Expected to reach a valuation of US$ 18.9 billion in 2023, the global compostable foodservice packaging market is anticipated to witness substantial growth, with sales projected to surge at a Compound Annual Growth Rate (CAGR) of 4.5% from 2023 to 2033. By the end of 2033, the market is forecasted to achieve a significant valuation of US$ 29.3 billion. This growth trajectory underscores the increasing demand for sustainable packaging solutions in the foodservice industry, driven by environmental concerns and shifting consumer preferences towards eco-friendly alternatives. Additionally, regulatory initiatives promoting compostable packaging further contribute to market expansion.
A product labeled as “compostable” signifies its ability to break down into carbon dioxide, water, inorganic compounds, and biomass at a pace comparable to paper, undergoing a disintegration of at least 90% of its original mass within 180 days, and leaving behind no harmful residues. Typically, these products receive certification from reputable third-party systems, such as the Biodegradable Products Institute (BPI).
Within the realm of compostable foodservice packaging, various solutions encompass single-use plates, trays, cups, bowls, bags, wraps, cutlery, and more. These items are designed to be composted and are widely utilized by restaurants and other establishments providing prepared foods and beverages, contributing to sustainable and eco-friendly practices in the food industry.
The surging adoption of compostable foodservice packaging in Germany is fueled by a confluence of factors. A growing demand for environmentally friendly and sustainable packaging solutions, both from businesses and consumers, is steering the momentum toward compostable options. Furthermore, Germany, mirroring several European nations, has enforced stringent regulations to curb plastic usage. The European government’s ban on single-use plastic products in 2021 has been a significant catalyst, propelling substantial growth in the compostable foodservice packaging industry within Germany. Consequently, businesses such as restaurants and cafes are swiftly embracing compostable packaging to align with government mandates and cater to environmentally conscious consumers, ensuring sustained expansion in this market throughout the next decade.
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Similarly, rising awareness levels, growing need for achieving the sustainability goal among the brands, and implementation of stringent government regulations on the usage of single-use plastic products are expected to push the demand for compostable foodservice packaging.
Rising industry standards and the introduction of technology solutions into the paper market are creating future growth prospects for the compostable foodservice packaging market.
Initially, waste was generated by paper producers due to a lack of adequate paper making machinery. Owing to technological advancements, waste created may now be repurposed as a raw material for creating paper or other products, which was previously not feasible due to a lack of required technologies.
Wastage during the papermaking process has been cut in half as a result of the development of cutting-edge paper production technology, and paper producers’ efficiency has grown. In addition, technologically improved papermaking equipment give paper manufacturers increased production capacities.
Bagasse is expected to act as a revolutionary element in the compostable packaging market due to its strong, lightweight, affordable, and eco-friendly features. Bagasse is a dry, pulpy, fibrous by-product of crushed sugarcane. It is extensively utilized in the production of food packaging and service elements. It is completely biodegradable and has no harmful effects on the environment.
Bagasse packaging solutions can handle both hot and cold foods. Government restrictions on single-use plastics could make way for eco-friendly packaging solutions such as bagasse tableware. This in turn will boost the global compostable foodservice packaging industry.
Key Takeaways from Compostable Foodservice Packaging Market
- By material type, paper & paperboard segment is expected to expand at 5.5% CAGR during the forecast period.
- The molded fiber sub-segment of paper & paperboard category is projected to register a CAGR of 6.9% between 2023 to 2033 due to its 100% biodegradable and compostable feature.
- Based on product type, cups and trays segments collectively are estimated to account for around 48% of the market value share by the end of 2033.
- By end use, delivery catering segment is anticipated to expand at 1.6 times the current market value during the forecast period.
- Western Europe holds a significant portion of the global compostable foodservice packaging industry owing to the presence of strict recycling laws.
- The USA compostable foodservice packaging market is forecast to create a growth opportunity of US$ 582.7 million during the assessment period.
- Demand for compostable foodservice packaging across Germany is poised to increase at 3.1% CAGR throughout the forecast period.
“A gradual shift from plastic foodservice packaging to greener material-based paper foodservice packaging has been witnessed in the past year. Biodegradable materials such as wood, corn starch, etc. offer sustainability added with proper packaging. Therefore, they have become ideal for making foodservice packaging,” says an FMI analyst.
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Business Growth Drivers:
- Environmental Concerns: Growing awareness about the harmful effects of conventional plastics on the environment has led to a shift towards eco-friendly alternatives like compostable packaging. Consumers and businesses alike are increasingly seeking sustainable options to reduce their environmental footprint.
