The global market for green packaging is expected to grow at the CAGR of 5.7% within the time horizon of 2019-2022 and was valued at USD 224.92 billion in 2018.
Growing environmental protection campaigns and increasing use of green packaging is going to sustain the growth and development of its market.
- Definition / Scope
- Market Overview
- Market Risks
- Top Market Opportunities
- Market Trends
- Industry Challenges
- Technology Trends
- Pricing Trends
- Regulatory Trends
- Market Size and Forecast
- Market Outlook
- Technology Roadmap
- Distribution Chain Analysis
- Competitive Landscape
- Competitive Factors
- Key Market Players
- Strategic Conclusion
Definition / Scope
Green packaging is the use of eco- friendly materials and environmentally-sensitive manufacturing process for the purpose of the product packaging so that it has a low impact on both environment and energy consumption. It is also known as sustainable packaging as biodegradable or recyclable materials are used and energy efficient methodology is adopted.
On the basis of the type of material, it is categorized into three components i.e. recycled, reusable and degradable packaging content. Here, recycled content packaging includes paper, plastic, metals, etc.
The reusable type comprised of durable materials such as drums, plastic boxes, containers, etc and designed for reuse purpose. The degradable content type use materials that are decomposed by natural forces such as air, light, water, and addition of chemicals.
On the basis of application, it is segmented into food and beverages, personal care health care, and others.
Global Market for green packaging is in the growth stage. It was valued at USD 132.4 billion in 2014 and increased to USD 224.92 billion in 2018 because of the stringent environmental regulation and rising concept of sustainable development.
It is forecasted to rise at the CAGR of 5.7% within the time period of 2019-2024. Globally, it is forecasted to reach USD 237.8 billion by 2022
- Inadequate recycling capacity
The generation of annual solid waste is increasing and almost 2.12 billion tons of waste produced each year. However, 270 million tonnes of waste are only recycled across the world.
For instance in America, almost 75% of waste is recyclable but only 30% of it recycled. It indicates the inadequate capacity of the existing recycling industry. As green packaging is well-known because of the recyclable materials, it can restrain the growth of the market.
- Threat to global food production
Bioplastics are made from crops such as maize, sugarcane, wheat, whose market is rising by 20-30% every year Over a large area of land is now taken over to grow biomass for the bioplastic production which was previously used for human consumption.
According to the European Bioplastics, almost 0.016% of the global agricultural area is used to grow the biomass. It might create a threat to food production and can cause food crises. Because of this, market players may face a risk for the sustainability of this market.
- Being mixed with non-biodegradable materials
Some of the materials used in green packaging such as plastics are non-biodegradable in nature. Because of this, the packaging isn’t completely green, which is creating the risk for its adoption by the manufacturing company as well as the consumers.
Top Market Opportunities
- Availability of incentives and support for green packaging
In order to promote the concept of green packaging, the government, as well as independent bodies have developed the varieties of incentive programs.
For instance, the Carbon Trust Green, an organization provides business fund up to 10,000 pounds to reduce their carbon footprint. Besides this, the business loan with zero incentive is also provided in Wales. this is a great opportunity that the companies can grab to develop this market.
- Environment-friendly materials
Materials used for the purpose of green packaging are biodegradable and also contribute to the reduction of greenhouse gas emission as bioplastics have zero CO2 emissions.
For instance, the replacement of petroleum-based polystyrene with corn-based plastic is known to reduce the emission of the greenhouse gases It will increase the public preferences towards green packaging and is beneficial for the development of the market.
- Rapid growth of food and beverage industry
The global food and beverage industry are growing at a rate of 5% every year. As a result, the demand for packaging also increases every year and creates a wonderful opportunity for its market growth.
- Energy efficient methodology
A study has found that recycled plastic bottles use 76% less energy and newsprint use almost 45% less energy. As recycling is a part of the green packaging, it is an opportunity that companies can grab for the growth of the market.
- Extended producer responsibility
It is the policy approach in which producers are given responsibility to treat the post-consumer products. Along with this, they are provided with the incentives to prevent waste at the source. It creates a fruitful environment for the introduction of green packaging by the product manufacturers.
- Rising Public awareness about the synthetic packaging: At the present context, the public is getting more aware of the toxic effects of synthetic plastics upon the environment and consumer health. For example, a study conducted among 3600 population in Indian cities has revealed that over 85% of them were aware of the harmful effects of plastics upon the environment. This rising awareness level creates a suitable environment for the preference of green packaging at local as well as at international level.
