As Covid-19 Accelerates E-Commerce’s Retail Takeover, Pouch Suppliers Poised for Growth

While the Covid-19 pandemic has negatively affected many manufactured goods sectors, the pouches market is not expected to see any declines, with sales gains only decelerating in 2020, according to a new series of Freedonia Group analyses examining different segments of the US pouch market.

Pouches, along with other types of packaging, will see losses prevented by ongoing demand for essential items such as groceries, pet food, household cleaning supplies, personal care products, and pharmaceuticals during the pandemic.

In addition, pouches will benefit from surging e-commerce activity and the long-term opportunities that surge represents as a broader range of brands – from food and beverage to personal care – begin taking amenability to shipping into stronger consideration in their packaging decisions.

Below we explore these and other trends that are expected to affect growth in the US pouch market through 2024.

US Pouch Demand Is Expected to Rise 3.7% Annually to $11.0 Billion in 2024

In all markets, pouches (i.e., flat and stand-up types) are expected to capture additional market share from rigid containers, bags, and film wrap through 2024, due to:

• the many functional advantages of pouches, including their excellent graphics capabilities and ability to incorporate features such as resealability, vacuum sealing, and spouts
• the ability of pouches – particularly stand-up types – to boost shelf appeal and to improve product differentiation
• their light weight, low package-to-product ratio, and ability to be shipped flat – increasingly important features for reducing shipping costs and in light of retailer initiatives to meet certain sustainability guidelines
• the perception of pouches as a more environmentally friendly packaging option due to the significantly lower volume of raw materials required for pouch production compared to rigid containers

Pouches’ Light Weight & Strength Make Them More Amenable to Shipping Online Orders

Pouches, which are more amenable to shipping than other types of packaging due to their light weight and strength, are expected to benefit from increased reliance on e-commerce for food, beverages, pharmaceuticals, and consumer goods.

While consumers have been gravitating toward e-commerce from traditional brick-and-mortar retail for years, the Covid-19 pandemic has sped up that transition even further:

• Government shutdowns of nonessential retailers in March eliminated brick-and-mortar as an option for some products, leading more consumers to use e-commerce for the first time.
• Many consumers began reducing in-person trips to grocery stores and other retailers deemed essential and allowed to operate throughout the pandemic, with more people buying online items they would have purchased in-store before, like groceries and household products.

Since the May reopenings, high consumer concern about Covid-19 has continued to suppress overall retail spending, but e-commerce remains a bright spot. Online retailers like Amazon and Instacart have seen massive sales increases during the pandemic, and essential retailers like Target, Walmart, and other big-box stores also saw a sharp rise in online sales and use of digital services like curbside pickup. Entering the holiday season, online sales still continue to surge even after most retailers have reopened.

Emerging Applications for Pouches in Beverages, Processed Foods, & Consumer Goods

Though the mature candy and snack market– including chips, chocolates, cookies, crackers, and nuts – will remain the largest outlet for pouches, accounting for nearly one-third of sales through 2024, growth will be bolstered by the increasing penetration of pouches in emerging applications, such as:

• non-juice beverages (e.g., alcoholic, sports, and energy drinks as well as ready-to-drink teas)
• processed food, including cooked rice and pasta and wet soups

In these applications, pouches will benefit from their added convenience (e.g., portability, ability to be microwaved) and visual appeal. In addition, a number of sauces and condiments – including peanut butter, mayonnaise, and barbecue sauces – are converting to inverted stand-up pouches for their superior convenience, reduced product waste, and product differentiation capabilities.

A number of consumer products – including shampoos, makeup, and hand soaps – are transitioning to pouches, especially spouted stand-up pouches that can serve as refill packs for liquid cleaning and personal care products. Pouches will also continue to find widespread use in applications such as detergent pods and lawn and garden products.

Stand-Up Pouches to Post 6% Annual Growth Through 2024

Among pouch types, particularly robust growth opportunities are expected for stand-up pouches.

Stand-up pouches – particularly spouted and inverted types – are gaining a wider presence among retail sauces and condiments, with a number of introductions by major brands in recent years. Condiments such as mayonnaise, honey, peanut butter, barbecue sauce, and guacamole spreads, for example, are increasingly packaged in inverted pouches such as Glenroy’s STANDCAP pouch.

Nonfood markets will also see fast increases in stand-up pouch use, particularly in applications that benefit from the use of spouted types. Growth opportunities exist in refill pouches for hand soaps and other cleaning and personal care products, motor oils, and topical and liquid pharmaceuticals.

Want to Learn More?

Pouches, Stand-Up Pouches, and Processed Food Pouches are now available from The Freedonia Group.

About the Author:

Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.