Industry Description
The packaging & labeling services industry in the U.S. comprises contract-based packaging services for client-owned materials, along with related labeling and imprinting capabilities (NAICS 56191). The industry excludes the manufacturing of packaging materials and labeling products.
The following are some basic characteristics of the packaging & labeling services industry:
- Packaging & labeling services industry has a combined revenue of $10.3 billion, with a growth rate of 2.4% in 2019-2024
- There are approximately 3,100 businesses as of 2024
- The packaging & labeling services industry employs approximately 110,400 people
Industry Trends
The Packaging and Labeling Services industry is highly fragmented and competitive, with no single operator commanding a dominant share of the market. The market is characterized by a high degree of fragmentation, with opportunities available through mergers, acquisitions, and strategic alliances to gain market share. Operators range from small, independently run contract packagers serving local or regional clients to large multi-site corporations providing integrated fulfillment, labeling, and assembly solutions across a broad range of industries. Key companies also offer assembly and fulfillment, testing, and repackaging work. Some key external forces influencing the industry are (i) growth in e-commerce, (ii) demand from core end-use industries, and (iii) the shift toward sustainable packaging. Each of these is described in further detail below.
The rapid expansion of e-commerce has been a primary driver of demand for packaging and labeling services. As more consumers shop online, the volume of individually packaged, labeled, and shipped goods has grown substantially, creating increased outsourcing opportunities for industry players. The global e-commerce packaging market was valued at $77.4 billion in 2024 and is projected to reach $124.9 billion by 2029, growing at a compound annual growth rate of 10.0%. This growth is underpinned by rising internet and smartphone penetration, expanding consumer spending power, and the continued shift in purchasing behavior toward online channels. The International Trade Administration projects that global B2C e-commerce revenue will grow to $5.5 trillion by 2027, a trend that will necessitate parallel growth in packaging and labeling capacity. Industry players that invest in scalable, flexible operations are well positioned to capture a disproportionate share of this demand.
Demand from core end-use industries — including food and beverage, pharmaceuticals, and personal care — is a foundational pillar of industry revenue and a key indicator of long-term growth. The food and beverage segment is the largest consumer of contract packaging services, driven by the growth of retailer private-label programs, which require rapid development, prototyping, and scaling of packaged goods without the brand owner’s internal manufacturing overhead. The pharmaceutical industry also represents a prime market stimulant, given its reliance on packaging for drug safety and integrity. Governments worldwide are enforcing stricter labeling regulations — particularly in the food, pharmaceutical, and chemical sectors — to ensure consumer safety and transparency, which further increases the complexity and value of outsourced labeling services. As these regulated industries continue to grow, so too does the demand for specialized, compliant packaging and labeling solutions, supporting sustained revenue growth for industry operators.
The shift toward sustainable and eco-friendly packaging has emerged as one of the most consequential structural trends reshaping the industry. The sustainable packaging market is projected to grow from approximately $292.7 billion in 2024 to $423.6 billion by 2029, reflecting a compound annual growth rate of 7.67%, driven by rising consumer interest in sustainability, the growing influence of circular economy practices, and stricter global regulations aimed at reducing packaging waste. Consumer sentiment is a key catalyst: 90% of consumers say they are more likely to purchase from a brand or retailer if its packaging is eco-friendly, and nearly three-quarters of shoppers indicate a willingness to switch brands in favor of those offering sustainable packaging. Looking forward, 69% of shoppers expect companies to offer sustainable packaging, signaling that eco-friendly design is becoming a core driver of customer loyalty. Industry players that develop expertise in recyclable, biodegradable, and low-waste packaging solutions stand to gain a competitive advantage as brand owners increasingly outsource this specialized work to meet both regulatory requirements and consumer expectations.
The Packaging and Labeling Services industry in the U.S. is well supported by a confluence of external tailwinds. The continued rise of e-commerce expands the universe of goods requiring individualized packaging and tracking, while the regulatory complexity of core end-use sectors such as food and beverage and pharmaceuticals increases the value and necessity of professional labeling services. Sustainability imperatives are further reshaping how packaging is designed and sourced, creating new service opportunities for operators who can adapt. Industry players that align their capabilities with these three forces are positioned to capture growing demand and expand their market presence.
Key Performance Metrics
In evaluating the packaging & labeling services industry, the following metrics can provide useful information in comparing a subject company to guideline companies and transactions.
- Changeover time
- Contract duration mix
- First pass rate
- Line utilization rate
- Rework rate
- Units per hour
Industry Organizations & Publications
The following organizations publish useful information:
- Association for Contract Packagers & Manufacturers (CPA)
- Association for Packaging and Processing Technologies (PMMI)
- Institute of Packaging Professionals (IoPP)
- International Safe Transit Association (ISTA)
Guideline Information: Private Purchase Transactions
Most packaging & labeling services companies are privately owned. While there are publicly traded companies, data regarding the sale of 100% of closely held packaging & labeling services companies is generally the best source of information to appraise a subject company.
The following are typical appraisal multiples from sale of packaging & labeling services companies:
- Revenue multiples between 0.2 and 1.0 times
- Gross Profit multiples between 0.5 and 1.6 times
- EBITDA multiples between 2.5 and 17.4 times
In selecting guideline transactions, it is of critical importance to select transactions that are similar to the subject company. Unique factors for any subject company must be considered to yield credible results. Additionally, industry economic conditions also vary over time, which must also be considered.
Guideline Information: Publicly Traded Companies
Most packaging & labeling services companies are privately owned; however, there are a few that are publicly traded, meaning it is possible to compare a subject company based on industry metrics and appraise using industry multiples. However, as with the guideline transactions described above, it is of critical importance to select publicly traded companies that are similar to the subject company. Also be aware that multiples of certain publicly traded companies may not accurately reflect a subject company.
The largest publicly traded U.S. packaging & labeling services company is Sonoco Products Company (SON) – $4.6 billion market capitalization. The Price-to-Earnings (P/E) ratio of this company is 31.2 times.
Appraisal Rules of Thumb
Please note you should never use a Rule of Thumb in place of a professional appraisal. You will never see a competent professional appraiser do their work using a Rule of Thumb. The professional standards that govern professional appraisal practice, which all professional appraisers should follow, specifically prohibit the use of Rules of Thumb.
Packaging & labeling services companies are businesses sold based on sound economics. These economic considerations can be measured using the key performance indicators described above, but such economics cannot be accurately summarized in these simple formulae.