Craft bags, which are usually used to package retail items, present gifts, take away food, and serve promotional purposes, are paper carry bags that the user cherishes based on eco-friendliness as well as self-design. Growing impetus towards use of plastic alternatives and brand-stories make craft bags an inevitable aspect in sustainable but visually appeasing packaging strategies across industries.
As the craft bag market is said to be growing at a CAGR rate of 4.4%, it is estimated to reach USD 1.7 billion in value by 2025 and then expect it to be worth USD 2.7 billion by 2035. Growth is propelled due to strong increase in customer demand for recyclable materials, rise in artisanal and premium product lines, and the establishment of an overall environment cultivation towards using paper packaging in foodservice, fashion, and retail.
Versatility, biodegradability, and branding potential make craft bags important components of both luxury and budget packaging solutions.
Key Market Metrics
| Metric | Value |
|---|---|
| Market Size in 2025 | USD 1.7 Billion |
| Projected Market Size in 2035 | USD 2.7 Billion |
| CAGR (2025 to 2035) | 4.4% |
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Asia-Pacific is a major driver of craft bag growth. Currently, more and more markets in retail, food service, and e-commerce packaging are accepting craft bags. Countries like India, China, and Vietnam are investing in kraft paper production and eco-packaging hubs.
A plastic ban coupled with a zero-waste initiative is speeding up the transition towards reusable and biodegradable bags. Regional retailers and food vendors are personalizing craft bags to stand out in competitive marketplaces. Government support towards small paper packaging units and rising local consumer preference for ecologically sound products are contributing to the growth.
North America is still advocating for paper alternatives with increasing regulations on plastic use. The United States and Canada are embracing premium and trendy craft bag formats in specialty retail, gift packaging, and takeout.
Recycled content requirements, consumer demands for low-carbon packaging, and interest in reusable bag programs strengthen the demand. High-end retailers are embracing custom-printed and textured craft bags for luxury positioning, while QSRs are are rapidly switching from plastic bags to grease-resistant paper alternatives.
Innovation and sustainability for this kind of bag are headed by Europe. Countries like France, Germany, and the Netherlands are at the forefront of plastic-free retail initiatives, compelling retailers to transition to fully recyclable, FSC-certified paper bags.
The increasing interest in artisanal, heritage branding in the region fits well with the feel and rustic aesthetics of craft bags. These bags, with reinforced handles, biodegradable coatings, and cradle-to-cradle certifications, are penetrating even grocery, fashion, and beauty retailing.
Material strength, water resistance, and cost balance
Craft bags face challenges around durability under heavy loads or wet conditions. Balancing aesthetics, cost-efficiency, and functional performance-especially in grease resistance or tear resistance-can limit wider adoption across high-volume or heavy-duty applications.
Personalization, smart branding, and circular design
The push toward hyper-customization is boosting demand for digitally printed craft bags. QR code integration, loyalty-program tie-ins, and compostable innovations are elevating brand interaction. Circular packaging strategies and zero-waste retail models are expanding the market for reusable, upcycled, or refill-ready craft bag designs.
Craft bags have gained a decent trade since around 2020 till the coming 2024 due to the sustainable packaging that retailers look for during this pandemic-influenced boom in e-commerce. However, consistency in production has been hampered due to the volatility that the raw material prices have been going through as well as labor shortages.
From 2025 to 2035, craft bags will become core to a no-waste retail, smart packaging campaigns, and digital brand experiences. They will be the storytelling, transparency, and carbon-conscious design media for retailers and food brands. New fronts for design and functionality will be open with compostable inks, eco-textured finishes, and automation in production.
