US Flexible Food Packaging

Report Overview

What flexible food packaging products will grow fastest?

• Vacuum skin packaging

• Brick packs

This Freedonia industry study analyzes the US market for flexible food packaging. Historical data (2012, 2017, and 2022) and forecasts for 2027 are presented for flexible food packaging demand in current US dollars (including inflation) and units. Demand for flexible packaging is provided for food by material, packaging product, food format (fresh/refrigerated, frozen, canned or dry), and application. The study also evaluates company market share for key suppliers. 

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Demand for flexible food packaging is forecast to increase 3.0% per year to $22.0 billion in 2027, with real growth of 1.4% to 225 billion units, above that of food packaging overall. Flexible packaging offers a number of benefits over rigid packaging – including its lighter weight, lower cost, and improved performance – and will continue to penetrate the food packaging market going forward. Nonetheless, food packaging remains a challenging market due to the need to balance cost, performance, sustainability goals, and consumer preferences:

• High-performance and newer products such as bag-in-box bladders, brick packs, and vacuum skin packaging will experience the strongest advances.

• Flexible packaging continues to significantly penetrate shelf-stable formats through aseptic and retort pouches and bladders, owing to their lower cost and weight compared to cans.

Meat, Poultry, & Seafood Propel Growth of High-Value Flexible Packaging

Vacuum skin packaging and brick packs – two forms of packaging used almost exclusively with meat, poultry, and seafood products – are expected to grow at the fastest rate of any flexible food packaging product, taking share primarily from wrap (which is used with trays in conventional packaging formats). The unique nature of fresh protein products – their high cost, short shelf life, and sensitivity to temperature and moisture – incentivizes the use of brick packs and skin packaging; despite their higher cost, they improve shelf life and reduce leakage compared to traditional wrap and tray packaging, decreasing food spoilage. These products are also increasingly used in the packaging of the high-growth meat alternatives market, as well as with other fresh, high-cost perishable foods, such as cheese.

Plastic Continues to Dominate Flexible Food Packaging

Despite comprising nearly 90% of total flexible food packaging demand, plastic is expected to continue to see healthy growth going forward due to the variety of advantages it offers, particularly with regard to its performance:

• Certain high-growth packaging formats – bladders for bag-in-box, brick packs, and skin packaging – can only be made using plastic due to its impermeability, a necessary feature to extend the shelf life of food products.

• Plastic also benefits from its clarity, allowing consumers to inspect the food before purchase, especially important for fresh applications.

Furthermore, manufacturers of plastic packaging continue to address its poor sustainability image by incorporating recycled content, improving recyclability, reducing plastic used per package, and offering more bioplastic options.

Historical Market Trends

Shifts in demand for food packaging from year to year are determined by a few factors, primarily related to the production and marketing of food products. These activities in turn are influenced by:

• demographic trends such as age, average household size, and levels of disposable income

• consumer spending on food and the balance between at-home and away-from-home meals

• food preferences (e.g., demand for enhanced convenience or for organic products)

• restaurant and other foodservice industry revenues

In addition, several competitive variables determine the mix of packaging types used and their cost, including:

• raw material and conversion costs

• changes in the mix of foods being packaged, particularly in terms of food format (canned, dried, frozen, fresh)

• trends in packaging size and format, such as shifts toward smaller single-serving packages, family size units, or multipacks

• the proportion of food that is sold via retail channels versus foodservice establishments

• environmental and regulatory factors, including trends such as source reduction, the use of recycled content, and recyclability

Food packaging market value growth overall in 2021 and 2022 experienced a strong acceleration in value terms compared to previous years due to the significant inflation following supply chain issues caused by the 2020 pandemic. However, unit growth in those years was below the historical average as consumers facing increased prices opted to cut back on purchases.

Demand by Application

Most food products are packaged in some way before being sold to end users, with some types of fresh produce being one notable exception. The market value of packaging sold for different food applications varies depending on the performance requirements, the volume of packaging needed, and the materials used.

Key food markets for flexible packaging include:

• meat, poultry, and seafood

• baked goods

• snacks

• dairy

• candy

• fresh produce

Demand for flexible food packaging is expected to increase 3.0% per year to $22 billion in 2027, with real growth of 1.4% annually to 225 billion units. Flexible packaging will see solid growth in several applications where conversions from rigid packaging are occurring, much of which involve stand-up pouches or newer product formats like skin packaging.

Meat, poultry, and seafood will remain by far the largest application for flexible food packaging, which benefits from:

• its low cost and reduced material consumption compared to rigid packaging

• the effective barrier properties of plastic bags and pouches

• broad range of packaging available for specific uses (such as cook-in bags)

• continued conversions to higher value formats such as skin packaging

Savory snacks are the next leading category for flexible packaging, with pouches expected to see healthy growth going forward, especially in the fast-growing nut category owing to their lighter weight compared to traditional plastic jars.

Demand for flexible packaging in baked goods – another significant food application – will be supported by the widespread use of bread bags and inroads by stand-up pouches for products such as cookies.

Although a relatively small application for flexible packaging, prepared foods will see above average gains based on inroads by pouches, particularly stand-up types that offer ample billboard space, an upscale appearance, and resealability.

Yogurt will see good prospects as pouches continue to penetrate the market and take share from cups, jars, and bottles due to their lighter weight and lower cost.

Food Formats

The types of packaging used in the food industry rely heavily on what food is being packaged, especially the technologies used for food preservation. Different food formats require packaging with different performance characteristics based on how the food will be shipped and stored before and after purchase.

The most prevalent food formats are fresh/refrigerated, frozen, canned, and dried/dehydrated, although there are also a few processed foods that are reasonably shelf-stable naturally or through only the use of food preservatives and proper packaging.

Flexible packaging is used significantly with all food formats, with fresh comprising the largest share due to the size of the fresh meat, poultry, and seafood market. Processed foods that do not require specific formats to maintain shelf-stability – comprising primarily snacks foods such as chips, candy, and cookies – comprise the next leading segments of flexible packaging demand.

Though fresh and frozen foods are the fastest growth food segments overall, the canned format will experience the fastest growth in regard to flexible packaging, owing to the increasing penetration of aseptic and retort pouches and bag-in-box bladders, which are substantially lower cost and weight compared to metal cans.

Pricing Trends

Pricing is an important factor in selecting packaging for a particular food application. Price competition in the food industry is intense, due to the prevalence of relatively low-technology, commodity-type products.

The primary determinant of pricing for flexible food packaging is the cost of raw materials, which typically represent 70% to 80% of the final packaging price.
Other key factors influencing the price of flexible food packaging include:

• the presence of value-added features such as spouts and reclosable zippers

• the packaging product mix, both in terms of package size and material composition

• supply chain pressures – packaging producers are often squeezed between large raw material suppliers on one end and large food processors on the other, leaving them less options for pricing flexibility

• pressure to improve sustainability, which can result in the use of higher cost packaging materials

In 2021, the price of key raw material inputs used in the production of flexible packaging – plastic, paper, and aluminum foil – increased dramatically due to shortages caused by supply chain issues, leading to a large increase in end pricing of food packaging products. These price increases continued through most of 2022 – with aluminum packaging seeing price growth even into 2023 – though paper and plastic packaging prices have mostly flattened.

Going forward, pricing for flexible packaging is expected to normalize, with the major packaging material categories – plastic and paper – forecast to see price growth mostly in line with historical trends.