Wood packaging market size is forecast to reach $4.21 billion by 2025, after growing at a CAGR of 5.39% during 2020-2025, owing to wide usage of wood to manufacture containers because its relatively plentiful, inexpensive and easy to obtain characteristics. There is an increasing demand for wood packaging as they are easier to shape and less fragile. Also, wood packaging has durability characteristics that permit extensive reuse. Moreover, the wood packaging is engineered to allow for re-use multiple times and allows wood packages to be mechanically disassembled and rebuilt into new pallets with recycled wood components, which is anticipated to drive the wood packaging market substantially during the forecast period.
By Type – Segment Analysis
The wooden pallet packaging segment held the largest share in the wood packaging market in 2019, owing to its superior characteristics such as low cost, good strength, stiffness for the price, quick and easy to make, easily customizable, readily available globally, recyclable, made from renewable material, high friction to minimize freight movement and easily repairable. Also, wooden pallets gained its popularity with the advent of the forklift truck and containerized transport as they increased the efficiency of loading and unloading freight. In some cases, wooden pallets are even used to display products in retail or wholesale environments. Thus, wooden pallets are being widely used for storage as well as freight and have become an integral part of most racking and warehousing systems, which is boosting the demand for wooden pallet packaging during the forecast period.
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By Application – Segment Analysis
The food & beverages storage application held the largest share in the wood packaging market in 2019 and is growing at a CAGR of 5.63%, owing to the increasing demand of wood packaging from the food products storage industries to pack, transport, handle, preserve, present and give an added value to the food products such as fruit, vegetable, fish, seafood, wines, oils, dairy, conditioned meat, bakery, dried fruits and more. Also, the wood packaging is being widely used in the industry as wooden packages are a good medium to protect the things kept inside since wood packages are relatively resistant to different weather conditions, making the stored product safe inside the box. Moreover, wooden packages are not damaged by moisture and therefore a perfect choice when it comes to the transportation of goods which can be damaged by moisture. Thus, the wide usage of wood packaging to store food products and beverages is anticipated to propel the wood packaging market during the forecast period.
By Geography – Segment Analysis
Asia Pacific region held the largest share in the wood packaging market in 2019 up to 31%, owing to increasing adoption of wooden packaging in the food and beverage industry to transport food and beverage products because of its ability to absorb bacteria naturally, which helps protect these products from cross-contamination. In 2016, according to the Federation of Indian Chambers of Commerce & Industry (FICCI), the packaging industry stood at USD 700 billion and was one of the fastest-growing industries globally. In developing countries like India, it grew at a CAGR of 16%. The market is flourishing in North America region as well. According to the United States Department of Agriculture (USDA), in 2018, Canada’s total food and beverage industry sector sales reached $87 billion. The Government of Canada is expecting to increase the food exports to 26 percent by 2025 up to C$ 85 billion. Also, according to the International Trade Administration (ITA), the US export value of wood packages increased from 157,321 in 2018 to 184,777 in 2019 while 164,140 wood packages were imported in 2019. Thus, the rising food and beverage industry coupled with the increasing export value of commodities is increasing the demand for wood packages in the region, which is anticipated to further drive the wood packaging market in North America and Asia Pacific during the forecast period.
Drivers – Wood Packaging Market
Increasing Construction Activities
The building and construction activities are increasing in countries, such as India and Singapore due to economic reforms and rising per capita income of the individuals. The construction activities require wooden packaging to transport the building products between suppliers and construction sites. The Indian government has initiated projects, such as ‘100 smart cities’ and ‘Housing for All by 2022,’ which are expected to drive the Indian construction market over the forecast period. According to the International Trade Administration (ITA), the construction value of China in 2018 was USD 893.58 and it is forecasted to reach USD 968.06 by 2019. Also, the Chinese construction industry is forecasted to grow at an annual average of 5% in real terms between 2019 and 2023. Such government’s initiatives are leading to increased building and construction activities in the region, which acts as a driver for the wood packaging market during the forecast period
Increasing Adoption of Wood Packaging Over Plastic Packaging
Packaging is one of the most important parts of the industry and there is an increasing demand for wooden packaging these days as there is a rising awareness about the negative impact of usage of plastic on the environment. Also, the average cost of wooden pallets is two times cheaper than that of plastic pallets. And the wooden pallet manufacturers are introducing stackable pallets that help reduce floor space and the cost of storing & transit goods. Moreover, wood packaging products have several advantages such as temperature tolerance, durability, easy to repair, cleats for increased sturdiness, reusable, eco friendly, high friction, and customizable, which acts as driver for the wood packaging market during the forecast period.
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Challenges – Wood Packaging Market
Several Disadvantages Related With Wood Packaging
Some wooden packages such as wooden crates are usually custom made, so they can be expensive. The untreated wood packages can easily become contaminated with fungi and bacteria. Often the treatment of wooden crates with paint or other chemicals causes wood quality deterioration. Also, the wood material may be too hard or rough for products like soft fruits, and therefore liners of soft material may be needed, which further increases the expenses. Metallic packagings are being preferred as it is hard to dispose of the wooden crates after use. Moreover, the continuous manufacturing of wooden packagings such as crates, pallets, containers, and more have put an extra claim on the natural forest resources. All these disadvantages of wood packaging may hinder its market growth during the forecast period.
Covid-19 Impact on The Wood Packaging Market
The COVID-19 pandemic outbreak has impacted the imports and exports of food products. Governments of the leading producing countries have imposed import and export restrictions which are significantly disrupting the shipping and transportation of various commodities, which is disrupting the wood packaging demand. Due to the COVID-19 pandemic, most of the countries have gone under lockdown, due to which the construction projects and operations are disruptively stopped, which is hampering the market growth. Also, since the wood packaging cannot be sanitized evenly, the plastic and metallic packages are being preferred more, which is affecting the wood packaging market negatively.
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the wood packaging market. Major players in the wood packaging market are Universal Forest Products, Inc., Shur-way Group Inc, Palcon, Cox Co, and Stora Enso. Other prominent players in the market are Bay Wood Products, Inc., Rowlinson Packaging Ltd, C&K Box Company, Inc., InterAgra s.c., and Brambles Ltd.
In May 2019, Stora Enso has launched new wood-based composite DuraSense which is specially designed for food, cosmetics, and luxury brands. The main aim of the launch is to replace fossil packing with renewable ones. This will help them to meet the rising demand of people to reduce the usage of plastics.
In March 2017, Pujolasos has launched new range of wooden makeup packaging which consists of mascara, nail polish, lip- gloss, lotion, and compact. The main aim of the launch is to meet the need and requirements of the customer who want products that are natural and sustainable.
Asia Pacific dominates the wood packaging market, owing to the increasing food and beverage industry in the region. Increasing population coupled with the increasing per capita income are the key factors driving the food and beverage industry in Asia Pacific.
Wood packaging such as pallets and wooden boxes for export and import is a cost-effective option for end-users when compared with substitute products such as plastic pallets as they efficiently reduce the cost of shipment, which is likely to drive the wood packaging market.
The change in the global trade pattern toward containerized seaborne and airborne trade has increased over time. Wooden pallets and boxes are increasingly used to facilitate the smooth transportation of containerized goods, which is expected to drive the wood packaging market.
Due to the COVID-19 pandemic, most of the countries have gone under lockdown, due to which various operations of shipping and transportation has been negatively affected, which is hampering the wood packaging market growth.
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