- Green movement and government regulations for environmentally friendly packaging: The various movement has been adopted by the country governments to protect the environment and bring sustainability in the development. For instance, ‘Europe 2020’is the strategy adopted by European Heads of State and Government to create 20% reduction in greenhouse gases and energy consumption. it will facilitate for the growth of green packaging market too.
- Growing consumer awareness about eco-friendly products: In a survey conducted among people of South and North America, more than 50% of people prefer green packaging and almost 42% of them are willing to pay more money for it. This is driving the growth in the market.
- Increasing waste recovery: Green packaging helps to recover certain types of energy from the trash. For example, paper waste and bioplastics can be easily degraded in landfills from which methane gas and compost can be recovered and used to enhance the quality of the soil. It can drive market growth because of its energy efficient nature.
- Rising demand for bioplastics and rising product sales: It has been expected that the global demand for biobased plastics is rising by 19% per year. the use of plant-based products in packaging also helps in increasing the sales of the product. For example, with the introduction of plantable packages (recycled newspaper and a sprinkling of seeds as the packaging material) for the packaging of the soap by Pangea Organics, the sales of the product were increased almost four times within a year. As bio-based products being a part of green packaging, it will finally raise the growth of its market.
- High cost of raw materials: Raw materials used for the production of green packaging such as liquid biofuels are expensive, which can hinder the development of this market. For example, in order to produce a kg of bioplastic almost 1.6 kg of biomass is required. The cost of biomass is USD 5 per kg while the average cost of PET used for the production of plastics is just USD 0.43 per kg. Here the cost of raw materials for green packaging is high in comparison to the raw materials used in conventional packaging. It can create an impact on the development of the green packaging market.
- Deforestation: Use of paper for the purpose of packaging is associated with the risk of the deforestation. Globally, more than 2 billion trees are cut every year for the purpose of product packaging alone. As there are strict regulations for environmental protection, it might restrain the use of paper for green packaging.
- Chemical Migration from packaging to the product: Harmful chemicals such as acetaldehyde used in the production of plastics are known to migrate to the product being packed with it. According to the Environmental Protection Agency(EPA), exposure of acetaldehyde causes irritation in the eyes, skin and respiratory tracts among the humans. This can restrain the growth of this market.
- High Fragmentation within the market: The global market for green packaging is highly fragmented over the application, type of packaging material and the geographical region at local, regional and international level. For example, over the type of material, it can be recyclable, reusable or degradable content. On the basis of application, it can be used for food & beverages, health care, personal care, and others. Because of this, companies are facing challenges to bring innovation in the product in terms of quality, features, and price of the product.
- High cost of production: The processing and recycling of the used materials, for instance, paper, cans requires more investment, energy and time. It is increasing the cost of its creation and might create challenges for its growth.
- Product safety: In green packaging, reusable and recyclable materials are used and concerned with the use of the less packaging which isn’t efficient for the integrity and safety of the packed product. Because of this, in the long run, consumers will question the quality of the product.
Transformation is expected in the future of packaging products because of the introduction of technological innovations in this field. Major innovations going to take place are as follows:
- Fiber-based materials: In terms of packaging, micro-fibrillated cellulose is going to replace plastics. However, there are few challenges in its adoption such as the ability to degrade the product being wrapped.
- Robotics: In robots are going to bring the change in the marketing of packaging materials with their use in e-commerce.
- Smart Packaging: It is the packing systems which consist of sensor technology with the product to extend shelf life, monitor freshness and display information on quality. They are going to replace the conventional market.
- 3D printing: Recently 3D printing has played an important role in scaling packaging to the high level of creativity. Its operation can be guided by the software.
It has been estimated that the cost of production of green packaging is higher in comparison to the traditional packaging as green packaging materials are often more expensive than other alternatives. For instance, in order to replace cellophane bags with compostable cellophane packaging, the packaging cost is raised by 30%.
The economic value of adopting best practice in the packaging design with the use of recycling is estimated at USD 2 to USD 3 billion annually.
- US FTC Labeling Guidelines: It was published in 2012, which is applied to all forms of environmental marketing, including labeling, advertising, and promotional materials. This guide addresses the carbon offsets, degradable, ozone-safe, recycled content, renewable materials, and source reduction.
- The CGF Global Protocol on Packaging Sustainability: Consumer Goods Forum is a Paris-based network of 650 retailers, manufacturers and packaging suppliers from 70 countries, which has developed Global Protocol on Packaging Sustainability to help the goods industries assess the sustainability of packaging.
- California Public Resources Code section 42355: California has joined the effort to regulate environmental claims on packaging. It has developed the prohibition on the sale of a plastic bag or plastic food or beverage in 2013.
