The surge in demand for paper packaging following the Covid pandemic has since decreased – why is that so?
The paper packaging sector, a crucial component of many industries, is currently experiencing a rollercoaster ride, with no clear bounce back in sight. This is due to a perfect storm of factors, including increased bureaucracy around environmental regulation, geopolitical factors like the Ukraine war, and yo-yoing US tariffs.
In 2020 and 2021, the sector saw a surge in demand across Europe, particularly for corrugated and folding cartons, due to the pandemic. However, by 2022, consumer demand had spiked, leading to destocking of both corrugated and folding cartons. This trend continued into 2023, with corrugated experiencing its second consecutive negative year for growth, and folding cartons experiencing its first.
The recovery for the paper packaging sector is not expected in 2025, but the bounce-back will be driven by the increasing product demand in the paper segment, supported by innovations and growth in key industries such as food and consumer goods packaging, along with a growing focus on environmentally friendly construction and infrastructure development.
One factor that could accelerate this recovery is the shift towards private labels moving towards paper packaging. Consumers' sustainability demands are causing own brand producers to move away from plastic packaging formats, and the growth in demand for private label products is having an impact on demand for paper packaging.
However, the paper packaging sector is facing pressure to trim prices due to cost reduction demands, which eats into their margins and takes resources away from environmental matters. Inflation has also increased packaging production costs, while at the same time, there are significant cost reduction pressures from retailers and brand owners.
Despite these challenges, there are opportunities for growth. For instance, Eastern European suppliers are supplying more and more Western European customers, taking market share. The key to increasing the use of reusable packaging in supermarkets could also be a game-changer for the sector.
As we look towards 2025, understanding global packaging sustainability regulation will be crucial. NOA, a packaging market research company, is exploring why the bounce-back year for the paper packaging sector hasn't materialized as expected in 2025. Stay tuned for their findings and insights into how the top brands are progressing on packaging sustainability.
In conclusion, the paper packaging sector is navigating through challenging times, but there is hope on the horizon. The sector's resilience and adaptability will be key to weathering these storms and positioning itself for a sustainable future.