- Regulatory Support: Governments and regulatory bodies worldwide are implementing stricter regulations on single-use plastics and promoting compostable packaging as an environmentally friendly alternative. These regulations create a favorable environment for the growth of the compostable foodservice packaging market.
- Corporate Sustainability Initiatives: Many companies are adopting sustainability as a core value and incorporating it into their business strategies. As part of these initiatives, they are switching to compostable packaging to reduce their carbon footprint and enhance their corporate image.
- Consumer Demand: There is a growing demand from consumers for products and services that align with their values of sustainability and environmental responsibility. As a result, foodservice businesses are increasingly opting for compostable packaging to meet consumer preferences and stay competitive in the market.
- Advancements in Technology: Ongoing research and development in materials science and packaging technology have led to the development of innovative compostable materials that offer comparable performance to traditional plastics. These advancements are driving the adoption of compostable foodservice packaging across various sectors.
Industry Restraints:
- Cost Considerations: Compostable packaging materials often have a higher upfront cost compared to conventional plastics. This cost barrier can deter some businesses, especially smaller ones with tighter budgets, from making the switch to compostable alternatives.
- Infrastructure Challenges: Composting infrastructure varies significantly across regions, and in some areas, it may be limited or non-existent. This lack of infrastructure can hinder the widespread adoption of compostable packaging as businesses may struggle to dispose of it properly.
- Performance Limitations: While compostable materials have made significant strides in terms of performance, some challenges remain, particularly in terms of durability and shelf life. Businesses may be hesitant to adopt compostable packaging if it compromises the quality or integrity of their products.
- Consumer Education: Despite increasing awareness, there is still a need for further education among consumers about compostable packaging. Some consumers may be unfamiliar with composting processes or may mistakenly dispose of compostable packaging in regular waste streams, leading to contamination issues.
- Supply Chain Complexity: Transitioning to compostable packaging may require changes to supply chain processes, including sourcing new materials, adapting manufacturing techniques, and ensuring proper disposal methods. These changes can introduce complexity and logistical challenges for businesses.
Rapid Expansion of Foodservice Industry to Boosting Compostable Foodservice Packaging Market
One of the most thriving and dynamic industries in the world is the foodservice industry. The sector has already unmatched growth, and it continues to generate revenue and create potential jobs. The development of the food production sector and the popularity of portable meals has improved the foodservice packaging sector.
The market for foodservice packaging is being further stimulated by the changing demographics and the increased internet usage among Generation Z. As more young people consume healthy, high-quality food that is packaged in hygienic ways, adoption of packaging solutions such as compostable cups, bowls, trays, etc. is increasing rapidly across foodservice industry.
Who is Winning?
Key players operating in the compostable foodservice packaging market include
- Huhtamaki Oyj,
- Stora Enso Oyj,
- Georgia-Pacific LLC,
- WestRock Company,
- Mondi Group,
- Berry Global Group,
- Smurfit Kappa Group plc,
- Pactiv LLC,
- Genpak, LLC.
Also, the other noticeable players in the market include
- SEOIL Corporation,
- Karat Packaging Inc.,
- Kruger Inc.,
- Vegware Ltd.,
- Biopac (U.K.) Ltd. (Duni),
- Ultra Green Packaging Inc.,
- Eco-Products, Inc.,
- Sabert Corporation,
- Fabri Kal
- others.
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Key Segmentations:
By Packaging Type:
- Plates
- Trays
- Bowls
- Cups
- Clamshell
- Cutlery
- Pouches & Sachets
- Others (Wraps, Straws, Cup Carriers, etc.)
By Material Type:
- Plastic
- PLA
- PHA
- PBS
- PBAT
- Starch Blends
- Other Plastics
- Paper & Paperboard
- Coated Unbleached
- Molded Fiber
- Other Grades
- Bagasse & Seaweed
By End Use:
- Chain Restaurants
- Non-Chain Restaurants
- Chain Café
- Non-Chain Café
- Delivery Catering
- Independent Sellers/ Kiosks
- Others (FMCG, Hotels, Retailers)
About Future Market Insights (FMI)
Future Market Insights, Inc. (ESOMAR certified, recipient of the Stevie Award, and a member of the Greater New York Chamber of Commerce) offers profound insights into the driving factors that are boosting demand in the market. FMI stands as the leading global provider of market intelligence, advisory services, consulting, and events for the Packaging, Food and Beverage, Consumer, Technology, Healthcare, Industrial, and Chemicals markets. With a vast team of over 5000 analysts worldwide, FMI provides global, regional, and local expertise on diverse domains and industry trends across more than 110 countries.
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