- EU Packaging and Packaging Waste Directive: It is the framework developed by the European Union that included the essential requirements to prevent the production of packaging waste and increase the recycling of packaging materials.
- ICC Framework for Responsible Environmental Marketing Communications: It was developed in 2010 in order to specify the environmental claims. It has defined it as an implicit reference made to the ecological aspects relating to the production, packaging, distribution or disposal of products.
- Plastic Bags Regulations: It was developed by the Department of environmental affairs and tourism in South Africa. It is concerned with the collection and disposal of the plastic bags which are widely used and discarded.
- Asian Environmental Packaging Standards: It has been adopted by 14 Asian countries which are focused on the recycling of the products. All the packaging is taxed at the source with a view to deal with the waste produced by the concerned product.
- Waste Import Ban: China has adopted the regulation to ban the import of garbage from other countries. Especially, import of waste paper and plastic was banned. As a result, other countries such as European countries are compelled to recycle their products in their own country.
Market Size and Forecast
Total revenue of the global market for green packaging was USD 224.92 billion in 2018 because of the increasing awareness regarding environmental issues and strict environmental protection and sustainable development regulations. The global market for green packaging is estimated to rise at the CAGR of 5.7% within the time period of 2019-2024.
As far as the geography is concerned, the Asia-pacific region is expected to show at the highest growth rate of 6.8% within the time period of 2014-2022 in comparison to other regions in the world. Within Asia Pacific region, India is growing at the highest rate i.e. at 7.69% because of rising demand for food in this country
On the basis of application, Food and beverages segment is dominating the market with market share at 29.8% in 2018 and is expected to grow at the higher rate i.e. at 5.5% CAGR over the time period of 2016-2022.
On the basis of the materials used, the degradable content is expected to grow at the high rate i.e. 15.5% followed by the reusable content within the time period of 2016-2021.
Globally, the market for green packaging is expected to rise at a rate of 5.7%. Similarly, it is expected to grow at a rate of 5.7% in Europe too because of increasing demand from the healthcare sector.
The global market for green packaging is forecasted to reach USD 237.8 billion by 2022 while it will reach around USD 244.9 billion by 2024.
South Asian Paper Packaging market is expected to grow at the CAGR of 5.9% within the time period of 2018-2028. Here, the Asian market is expected to grow at a high rate because of the rise in demand for the food and beverages and rising regulations for the use of eco-friendly products in this region.
At present, there are lots of technological innovations which will drive the new perspectives in the upcoming era of product packaging. For instance, smart packaging which is the great innovation in packaging with the motive to the quality control of the product being packed along with the monitoring sensors.
Along with this, the use of e-commerce and robots for marketing and raising awareness about green packaging. As the public awareness regarding the concept of green packaging is raised, it will foster the growth of this market. Besides this, the use of innovative solutions will attract consumers for the use of products with green packaging.
As a result, technological innovations are acting as a boon for the growth and development of the green packaging market at the optimum level.
Distribution Chain Analysis
The green packaging market is oriented towards the engagement of manufacturers, raw materials suppliers, aftermarket suppliers, research institute and potential investors.
Here different stakeholders are playing the unique vital role for the growth, development, and sustainability of the market. For instance, the research institute is responsible for the creation of shreds of evidence regarding the effectiveness and efficacy of the innovations in the field of green packaging while raw materials suppliers are responsible for the maintenance and supply of raw materials such as wood, metals for the manufacturers.
Over the segmentation of application, the food and beverages application has dominated the market and is expected to grow at the rate of 5.5% within 2015-2022 while on the basis of the type of materials/product, recycled content is dominating the market holding 76.03% of the market share.
On the basis of geography, North America is leading the market with 28% market share and is expected to reach USD 70.4 billion by 2024 while US is the leading country in this market.
However, Asia Pacific is expected to rise at a higher rate i.e.6.8% within the forecasted time horizon of 2014-2022 because of the extensive demand for green packaging in major countries such as Japan, China, and India in this region and increasing government’s focus on the adoption of eco-friendly solutions. .
Within the green packaging market, the competition is basically based on the cost and quality of the product. Especially, the low switching cost is increasing the competition. Along with this, they are competing to create innovation ideas and technologies such as to create edible packaging materials.
Key Market Players
Over the segmentation of the green packaging market by region and application, the key companies engaged are as follows:
Growing awareness regarding the potential environmental issues linked with the use of synthetic packaging and potential benefits of green packaging is driving the growth of this market.
However, limited recycling capacity and high cost associated with its production might be the risk for the further development of this market.
- CGF= Consumer Goods Forum
- PET = Polyethylene terephthalate