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CPGs Move More Lines to Contract Manufacturing and Packaging Facilities

A PMMI industry report reveals what’s driving growth in machinery sales to the CoMan/CoPack market.

cpg contract manufacturing

The needs of CPGs and the machinery required from OEMs to churn out goods were already experiencing a sea of change before COVID-19 completely turned supply and demand on its head. To keep up with these changes, many CPGs employed more CPG contract manufacturing and packaging providers to stay ahead of the evolving whims of consumers seeking convenience, variety, and more eco-friendly items. cpg contract manufacturingOEMs report that more than 70% percent of the time, CM&Ps generate technical specifications for equipment, easing some of the burdens on CPGs.

“[CM&P] business has grown drastically at an average growth rate of 10.2% over the last five years. We have segments growing much faster than that, but overall, everybody’s experiencing a very high growth rate,” says Ron Puvak, executive director of The Association for Contract Packagers & Manufacturers (CPA).

Some of that is attributable to COVID-19, like in food and beverage, which are traditionally the most significant segments of CM&Ps. Still, the numbers indicate that the spike remained once CM&Ps met the immediate need.

“CM&Ps haven’t lost that business,” Puvak says. “There has been a conversion [by CPGs] away from doing it in-house, or with dedicated lines, to moving it out to contract facilities.”

Contract Manufacturing and Packaging to Keep Growing

Another reason Puvak projects this growth to continue—particularly in food and beverage—is where once it was common for CM&Ps to have short-term contracts of six months or less, many are now signing longer-term agreements. Others are turning to CM&Ps as risk management against future supply chain issues. Rather than dedicate complete in-house lines, CPGs and processors can be more flexible and put the capital investment in the hands of the CM&Ps.

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