According to the FMI analysis, the biodegradable packaging market reached over US$ 440 Bn in 2021. The global biodegradable packaging market is anticipated to register a CAGR of 6.1% during 2022-2032. The demand for the biodegradable paper packaging segment by the material is estimated to boost, with the top 5 key players holding 20-25% of the global biodegradable packaging market by the end of 2022.
The increasing demand for sustainable and eco-friendly packaging in various end-use industries is projected to bolster the biodegradable packaging market. A new forecast by FMI analysis estimates that biodegradable packaging sales will augment during 2022-2032 and is anticipated to create a growth opportunity of US$ 1.8 Bn.
The government and non-government initiative toward sustainable packaging in North America and Europe is projected to create a growth opportunity for the biodegradable packaging market during the forecast period.
Fast-Moving Consumer Goods (FMCG) Producers And Retailers Are Rapidly Expanding Beyond Conventional Light Weighting Efforts
Historically, FMCG companies and retailers have prioritized immediate gains, such as reducing weight and materials utilization, to cut their packaging costs. As a result of these shifts, flexible packaging and pouches have replaced mainly more rigid packaging designs. However, in recent years, producers and sellers of packaged goods have pledged to reduce packaging waste. Almost all the top 100 fast-moving consumer goods businesses have made public pledges to increase their sustainability efforts in the future years.
Concurrently, significant industry trends influencing the packaging solution sector, such as cost pressures, e-commerce and digitalization, and altering consumer tastes, are combined with sustainability-focused programmes centred on innovation and the need for change in the use of packaging. FMCG producers and sellers are dabbling with radical new approaches to packaging solutions and distribution. They are trying out several returnable methods that use metal and glass to reduce plastic waste. Major brands are, in effect, beginning to self-regulate.
FMCG firms and retailers are venturing into new ground as they face unique difficulties in waste management and recyclables. Organizations like these have traditionally prioritized a narrow package sustainability agenda, emphasizing “light weighting.” Now, fast-moving consumer goods (FMCG) manufacturers and retailers are working to meet these new difficulties through tighter cooperation with upstream stakeholders, bio-packaging companies, and recyclers.
As fast-moving consumer goods (FMCG) companies and retailers realize the need to shift from an arm’s length relationship with suppliers to more of a partnership and collaborative approach, new opportunities are expected to emerge for bio-packaging manufacturers, especially for agile converters that can quickly expand their innovation capabilities.
Legislation and trends have accelerated the transition from plastic packaging solutions to perishable goods. Customers are more likely to purchase goods packaged with sustainable, 100% recyclable materials like paper, starch, and glue.
Some of the measures key players are focusing on to ensure ethical production and internal operations are as follows:
- Using wind power in production.
- Making intelligent decisions about shipping packaging solutions to reduce carbon footprints.
- Finding methods to cut back on or do away with material consumption.
- Consolidating goods into fewer trips helps us save money and reduce emissions.
- Conserving resources and boosting productivity in the workplace.
- Use previously used packaging materials for outgoing shipments if they are still in acceptable condition.
- Historic Market Outlook for Biodegradable Packaging
The global biodegradable packaging market witnessed a CAGR of 5.3% during the historical period, with a market value of US$ 448.2 Bn in 2021.
The rapidly growing trend for sustainable packaging is the primary factor augmenting the sales of biodegradable packaging. Biodegradable packaging offers various packaging solutions made from paper & paper board, bio-plastic, and bagasse, which do not harm the environment or surroundings when disposed of. The government regulation over the usage of single-use plastic products creates a growth opportunity for the biodegradable packaging market. Slowly, consumers are becoming conscious of the increasing packaging waste in landfills, creating demand for biodegradable packaging.
Also, the brand owners have shifted their preference toward eco-friendly packaging to meet consumer demand and attain sustainability goals that drive the demand for biodegradable packaging. Overall, the future outlook for the biodegradable packaging market is projected to rise faster during the forecast period.
How Does the Trend for Bagasse Packaging Create a Growth Opportunity for the Biodegradable Packaging Market?
Bagasse is a dry, pulpy, fibrous remnant of crushed sugarcane or sorghum. It is commonly used in the manufacturing of food packaging and serving elements. Bagasse is 100% biodegradable and has no adverse effects on the environment. Uncoated bagasse can easily be composted at home and degrades within sixty days. Ongoing research on bagasse concludes that the material can withstand hot and cold food and can be microwaved and frozen. Government regulations for single-use plastics could significantly fuel the bagasse packaging trend, which directly impacts the market growth of biodegradable packaging.
The growing demand for sustainable and disposable packaging after the arrival of the pandemic is expected to improve the market revenue for the biodegradable packaging market. The carbon footprint of bagasse packaging is also much less than plastic packaging. Recyclable, lightweight, and eco-friendly features boost bagasse in the biodegradable packaging market. Hence, bagasse is expected to be a revolutionary element in the biodegradable packaging market.
Why is the U.S. projected to Augment the Sales of Biodegradable Packaging?
In the U.S., the rising awareness among consumers and favourable regulations from the government is anticipated to drive the demand for biodegradable packaging during the forecast period. The U.S. is projected to hold around 80% of the North American biodegradable packaging market by the end of 2032.
According to the United States Environmental Protection Agency (EPA), the United States generates almost 80 million metric tons of packaging waste annually. Recognizing this issue and under pressure from consumers, several companies pledged to reduce the environmental impact of their packaging. Thus, the abovementioned factors are projected to augment the sales of biodegradable packaging in the U.S.
How is Germany anticipated to Drive the Demand for Biodegradable Packaging?
The German biodegradable packaging market is projected to register a CAGR of 4.3% during the forecast period due to the ban on single-use plastic products. The ban on single-use plastic products in Germany leads the end-use industries towards sustainable and eco-friendly packaging solutions, which drives the demand for biodegradable packaging. In various governments across European countries such as Spain, Germany, the U.K., and others, July 2021 came up with legislation regarding the ban of single-use plastic products to reduce the excessive use of plastic products; this creates a growth opportunity for biodegradable packaging.
The key players operating in the biodegradable packaging market are focusing on expanding their capacities and resources to meet the growing demand for sustainable packaging, including biodegradable packaging, by establishing a new plant. Also, the key players are adopting collaboration & joint venture strategies to increase their presence and resources. Some of the key developments are as follows–
In April 2022, Karat Packaging Inc. announced a joint venture agreement with Happiness Moon, Co. Ltd. (Happiness Moon) to build a new factory in Taiwan for manufacturing compostable food service products from bagasse.
In March 2022, Mondi invested US$ 285 Million in corrugated packaging to accelerate the sustainable growth plans of the company.
In January 2022, Smurfit Kappa announced the investment of USD 33 Million in its Fortaleza plant in Brazil to expand its capacity to meet the growing demand for innovative and sustainable packaging.
These insights are based on a report on biodegradable packaging market by Future Market Insights
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