According to the report, by Rabobank Food & Agribusiness Research and Advisory, this will be driven by underlying demand growth, market share gains of ‘A-brands’ and increased levels of outsourcing activity.
An anticipated compound annual growth rate (CAGR) of more than 8% will see contract manufacturing reach a size of at least €14bn to €16bn in the coming eight years.
Contract manufacturing addresses some of the most profound challenges faced by the food and agri (F&A) industry such as the scarcity of agricultural raw materials, a constrained financial playground, growth in private label and the ongoing consolidation in food retail.
Despite the buoyant growth outlook, contract manufacturing will still be a modest niche even in 2020, by then representing only 6% of the European processed food and beverages market.
However, in terms of the implied shift in the supply structure and the headache reduction for brand manufacturers, contract manufacturing is unmatched in its impact on the food and beverage market.
Source: Rabobank
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