According to the latest report by Future Market Insights (FMI), worldwide sales of compostable food service packaging reached approximately 6,400 tons in 2018, equalling revenues worth US$ 16.7 million (approximately Rs 115 crore). As end users’ quest for sustainable packaging intensifies, manufacturers are likely to witness a period of sustained demand in the future.
Expansion of the food service industry, along with the emergence of ‘takeaway’ and ‘grab-and-go’ services, will continue to provide potential growth prospects for the market. However, the price of producing compostable materials for packaging continues to be higher than the conventional variants, which is likely to represent a threat to the growth of the compostable food service packaging market.
With plastics becoming one of the biggest challenges in the world right now, brands prolifically using such materials will need to act quickly to find reliable alternatives. Technological innovations are being made to reduce the price of compostable food service packaging and study assesses that the global efforts to become a more sustainable society will be instrumental in creating new growth opportunities for the market vendors.
Trays continue to gain preference over other packaging format
According to the study, the composite food service packaging market is estimated to grow at a CAGR of approximately 5% through 2029. One of the key growth drivers is a notable spike in the number of quick service restaurants (QSRs), especially in developing countries, which align with today’s convenience and on-the-go culture. In addition, surging adoption of food service disposables, in the view of an increase in the demand for pre-packed food, has been preparing the grounds for compostable food service packaging penetration.
The study finds that compostable trays continue to account for relatively large share of manufacturers’ bottom lines, while more focus has been placed on increasing the production of compostable cups, as the category is witnessing rising demand from a multitude of end-use sectors. As the search for sustainable solutions scales up, companies operating in the packaging industry are starting to launch a number of products made entirely from plant-based materials, including mushroom roots, bagasse, seaweed and starch derived from maize.
Customization in the compostable food service packaging
As per the study, the wave of ‘customization’ is also approaching in the compostable food service packaging space. To fulfil the individual packaging needs while promoting sustainability, manufacturers are targeted towards offering custom products of all sizes, ensuring food safety and minimizing leakage. Demand from non-chain restaurants continues to influence growth strategies, and as identified by the study, market stakeholders are tapping into opportunities in chain café and independent food service operators. Rapid expansion of international chain café in developing countries along with growing consumer preference to eat out, especially from food trucks and street stalls, is also likely to work well with the manufacturers’ growth strategies.
Growth prospects are high in EU5 and the US
Growth prospects of the compostable food service packaging, as the report opines, are high in EU5 and the US. Greater awareness and easy access to innovative solutions along with favorable regulatory framework and higher availability of compost facilities in these regions have worked to the advantage of the stakeholders. In addition, market consolidation in Asia Pacific, particularly in the southern region, will remain a key to gaining distinct competitive advantage, as trends of eating out and online ordering have spiked across the region.
The business intelligence report also offers an incisive outlook on competitive landscape by analyzing the key development strategies of the market players. According to the study, the market shows a high level of consolidation, with local and regional players catering to domestic and urgent demands, while leading players with strong regional presence account for relatively small share in the market.
* These insights are based on a report on Compostable Food Service Packaging Market by Future Market Insights.