Paper and board packaging is the most widely used packaging material in the UK. It has been growing year-on-year since 2009 and in 2013 increased by 1.8% in 2013. Its forecast is healthy too – a growth of 6.3% is expected over the next five years.
But it is not without its problems. The long-term sentiment felt by consumers about its impact on the environment is negative. And new developments in plastic packaging, that make it more recyclable, more sustainable or allow it to contain less plastic material, are making plastic increasingly viable.
Is the Australian sector of the paper and board packaging market dealing with the same unease about its future?
We asked Tim Woods of Industry Edge. Here is his overview:
“The Australian paper and board packaging market value is estimated by IndustryEdge to have grown at around 0.6% in calendar 2013. For the year to June 2013, consumption of packaging paper and board grew by 1.9% to 1.42 Mt. Over the decade to the end of June 2013, the volume of packaging paper and board consumed in Australia declined by an average 0.4% per annum.
“IndustryEdge expects a smaller increase in consumption for the financial year just completed. Despite capacity closures, the demerger of Orora from Amcor and intensifying competition, exports of agricultural products and other manufactured items have been reasonably sound. Organic growth can be expected, based on stable economic growth and population stability.
“Although the next few years are unlikely to see substantial growth in consumption of packaging paper and board, growth is likely to be consistent for Australia's dominant packaging material.
“In 2013, according to data researched by IndustryEdge for the Australian Packaging Covenant, 78% of Australia's packaging and industrial papers were recycled, consistent with the best recycling rates for Europe and exceeding those for North America.
“Sustainability, including the fact the material can be recovered and recycled, remains a key driver, as does the design and application flexibility of container board products like corrugated boxes and specialty cartonboard products that typically have a higher value because they house higher value contents such as perfumes, pharmaceuticals and phones.
“Unlike in other jurisdictions, consumers appear to be less concerned about reusable, renewable and recyclable fibre-based packaging than they are about alternative substrates like plastics. Consumer and environmental group pressures seem focussed elsewhere, perhaps reflected in the high recycling rates to which all consumers contribute.
“Structurally, the paper and paperboard packaging sector is dominated by two major suppliers - Visy and Orora. Other companies, led by the New Zealand based Carter Holt Harvey and including companies like ColorPak, ABBE and Zac Pac are less vertically integrated. Likely developments include consolidation and re-investment in converting facilities.
“Australia's proximity to Asia makes it a substantial supplier of packaging paper and board into China and other countries within the region. For instance, for the year to the end of June 2014, Australia exported 1.47 Mt of recovered paper, more than half of which was packaging grades. More importantly, Australia exported 930,000 tonnes of packaging papers into Asia, of which almost half a million tonnes (497.6 kt) was high quality virgin fibre kraftliner for the manufacture of cardboard boxes.
“Kraft paper is manufactured from a chemical processed pulp that retains fibre qualities that in the case of packaging papers and board are all related to strength and durability. Australia's exports of these supplies are of enormous strategic value into Asia which is short of fibre in general, but has virtually no internal resources for the supply of high quality kraft paper suitable for packaging. The Australian (and New Zealand) strategic advantage will continue to be important for at least the next decade, driven by companies like Visy, Australian Paper and Carter Holt Harvey Pulp, Paper and Packaging (PPP). CHH PPP operates container board converting facilities in Sydney and Melbourne.
“In fact, so important is the supply of kraft packaging grade fibre into Asia that the giant Oji Holdings is currently completing the purchase of New Zealand based Carter Holt Harvey PPP, as part of its strategic expansion in Asia. Without reliable sources of long, strong fibre supplied from softwood kraft packaging paper and board, we consider their expansion plans would be severely constrained.
“Based on 23 years of production, trade and GDP data to the end of June 2013, IndustryEdge forecast that Australia's consumption of packaging and industrial papers will rise to 1.5 Mt by mid-2018. That equates to a 5.6% increase or an average 1.1% per annum. The forecast will be revised and published in the 2014 edition of the Pulp & Paper Strategic Review.”
