Compostable Packaging Market Size, Share & Trends Analysis Report By Material (Cellulose, Bamboo), By Application (Cosmetics, Pharmaceuticals), By Product, By Region, And Segment Forecasts, 2024 - 2030

Compostable Packaging Market Trends

The global compostable packaging market size was estimated at USD 74.01 billion in 2023 and is expected to grow at a CAGR of 6.5% from 2024 to 2030. The market is driven by a combination of environmental concerns, regulatory frameworks, consumer preferences, and advancements in material science.

Government regulations and policies are another significant driver for this market. Many countries and regions are imposing strict regulations on single-use plastics and encouraging the use of compostable alternatives. For instance, the European Union’s Single-Use Plastics Directive has set restrictions on plastic packaging, which has led to increased adoption of compostable packaging. Similarly, cities across the U.S., including New York and San Francisco, have introduced bans on non-compostable plastics, creating a favorable regulatory environment for compostable packaging manufacturers.

In addition, corporate social responsibility (CSR) initiatives by businesses play a key role in driving the adoption of compostable packaging. Companies are increasingly recognizing the importance of sustainability in their branding and operations. Packaging is often the most visible aspect of a product, and shifting toward compostable materials allows companies to showcase their commitment to environmental stewardship. For instance, brands like Lush and Pangea Organics use compostable packaging as part of their broader sustainability strategies, appealing to environmentally conscious consumers while aligning with CSR goals.

Finally, technological advancements in material science have improved the performance and cost-efficiency of compostable packaging, further fueling market growth. Innovations in biopolymers, such as polylactic acid (PLA) and polyhydroxyalkanoates (PHA), have made it possible for compostable packaging to match the durability and functionality of traditional plastics. This has opened new possibilities for industries like food & beverage, cosmetics, and consumer goods, which rely heavily on packaging solutions. With continued research and development, the cost gap between conventional plastics and compostable materials is narrowing, making compostable packaging a viable option for mass-market applications.

Material Insights

Based on material, the market has been segmented into polylactic acid (PLA), cellulose, bamboo, wood, and polyhydroxyalkanoate (PHA). PLA dominated the overall market with a revenue market share of over 70.0% in 2023 and is expected to witness robust growth with a CAGR of 6.6% over the forecast period. It is a biopolymer derived from renewable resources such as corn starch or sugarcane. PLA is widely used in compostable packaging products due to its ease of processing and relatively low cost. PLA offers good mechanical properties and is transparent, making it versatile for different applications.

The wood material segment is expected to grow at the fastest CAGR during the forecast period. Wood-based packaging materials, such as molded fiber or paper products, are commonly used in packaging applications. Wood is naturally compostable and can be transformed into various packaging forms, including cartons, trays, and cushioning materials. It offers structural strength and is suitable for both food and non-food applications.

Product Insights

Based on product, the market has been segmented into bags, trays, pouches, films, and others. Pouches dominated the overall market with a revenue market share of over 33.0% in 2023. The increasing demand for convenient and sustainable packaging in the food and beverage industry is driving the adoption of compostable pouches. Compostable pouches are flexible, lightweight packaging options commonly used for snacks, coffee, grains, and other dry food items. These pouches can be manufactured using plant-based materials such as polylactic acid (PLA) and paper laminates.

Compostable films are expected to grow at the fastest CAGR during the forecast period. These thin, flexible sheets are used as protective packaging for food products, consumer goods, and industrial applications. They are often made from materials like PLA, polyhydroxyalkanoates (PHA), or starch-based polymers. Compostable films degrade naturally under composting conditions and are used for wraps, laminates, and coatings.

Application Insights

Based on the application, the market is segmented into food & beverages, pharmaceuticals, cosmetics, and others. Food & beverages dominated the market and accounted for the largest revenue share of over 46.0% in 2023. This positive outlook is due to the growing demand for sustainable food packaging options, stringent regulations on single-use plastics, and consumer preference for environmentally friendly brands. Besides, the rise of e-commerce and food delivery services has increased the need for compostable packaging, further fueling demand in this segment.

In the pharmaceutical sector, compostable packaging is gaining momentum as companies strive to minimize their environmental footprint while maintaining the integrity and safety of their products. Packaging in this industry must meet high standards to ensure drug stability, protection, and compliance with health regulations, and compostable materials are being designed to meet these requirements. Moreover, the cosmetics industry progressively adopts compostable packaging to align with natural and eco-conscious beauty product trends. Packaging for cosmetics, which often involves multiple layers and materials, is being reimagined with biodegradable and compostable options to reduce environmental harm.