Market Shifts: A Comparative Analysis (2020 to 2024 vs. 2025 to 2035)
| Market Shift | 2020 to 2024 Trends |
|---|---|
| Regulatory Landscape | Rise in paper bag mandates and plastic bans |
| Material Innovation | Use of kraft paper and laminated linings |
| Industry Adoption | Growth in food, fashion, and gift retail |
| Market Competition | Regional paper converters and independent print shops |
| Market Growth Drivers | Sustainability mandates and retail premiumization |
| Sustainability and Environmental Impact | Shift to recyclable and partially compostable formats |
| Integration of AI and Process Optimization | Manual folding and batch print runs |
| Advancements in Packaging Technology | Standard flat-bottom or twisted-handle designs |
| Market Shift | 2025 to 2035 Projections |
|---|---|
| Regulatory Landscape | Universal standards for compostable and certified recyclable paper bags |
| Material Innovation | Expansion of waterproof, mono-material, and carbon-negative fiber -based bags |
| Industry Adoption | Adoption across zero-waste, luxury, and refill-store formats |
| Market Competition | Entry of global packaging leaders, automation-first startups, and eco-design specialists |
| Market Growth Drivers | Circular economy goals, interactive branding, and refillable packaging adoption |
| Sustainability and Environmental Impact | Widespread use of fully compostable, biodegradable, or reusable craft bags with lifecycle transparency |
| Integration of AI and Process Optimization | On-demand digital printing, AI-driven production workflow, and variable data application at scale |
| Advancements in Packaging Technology | Advanced folding, embossed finishes, smart tags, and grease-proof coatings for food applications |
The United States dominates the craft bags market due to the growing demand for eco-friendly, reusable, and aesthetically appealing packaging across retail, food service, and personal care sectors. Brands favorkraft paper bags for their recyclability, durability, and premium look, especially as consumers shift away from plastic.
Retailers, bakeries, and organic food stores are increasingly adopting printed craft bags with custom logos, QR codes, and biodegradable coatings. The USA market is driven by sustainability legislation, including bans on plastic bags and mandates for compostable packaging. Manufacturers are innovating with water-based inks, reinforced handles, and AI-powered cutting systems to improve efficiency and quality.
Additionally, companies are integrating tamper-evident features for enhanced security. The trend of local sourcing is encouraging the use of regionally produced, FSC-certified paper. Digital printing technologies are enabling faster prototyping for seasonal and campaign-specific designs. Furthermore, smart tags and authentication elements are being explored for premium craft packaging.
| Country | CAGR (2025 to 2035) |
|---|---|
| United States | 6.8% |
The UK craft bags market is expanding due to heightened awareness around plastic pollution and growing interest in sustainable lifestyle products. Retailers and event organizers use custom-printed paper bags made from recycled and FSC-certified paper as alternatives to plastic carriers.
Government policies favoring eco-friendly packaging, combined with consumer demand for minimalist, branded, and reusable solutions, fuel innovation. Companies are developing greaseproof, water-resistant, and tear-resistant craft bags for food and non-food applications.
The rise of gift packaging, boutique branding, and online craft sales continues to support market growth in the UK. Additionally, smart printing with QR codes is helping brands communicate sustainability credentials. Digital platforms are enabling small businesses to launch personalized bag lines quickly. Furthermore, luxury retailers are adopting foil stamping and textured paper for premium unboxing experiences.
| Country | CAGR (2025 to 2035) |
|---|---|
| United Kingdom | 6.5% |
Japan’s craft bags market benefits from the country’s cultural emphasis on presentation and packaging aesthetics. Retailers, cosmetics brands, and high-end bakeries use intricately designed kraft paper bags to enhance product value. Lightweight yet strong, these bags often feature handles made of twisted paper, ribbons, or flat paper handles for a premium unboxing experience.
Demand for sustainable, compostable, and non-bleached paper solutions is growing in line with Japan’s environmental goals. Manufacturers are investing in precision printing, embossing, and AI-assisted design to produce small-batch, custom craft bags efficiently.
Additionally, brands are experimenting with thermochromic inks and fragrance-embedded coatings to enhance sensory appeal. Limited-edition seasonal designs are fueling demand for short-run digital printing. Furthermore, Japan’s tourism and gifting culture continue to support craft bag sales through luxury retail and souvenir outlets.
| Country | CAGR (2025 to 2035) |
|---|---|
| Japan | 6.4% |
South Korea’s craft bags market is expanding rapidly due to the rise of lifestyle branding, K-beauty packaging, and premium retail experiences. Craft bags are widely used in cosmetics, cafes, and fashion sectors where brand storytelling and presentation are key. Eco-conscious millennials and Gen Z consumers are driving demand for printed paper bags with minimalist designs, soy-based inks, and eco-seals.
