Compostable Bags Market – Growth, Trends & Future Outlook

May 14, 2025

As sustainability becomes a global priority, compostable bags are emerging as a key solution to reduce plastic waste. With growing consumer demand, stricter regulations, and innovations in eco-friendly materials, the compostable bags market is expanding rapidly. This blog explores key trends, market drivers, and what the future holds for this green packaging alternative.

Global Compostable Bags Market Overview

The global compostable bags market is experiencing a significant transformation. As of now, the market size is estimated to be valued at approximately $4 billion, with a compound annual growth rate (CAGR) of about 15% projected over the next five years. This growth is primarily driven by shifting consumer preferences and regulatory pressures aimed at reducing plastic waste.

Key Growth Regions: North America, Europe, Asia-Pacific

-North America**: The United States and Canada are at the forefront due to stringent regulations against single-use plastics. The demand for compostable bags is rising, particularly in the retail and grocery sectors.

Europe: With initiatives like the EU Green Deal, European countries are implementing robust policies to phase out conventional plastics, driving the necessity for environmentally friendly alternatives.
Asia-Pacific: Countries such as India and Japan are also capitalizing on environmental concerns, increasing production and acceptance of compostable bags in daily use.

Demand Drivers: Plastic Bans, Consumer Awareness, ESG Policies

Several factors are propelling the compostable bags market:

Plastic bans: Government regulations targeting single-use plastics are urging businesses to seek sustainable alternatives.
Consumer awareness: Increasing public knowledge about the environmental impact of plastic has led consumers to seek eco-friendly products.
ESG (Environmental, Social, and Governance) policies: Companies are under pressure to demonstrate sustainability in their operations, making compostable bags a feasible choice.

Compostable Bags Market Trends

Government Regulations & Plastic Bans

Governments worldwide are enacting stricter regulations to combat plastic pollution. For instance:

The EU Green Deal aims to reduce plastic waste, mandating the use of compostable materials in specific sectors by 2025.
The U.S. Plastics Pact is fostering collaboration among various stakeholders to eliminate problematic plastic packaging, prompting a shift towards compostable options.
Canada’s single-use plastics ban prohibits the use of plastic bags, straws, and utensils, paving the way for compostable alternatives.

Rise of Eco-Conscious Consumers

Millennials and Gen Z are leading a movement favoring sustainability.

Demand from organic food, cosmetics, and retail sectors: These demographics are willing to pay more for products that align with their values. From organic food packaging to cosmetics using sustainable bags, the trend is undeniable.

As someone who is part of this eco-conscious wave, I feel a sense of responsibility to make sustainable choices. It's rewarding to see so many businesses shifting towards compostable packaging.

Material Innovation

The innovation in materials used for compostable bags has been remarkable.

Compostable films with barrier properties: These enable manufacturers to produce bags that not only decompose but also protect products from spoilage.
Home compostable vs. industrial compostable solutions: Consumers are now faced with choices regarding composting methods, broadening the market and catering to varying customer needs.

From my experience, seeing these advancements tells me that companies truly care about balancing functionality with sustainability.

Custom Branding & Private Label Compostable Bags

Another exciting aspect of the compostable bags market is the growth of customized and branded packaging.

Growth in customized, branded compostable packaging for SMEs and D2C brands: Small and medium-sized enterprises (SMEs) and direct-to-consumer (D2C) brands are increasingly adopting compostable bags for their branding initiatives, showcasing their commitment to the environment.

It’s inspiring to witness startups embrace sustainability through innovative packaging designs while appealing to the eco-conscious market.

Key Players in the Compostable Bags Market

The compostable bags market is characterized by a diverse range of players that contribute to its growth and innovation. Notable leaders in this space include:

Biobag: A pioneer in the development of compostable bags, Biobag offers a variety of products suitable for both residential and commercial composting.
BASF: This global chemical company has invested significantly in developing biodegradable and compostable materials, integrating them into their product lines for sustainable solutions.
Novamont: Known for its Mater-Bi technology, Novamont produces a range of biodegradable and compostable materials that are used in bag manufacturing.
TIPA: Focused on creating fully compostable flexible packaging, TIPA has positioned itself strongly within the food and fashion packaging sectors.
Emerging regional brands: Numerous local manufacturers are entering the market, providing innovative solutions tailored to regional needs.

Key Players in the Compostable Bags Market

Market Challenges

Despite the growing popularity of compostable bags, several challenges hinder widespread adoption:

Higher cost compared to traditional plastics: One of the primary barriers to the adoption of compostable bags is their production cost, which is generally higher than that of conventional plastic bags. This increased cost can deter businesses that are focused on price competitiveness.
Limited industrial composting infrastructure: The effectiveness of compostable bags relies on the availability of industrial composting facilities. In many regions, such infrastructure is lacking, which limits the actual composting of these products.
Mislabeling or greenwashing (regulatory gaps): The market faces issues with mislabeling, where products that are not truly compostable are marketed as such, leading to consumer confusion and mistrust. Additionally, regulatory frameworks that govern these products are often not sufficiently stringent, leading to inconsistencies in product quality.

Future Outlook (2025–2030)

As we look to the future, several trends and forecasts can be identified:

Market forecast by region and application: The compostable bags market is expected to see substantial growth across various regions, particularly in North America and Europe, as regulations against single-use plastics become stricter. They will see escalating adoption across applications such as grocery, food service, and e-commerce packaging.
Growing demand in food delivery, fashion packaging, and e-commerce: With the rise in food delivery services, there is an increasing need for sustainable packaging solutions that cater to this sector. Similarly, the fashion industry is gravitating towards eco-friendly packaging, while e-commerce continues to expand its use of compostable materials to enhance sustainability.
Role of innovation and certification standards: Innovations in material science will result in better-performing compostable bags. Certification standards such as TÜV Austria, BPI, and OK Compost will continue to gain importance, helping consumers identify genuine compostable products and assuring businesses of their sustainability commitment.

Why Businesses Should Watch This Market

Staying updated on the compostable bags market is crucial for businesses:

Competitive edge through early adoption: Companies that embrace compostable bags early can distinguish themselves in their respective markets, appealing to environmentally conscious consumers.
Alignment with ESG and CSR strategies: As Environmental, Social, and Governance (ESG) considerations become more vital for consumers and investors, utilizing compostable packaging aligns with these principles, enhancing a company's reputation.
Customer loyalty through sustainable packaging: There’s a growing consumer preference for brands that demonstrate a commitment to sustainability. Using compostable bags can help foster brand loyalty among eco-conscious customers.

FAQs

What is the CAGR of the compostable bag market?

The Compound Annual Growth Rate (CAGR) of the compostable bag market is projected to be around XX% from 2025 to 2030, driven by increasing regulations against single-use plastics and rising consumer awareness.

How do compostable bags compare in cost vs plastic?

Compostable bags currently have a higher price point than traditional plastic bags, often due to the costs of materials and production processes. However, prices are expected to decrease as technology improves and demand increases.

Are compostable bags scalable for mass production?

Yes, with advancements in manufacturing technology and increasing demand, compostable bags can be scaled for mass production. Companies are investing in more efficient production methods to meet these needs.

What certifications are needed to enter this market?

Key certifications that companies should consider obtaining include TÜV Austria, BPI (Biodegradable Products Institute), and OK Compost. These certifications help assure consumers and businesses of the compostability of the products.

Conclusion

The compostable bags market is growing rapidly and transforming packaging across industries. With innovation and regulation on the rise, now is the time to invest or switch. KimEcopak is ready to help your business lead the sustainable packaging movement.