot-fill products, large corporations with well-known brands have turned to contract packers to meet their production requirements.
- As per Statistics South Africa data in February 2024, the Consumer Price Index (CPI) in South Africa was measured at 113.9 points regarding food and non-alcoholic beverages. There is an uptick in demand for contract packaging services in the country as manufacturers seek efficient and cost-efficient solutions to meet consumer demand while maintaining competitive pricing.
- Contract manufacturers also provide bundling services such as bottling and filling, pallet displays, promotional packaging, product displays, custom assembly, manual packaging, etc., for cans, bottles, jars, cartons, etc. The food, beverage, and pharmaceutical industries are some of the biggest adopters of primary packaging. Therefore, the growth in the overall production capacity of these industries is expected to drive the adoption of primary contract packaging services across the region.
- By leveraging the expertise and infrastructure of contract packaging firms, manufacturers can focus on their core competencies, such as product development and marketing, while benefitting from efficient and flexible packaging solutions. This trend reflects a growing recognition of the value proposition offered by contract packaging companies in optimizing supply chain operations and enhancing market responsiveness in a dynamic business environment.
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