Secondary packaging: CPG companies that are in it plan to do more of it

25% of survey respondents who already use co-packers for work such as display cartons and sleeved multipacks will increase their volume. But quality, cost, and timeliness challenges remain.

FLEXIBILITY IS CRUCIAL. Survey respondents say that achieving flexibility in outsourced secondary packaging operations is import
FLEXIBILITY IS CRUCIAL. Survey respondents say that achieving flexibility in outsourced secondary packaging operations is import

INTRODUCTION

This survey was developed as a joint effort between Contract Packaging magazine and Saddle Creek Corp., a third-party logistics company offering warehousing, transportation, and secondary packaging services. The goal was to compile trend data for users of secondary packaging services and provide credible information on secondary packaging’s impact on contract packaging.

Saddle Creek and Contract Packaging conducted the online survey in May 2009 and received 494 responses. They represent the perspectives of both large and small companies that are Contract Packaging subscribers. The data presented in the following report includes analysis of responses for 203 survey-takers who already outsource some or all of their secondary packaging.

Contract Packaging acknowledges the contributions of Robert Pericht, senior vice president of warehouse operations at Saddle Creek. He assisted in preparing the survey questions and also provided analysis of the data.

How pervasive is secondary packaging among contract packaging services, and is it growing in importance? Which product segments are using outsourced secondary packaging services the most, and why?

Those who responded to a targeted survey say the outsourcing of secondary packaging is a growth industry. Consumer packaged goods (CPG) companies in a variety of product segments see value in the practice, primarily as a way to increase their production flexibility and reduce costs, and some product manufacturers plan to increase their reliance on outsourced secondary packaging soon.

Following are top-line results from the survey data.

• The survey data supports the adage that your best prospects might be your current customers. As the economy is expected to slowly and moderately begin improving in coming months, CPG companies’ reliance on contract packaging services for secondary packaging will increase. Nearly 25% of respondents who outsource at least some of their secondary packaging needs say their reliance on contract packagers will increase “somewhat” or “substantially” during the next 12 to 18 months (see Fig. 1).
• Asked for the top three benefits they derive from outsourcing secondary packaging operations, the respondents most often cited “increased flexibility” (65%), “reduced costs” (62%), and “help in meeting increasing customer demands” (48%) (see Fig. 2).
• Products that most often require secondary packaging (see Fig. 3) are in food and beverage (26%), health and personal care (24%), and medical-pharmaceutical (22%) segments. Products least likely to require secondary packaging are games/sporting goods/toys and pet supplies (both at 4%).
• 48% of responding CPG companies use three to 10 co-packers for secondary packaging operations (see Fig. 4), and a few rely on more than 10. But 39% use just one or two providers.

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