Companies invest in automation, recyclable materials, and digital customization to cater to both bulk and bespoke packaging needs. Government incentives promoting biodegradable and compostable materials are accelerating market adoption.
Additionally, limited-edition seasonal designs are driving demand for agile short-run printing. Innovations such as metallic foil stamping and die-cut windows are gaining traction in boutique branding. Moreover, AI-driven design platforms are enabling businesses to personalize craft bag artwork in real time.
| Country | CAGR (2025 to 2035) |
|---|---|
| South Korea | 6.6% |
The flat paper bag, stand-up craft bag, and handle bag segments are driving market growth as industries seek versatile, sustainable, and branded packaging alternatives to plastic. Technological innovations in printing, coating, and automation support scalability and design flexibility.
Growing demand for recyclable and compostable packaging is encouraging the use of bio-based materials in these segments. Customization tools are enabling smaller brands to launch limited-edition craft bags at competitive costs.
Flat Paper Bags Remain Popular for Simplicity and Cost-Efficiency
Flat paper bags are widely used in food takeout, bookshops, and small-scale retail for their minimalistic design and low cost. Brands leverage eco-labeling, water-based printing, and recycled paper to boost environmental appeal. Advancements in automatic bag-making machines support high-volume production with precision.
Stand-Up Craft Bags Gain Momentum in Food, Bakery, and Gifting Segments
Stand-up craft bags offer durability and shelf appeal, making them ideal for dry goods, baked items, and premium gifting. Manufacturers incorporate clear windows, foil linings, and resealable zippers for functionality and freshness. Innovations in barrier coatings and compostable films expand sustainable use cases.
Handle Paper Bags Expand Adoption in Retail and E-Commerce Packaging
Handle paper bags, including twisted-handle and die-cut handle styles, are preferred for strength and user convenience. Brands customize bags with embossing, foil stamping, and tactile finishes for upscale branding. Digital short-run printing enables personalized campaigns for seasonal promotions and local branding.
Research into water-resistant coatings, biodegradable adhesives, and digitally optimized cutting systems is improving the performance, durability, and sustainability of craft bags. Smart printing with QR codes and brand authentication tools are emerging as value-add features.
AI-based automation enhances print accuracy and shortens lead times for custom runs. Blockchain-based tracking systems are being explored to improve supply chain transparency. Augmented reality integration in bag designs is creating interactive customer experiences.
As businesses and consumers prioritize green, functional, and expressive packaging, the craft bags market will continue to expand. Innovation in design, substrate versatility, and smart integration will shape the future of this eco-friendly packaging category.
Craft Bags Market Maintains Market Relevance as Demand for Sustainable and Versatile Packaging Grows
Craft bags are coming fast into the fold of the market as brands, retailers, and consumers look for alternatives that are eco-friendly, functional, and colorful in place of plastic bags. These are most used in retail, gift packaging, food service, and promotions because of their biodegradability, strength, and ability to be branded.
The rise of using craft bags in the luxury retail packaging, grocery carry-out, and takeaway food services directly contributes to the growth. As the studies show more than 60% of retail outlets are currently converting to craft bags because of environment-friendly behavior and consumer preference toward using paper-based products.
Manufacturers are now focusing on recycled content, FSC-certified paper, and soy-based inks through which they produce such bags for environmental efficacy. Innovations in the printing, cutting dies, and handle reinforcements have also propelled their adoption across commercial and artisanal markets.
At the same time, advancements in material innovations by producing waterproof coatings like laminated kraft paper and compostable adhesives have enhanced durability without compromising eco-credentials. Further developments for reusable formats of craft bags with custom printing options are also attracting brands that have sustainability and eco-friendly goals.
