FLORIDA — According to Straits Research, the packaged food market is expected to grow at a compound annual growth rate (CAGR) of 4.56% in the forecast period from 2020 to 2026.
The global packaged food market is expected to reach $3.86 trillion by 2026.
A consumer’s buying behavior plays a vital role in the growth of packaged food market. For a couple of years, consumers have been tilted towards convenient food, said Straits. A fast-paced, hectic lifestyle, time constraints for meal preparations, developing e-commerce and rising disposable income, have boosted the packaged food sales. Moreover, increasing preference for convenience is expected to bolster the demand further.
COVID-19: Invokes Consumers to Prefer Packaged Food
The pandemic has dramatically affected people's lifestyle and their buying behaviors. Subsequent lockdown triggered panic buying among people, growing the demand for packaged food products. Customers shifted towards healthy and natural food, thus encouraging packaged food companies to expand their portfolios. As a result, packaged food products such as ready-to-eat food, intermediary food items and frozen food demand surged during the lockdown. Consumers stockpiled ready-to-eat and ready-to-cook products during the initial phases of lockdown.
Further, the lockdown encouraged e-commerce. According to the Department of Agriculture (USDA), India’s online grocery markets grew by nearly 80%, estimating $2.66 billion in 2020. The pandemic has invoked people to re-think their eating habits. Thus, the demand for packaged food is expected to increase further.
Packaged Food Market by Product Type
High Consumption of Baby Products. Based on product type, the packaged food market is segmented into ingredients and extracts, baby products, bakery and confectionery, oils and fats, etc. Among these, baby products dominate the market of packaged food. Baby products have witnessed a prominent growth due to the increasing number of working parents and growing awareness of nutritional benefits for infants and toddlers.
Packaged Food Market by Distribution Channel
E-retails Foster the Growth of Packaged Food Products. Hypermarkets and supermarkets are the prominent distribution channels of packaged food products. Food under one roof and fast shopping are the two main factors driving the packaged food demand.
In India and China, the concept of packaged food and convenience has increased rapidly. People are now more aware and tilted towards organized retailing. Physical experience is one of the reasons why a consumer visits the supermarket. As more people get vaccinated, shopping centers will experience more customers.
The e-commerce sector, which was already booming, saw a sudden increase in sales during the pandemic. During the pandemic, many grocers shifted their business online to promote no-contact shopping. According to UNCTAD, the online retail sector grew its sales from 16% to 19% in 2020.
Packaged Food Market by Regions
Inclination Towards Ready-to-Eat Food Products in APAC. Asia-Pacific is expected to grow at a faster rate due to the increasing awareness and rising e-commerce industry. China is the major region for food packaging and accounts for almost half of the supply in the provincial market. India, Japan, South Korea are among the fastest-growing countries, inclining towards ready-to-eat food products. According to the IBEF, India is expected to become the third-largest online retail market by 2030 after the U.S. and China.