Sustainable Packaging Market Size & Forecast

The Sustainable Packaging Market is expected to reach $518.5 billion by 2031, at a CAGR of 6.9% from 2024 to 2031. The growth of the sustainable packaging market is driven by government policies promoting eco-friendly packaging and a shift in consumer preferences towards environmentally friendly products. However, the high cost of sustainable packaging restrain the market’s growth.

Moreover, the increase in e-commerce sales, the rising emphasis on sustainability among companies, and the growing focus on promoting a circular economy are expected to create opportunities for stakeholders in this market. However, concerns about durability & product lifecycle and inadequate recycling practices & infrastructure are some of the challenges impeding the market’s growth.

Additionally, the emergence of sustainable packaging alternatives is a prominent trend in this market.

Sustainable Packaging Market Growth Drivers

Government Policies Promoting Eco-Friendly Packaging

Ensuring sustainability has become a global objective, leading businesses across various industries to prioritize environmentally friendly practices. This shift is prompting governments to implement policies aimed at promoting eco-friendly alternatives, particularly within the packaging industry. Countries like India, Malaysia, the U.S., the U.K., and European Union members are actively promoting sustainable packaging through regulations and policies. These measures establish guidelines and standards that businesses must adhere to, fostering accountability and encouraging responsible packaging practices.

Moreover, some countries are offering incentives such as tax exemptions and grants to promote the use of biodegradable and compostable plastic bags. Therefore, government policies promoting eco-friendly packaging through regulations and incentive programs are expected to drive the growth of the sustainable packaging market in the coming years.

Shift in Consumer Preferences Towards Environmentally Friendly Products

Consumer behavior is evolving, with sustainability emerging as a top priority for many consumers. The rising preference for sustainable packaging in industries like cosmetics, food & beverage, and retail is driven by factors such as heightened consumer awareness and concerns about the environmental impact of plastic packaging waste. As a result, businesses are developing packaging solutions that not only meet environmental objectives but also align with consumer values. The adoption of eco-friendly packaging strategies enables companies to ensure customer satisfaction and strengthen brand loyalty. Thus, the shift in consumer preferences towards environmentally friendly products is contributing to the growth of the sustainable packaging market.

Sustainable Packaging Market Trend

Emergence of Sustainable Packaging Alternatives

The emergence of edible and biodegradable materials represents one of the most promising advancements in sustainable packaging. Bioplastics derived from renewable resources such as sugarcane, corn starch, or algae are increasingly popular as alternatives to conventional plastics. Another ground-breaking innovation with transformative potential for the packaging industry is water-soluble films, which dissolve in water without leaving toxic residues. These films are particularly beneficial for single-use items like food packaging, detergent pods, and personal care products.

Furthermore, mushroom packaging is gaining traction in the packaging industry as another viable alternative. It utilizes mycelium, the root structure of mushrooms, to create compostable and sustainable packaging material. Mycelium is an excellent substitute for Styrofoam and other plastic-based cushioning materials due to its rapid growth and capability to be molded into various shapes.

Sustainable Packaging Market Opportunity

Increase in E-commerce Sales

Increased disposable incomes and rapid modernization, combined with the convenience and accessibility of online shopping, have resulted in a surge in e-commerce sales globally. Additionally, the rising importance of sustainability and heightened environmental awareness among consumers are influencing purchasing decisions, particularly in favor of sustainable packaging within the e-commerce industry. As online shopping continues to grow, there has been a corresponding increase in packaging usage, thereby driving the demand for sustainable packaging solutions.

In response to this trend, many e-commerce businesses are exploring eco-friendly alternatives to traditional packaging materials. Biodegradable and compostable options, such as corrugated cardboard and paper-based materials, are gaining popularity among e-commerce sellers. Thus, the increase in e-commerce sales is anticipated to offer significant opportunities for stakeholders in the sustainable packaging market.

Sustainable Packaging Market Analysis: Key Findings

By Type: In 2024, the Recyclable Packaging Segment to Dominate the Sustainable Packaging Market

Based on type, the sustainable packaging market is segmented into recyclable packaging, reusable packaging, and degradable packaging. In 2024, the recyclable packaging segment is expected to account for the largest share of over 57.0% of the sustainable packaging market. This segment's large market share can be attributed to the widespread use of recyclable materials for packaging. This practice aims to conserve natural resources, reduce greenhouse gas emissions, and decrease waste in landfills. Additionally, major companies such as Nestlé S.A. (Switzerland), Hindustan Unilever Limited (India), and The Coca-Cola Company (U.S.) are actively adopting recycling strategies for packaging.

However, the degradable packaging segment is expected to record the highest CAGR during the forecast period. This segment’s growth is driven by the increasing demand for degradable packaging formats such as bags, boxes, and pouches. Degradable packaging has gained popularity among both brands and consumers as these types of packaging decompose naturally, resulting in less landfill waste and pollution.