Retail and Food Service Segments Drive Market Growth as Eco-Conscious Consumers Demand Paper-Based Packaging
Craft bags dominate in the retail and food service segments where environmental policies and branding opportunities converge. Retailers and restaurants increasingly use branded craft bags to reflect their eco-ethos and improve customer experience.
The ability to print promotional messages and event-specific graphics makes craft bags a popular choice for seasonal campaigns. Additionally, the rise of sustainable corporate gifting is driving more B2B demand for high-end craft bag solutions.
Retail Sector Expands Adoption of Craft Bags as Sustainable Packaging and Aesthetic Appeal Align
Retailers are turning to printed and die-cut craft bags to boost brand visibility and reduce plastic usage. From fashion boutiques to bookstores, businesses value the premium look and recyclability of kraft paper. Studies reveal that over 70% of independent retailers now offer branded craft bags, using natural finishes, foiling, and soft handles to enhance unboxing experiences and create tactile value.
With increasing demand for personalized shopping experiences, brands leverage craft bags to include messages, QR codes, and loyalty program info on-pack. Despite advantages like biodegradability and strength, the market faces challenges such as moisture sensitivity and cost competitiveness with plastic. However, innovations in barrier coatings and low-cost recycled paper solutions are addressing these concerns.
Food Service and Gifting Segments Boost Market Demand as Functional and Decorative Needs Grow
Restaurants, cafes, and gifting companies use craft bags to deliver safe, stylish, and eco-friendly packaging. Their grease resistance, printability, and handle versatility make them ideal for everything from bakery boxes to corporate gift packaging. The rise in online gifting and takeaway food orders is pushing demand for customizable, durable craft bags with minimal environmental impact.
While craft bags offer aesthetic value and sustainability, challenges like storage bulkiness and wet-strength limitations exist. Still, developments in compact-folding formats, reinforced gussets, and laminated interiors are expanding their usability.
The craft bags market is driven by sectors such as fashion retail, food service, events, and eco-conscious packaging. Leading manufacturers are introducing biodegradable coatings, digital printing capabilities, and automated bag-converting machinery. Market trends include increased use of recycled materials, reusable craft tote hybrids, and minimalist design aesthetics.
Collaborations between packaging suppliers and sustainability-focused brands are fueling innovation. Smart packaging features such as QR code-enabled loyalty programs are gaining traction in upscale craft bag formats.
Brands are also incorporating scent-infused coatings and textured finishes to enhance sensory appeal. Custom handles made from jute, rope, or bamboo are adding artisanal value. Moreover, innovations in modular bag design are enabling craft bags to be repurposed for storage and retail display.
Market Share Analysis by Company
| Company Name | Estimated Market Share (%) |
|---|---|
| Mondi Group | 12-16% |
| Novolex ( Bagcraft ) | 9-13% |
| WestRock Company | 7-11% |
| Smurfit Kappa Group | 5-9% |
| International Paper Co. | 4-7% |
| Other Companies | 51-61% |
| Company Name | Key Offerings/Activities |
|---|---|
| Mondi Group | Offers FSC-certified kraft paper bags with barrier coatings and high-speed production. |
| Novolex ( Bagcraft ) | Develops grease-resistant, custom-printed craft bags for food service and retail. |
| WestRock Company | Focuses on recyclable paper bags with enhanced strength for carryout and gifting. |
| Smurfit Kappa Group | Specializes in customizable, eco-friendly craft bags for retail promotions. |
| International Paper Co. | Innovates with laminated kraft materials and reusable paper bag designs. |
Key Company Insights
The overall market size for the Craft Bags Market was USD 1.7 Billion in 2025.
The Craft Bags Market is expected to reach USD 2.7 Billion in 2035.
The Craft Bags Market will be driven by demand for plastic alternatives, increased focus on sustainability, customization in retail and food service, and regulatory support for paper-based packaging.
The top 5 countries driving the development of the Craft Bags Market are the USA, Germany, China, India, and the UK.
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