Regional Insights

The compostable packaging market in North America has a well-established waste management infrastructure. Moreover, the growing emphasis on composting programs has also contributed to market growth. Cities such as San Francisco, Seattle, and Portland have implemented mandatory composting laws, requiring residents and businesses to separate organic waste. This has led to an increased demand for compostable packaging that can collect and dispose of organic waste without contaminating the composting process. In addition, many grocery stores, restaurants, and other businesses in North America are voluntarily adopting compostable packaging products, such as bags, pouches, and films, as part of their sustainability initiatives, further driving market expansion.

U.S. Compostable Packaging Market Trends

The U.S. compostable packaging market is growing due toincreasing environmental awareness and concern about plastic pollution. Many U.S. cities and states have implemented bans or restrictions on single-use plastic bags, creating a demand for alternative solutions. For example, California banned single-use plastic bags statewide, while cities such as New York and Chicago have followed suit. This legislative push has encouraged consumers and businesses to seek more eco-friendly options, including compostable packaging.

Europe Compostable Packaging Market Trends

Europe dominated the market and accounted for the largest revenue share of over 43.0% in 2023. Europe has emerged as a leader in driving the compostable and packaging market due to a combination of stringent environmental regulations, growing consumer awareness, and government initiatives. The European Union has implemented several directives to reduce plastic waste and promote sustainable alternatives. For instance, the EU Plastics Strategy, adopted in 2018, sets targets for all plastic packaging to be recyclable or reusable by 2030. This has created a strong incentive for businesses and consumers to switch to more environmentally friendly options such as compostable packaging products.

The UK compostable packaging market is primarily driven by stringent regulations to reduce plastic waste and promote sustainable alternatives. For instance, the UK Plastics Pact, launched in 2018, set ambitious targets for eliminating problematic plastics and increasing the use of recyclable, reusable, or compostable packaging. This regulatory push has incentivized manufacturers and retailers to invest in compostable packaging options. Major supermarket chains like Tesco and Sainsbury's have begun offering compostable bags for fruit and vegetables.          

Asia Pacific Compostable Packaging Market Trends

The compostable packaging market in Asia Pacific is growing due to rapid urbanization. The growing middle class contributes to higher waste generation rates, particularly in Indonesia, Vietnam, and the Philippines. This has led to a greater need for effective waste management solutions, including biodegradable refuse bags. For example, Jakarta, Indonesia's capital, produces around 7,000 tons of waste daily, creating a significant market opportunity for eco-friendly waste disposal products.

China compostable packaging market is expected to grow significantly due to increasing environmental awareness and stricter regulations. As the world’s largest consumer of plastics, China has been under pressure to manage its waste effectively. In recent years, the Chinese government has implemented strict regulations and policies to reduce single-use plastics, including bans on non-degradable plastic bags in major cities. The 2020 nationwide ban on non-degradable plastic bags for all major urban areas, including shopping malls and restaurants, created a significant demand for alternative, eco-friendly materials, including compostable packaging products such as bags, trays, films, and pouches.

Key Compostable Packaging Company Insights

The market's competitive environment is shaped by a growing emphasis on sustainability, driving innovation among established and emerging players. Key companies lead the market with advanced biodegradable materials and a strong focus on R&D. Smaller; niche manufacturers are also entering the space, leveraging regional demand for eco-friendly alternatives. The market is highly fragmented, with players differentiating through product certifications, material sourcing, and sustainability standards. Intense competition is driven by consumer preference for environmentally friendly products and increasing government regulations encouraging sustainable waste management solutions.

Recent Developments

• In January 2024, Sealed Air launched its new CRYOVAC brand compostable overwrap tray at the International Product & Processing Expo (IPPE) 2024, marking a significant advancement in sustainable packaging for protein products. This innovative tray is designed as a biobased alternative to traditional expanded polystyrene (EPS) trays.

• In September 2024, Pakka Ltd., a major compostable packaging company, launched a new range of compostable flexible packaging solutions aimed at the Fast-Moving Consumer Goods (FMCG) industry. This initiative represents a significant step in addressing environmental concerns related to packaging waste, particularly in India.

Compostable Packaging Market Report Scope

Global Compostable Packaging Market Report Segmentation

This report forecasts volume & revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global compostable packaging market report based on material, product, application, and region:

• Material Outlook (Volume, Kilotons; Revenue, USD Million, 2018 - 2030)

  • Polylactic Acid (PLA)

  • Cellulose

  • Bamboo

  • Wood

  • Polyhydroxyalkanoate (PHA)

• Product Outlook (Volume, Kilotons; Revenue, USD Million, 2018 - 2030)

  • Bags

  • Trays

  • Pouches

  • Films

  • Others

• Application Outlook (Volume, Kilotons; Revenue, USD Million, 2018 - 2030)

  • Food & Beverages

  • Pharmaceuticals

  • Cosmetics

  • Others

• Regional Outlook (Volume, Kilotons; Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

    • France

    • Italy

    • Spain

  • Asia Pacific

    • China

    • India

    • Japan

  • Central & South America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • UAE

    • South Africa