By Material: In 2024, the Paper & Paperboard Segment to Dominate the Sustainable Packaging Market

Based on material, the sustainable packaging market is segmented into paper & paperboard, plastic, metal, glass, wood, bamboo, and other materials. In 2024, the paper & paperboard segment is expected to account for the largest share of over 42.0% of the sustainable packaging market. This segment’s large market share can be attributed to the increased adoption of paper & paperboard for packaging food across restaurants and the rising demand for corrugated cardboard, folding boxes, and cartons in e-commerce. Paper & paperboard are particularly favored for their capacity to effectively showcase detailed product information, promotional content, and advertising. Additionally, several companies are actively introducing recyclable paper & paperboard packaging solutions. For instance, in March 2023, AB Electrolux (Sweden) launched recycled and paper-based packaging. This EPS-free packaging is made from Forest Stewardship Council-certified paper-based materials and features a four-color print that uses 70% less ink.

However, the bamboo segment is projected to register the highest CAGR during the forecast period. This segment’s growth is primarily driven by its eco-friendly, renewable, and biodegradable properties. Companies are increasingly opting for bamboo in packaging due to its durability, versatility, and widespread availability.

By Layer: In 2024, the Primary Segment to Dominate the Sustainable Packaging Market

Based on layer, the sustainable packaging market is segmented into primary, secondary, and tertiary. In 2024, the primary segment is expected to account for the largest share of over 46.0% of the sustainable packaging market. This segment’s large market share can be attributed to consumers’ rising preference for eco-friendly packaging products, resulting in the increased use of sustainable packaging in primary packaging to enhance brand positioning and reputation and the rising demand for primary packaging in the food & beverage and pharmaceutical sectors.

Moreover, the primary segment is projected to register the highest CAGR during the forecast period. This segment’s growth is driven by the increasing focus on sustainable and environmentally friendly packaging among companies and the growth of the e-commerce sector.

By Sector: In 2024, the Food & Beverage Segment to Dominate the Sustainable Packaging Market

Based on sector, the sustainable packaging market is segmented into food & beverage, retail & e-commerce, chemicals, building & construction, pharmaceuticals & healthcare, electrical & electronics, automotive, industrial machinery & equipment, and other sectors. In 2024, the food & beverage segment is expected to account for the largest share of over 49.0% of the sustainable packaging market. This segment’s large market share can be attributed to the growing focus of F&B companies on sustainable practices, including the adoption of eco-friendly materials such as biodegradable plant-based packaging and the implementation of sustainable packaging strategies like recycling and reuse.

However, the retail & e-commerce segment is projected to register the highest CAGR during the forecast period. This segment’s growth is driven by factors such as the surge in e-commerce sales, the increasing eco-consciousness among consumers, prompting businesses to adopt sustainable practices, and the growing utilization of degradable packaging for secondary packaging in e-commerce.

Geographical Analysis

In 2024, Asia-Pacific to Dominate the Sustainable Packaging Market

In 2024, Asia-Pacific is expected to account for the largest share of over 44.0% of the sustainable packaging market. Asia-Pacific’s significant market share can be attributed to the increasing consumer awareness about sustainable packaging, growing demand for food & beverage packaging, and the presence of numerous manufacturers in the region.

Moreover, the market in Asia-Pacific is projected to register the highest CAGR of 8.0% during the forecast period. The growth of this regional market is driven by factors such as the expanding urban population, rising disposable incomes, increased e-commerce spending, government regulations promoting sustainable packaging, evolving consumer preferences, and rising environmental concerns across the region.

Sustainable Packaging Market: Key Companies

The report offers a competitive analysis based on an extensive assessment of the leading players’ product portfolios and geographic presence and the key growth strategies adopted by them over the past 3–4 years. Some of the key players operating in the sustainable packaging market are Mondi plc (U.K.), Amcor plc (Switzerland), Tetra Pak International S.A. (Switzerland), Sealed Air Corporation (U.S.), Ball Corporation (U.S.), Crown Holdings, Inc. (U.S.), Smurfit Kappa Group plc (Ireland), Berry Global Group, Inc. (U.S.), International Paper Company (U.S.), Huhtamäki Oyj (Finland), Sonoco Products Company (U.S.), Elopak AS (Norway), DS Smith Plc (U.K.), ECOPACKABLES (U.S.), and Better Packaging Co. (New Zealand).

Sustainable Packaging Industry Overview: Latest Developments from Key Industry Players

• In April 2024, Amcor plc (Switzerland) launched packaging for its Eco Protect diapers with 30% recycled materials in Peru. The bags contain recycled content and provide a more sustainable packaging solution for hypoallergenic diapers.
• In February 2024, Mondi plc (U.K.) acquired Hinton Pulp mill (Canada) from West Fraser Timber Co. Ltd. (Canada). Mondi plans to enhance the mill's productivity and sustainability performance through investment. Pending pre-engineering and permitting, Mondi intends to expand the facility by installing a new kraft paper machine. This expansion aims to integrate Mondi's paper bag operations in the Americas.
• In January 2024, Sealed Air Corporation (U.S.) launched a biobased, industrial compostable tray designed for protein packaging. The new CRYOVAC brand compostable overwrap tray has undergone successful testing to ensure compatibility with existing food processing equipment. Made from biobased resin that meets food-contact grade standards, it is USDA-certified with 54% biobased content derived from renewable wood cellulose.

Sustainable Packaging Market Research Summary

Key questions answered in the sustainable packaging market report: