Analyzing the market shift from plastic to paper

Nobody talks about the monumental change that is happening in the packaging industry. Perhaps you have seen differences in product packaging on store shelves? Or did you notice that your last online purchase was sent in a recyclable paper envelope?

The switch from plastic to sustainable materials is taking over the market. And it is affecting the paper mills.

As companies and brands move away from plastic, remaining factories are converting their production lines to fit more profitable renewable materials.

But where does this leave the label industry? With label material grades in decline, factories are choosing to meet the need for sustainable packaging. Will this spell trouble for label supply volumes that are still trying to meet demand?

A change in infrastructure

If you have read anything recent about the paper industry, you know that the market has been fluctuating in recent years. Paper mills have had especially tough times: low profits, price increases, fluctuations in demand. Now an idea that has been discussed for years is finally taking the market by storm: sustainability.

With the global warming crisis drawing attention to the environment, consumers have become more aware of how the products they buy affect the world they live in. To meet consumer preferences, companies around the world are following suit. And the paper mills are taking notice.

Many have taken initiatives to go green and switch production from standard plastic packaging to more sustainable packaging. Converting these machines is a company of great investments, time and innovation. When working with these new materials, producers must be aware of:

  • Developing the right packaging solution
  • Offering recyclable replacement options
  • Offering a lower carbon footprint
  • Creation of packaging with sufficient barrier properties

Now industries that use these mills, such as the pressure-sensitive label industry, have to compete for the use of these machines. And time equals money. So if plastic is being pushed out of production, how is the machinery used in these mills?

Two words: renewable packaging. These alternative and environmentally friendly materials are flourishing in today’s world market.

A change in packaging.

The rise of renewable packaging is leading to increased demand for paper and other alternative materials. Instead of plastic, more and more companies are taking a greener approach with recyclable materials for their products, even those previously sold in plastic.

Today plastic is being replaced by renewable materials such as:

  • Paper
  • Wave
  • Cardboard
  • Compost

But why is this market changing? Simple: sustainable packaging is a booming market.

Sustainable packaging is projected to grow to $348 billion USD by 2026, up from $247 billion in 2019. This coincides with issues currently plaguing the pulp industry; specifically higher prices and depleted raw material inventories.

For example, Northern Bleached Softwood Kraft (NBSK), a key supply in label production, rose in mid-April to its highest price of $1,665 per tonne, according to RISI. Despite the demand, the supply is “very scarce”, to the point that customers cannot receive orders.

As the demand for renewable materials increases, pulp and paper mills are converting their machinery to use packaging as a way to compensate. This takes key time away from the production of items like self-adhesive labels, which are already in short supply.

If we want to know where these changes are headed, we must look no further than what is happening in Europe. This is because the European market tends to influence the direction that the US market will take.

Europe’s green initiative

To find out where the US paper industry is headed, we should take a look at the policies that Europe has adopted. Why? Because we are on our way to doing the same. For years, the world has been switching to more sustainable options, and Europe has been at the forefront of these practices.

Issues like the critical impact of climate change and global warming are making consumers pay more attention to the everyday products they buy, use and throw away. This increased awareness is pushing companies to adopt greener initiatives through renewable, recyclable and sustainable materials. It also means saying goodbye to plastic.

Do you ever stop to think about how much plastic your daily life consumes? Products purchased only to be used and discarded after a single use.

And today they are used for almost everything, such as:

  • Water bottles
  • Shopping bags
  • Cutlery
  • food containers
  • beverage glasses
  • straws
  • packaging materials

However, the recent pandemic caused an unprecedented increase in single-use plastic production, especially with the rise of e-commerce and D2C packaging. To help stop the continued rise of environmentally harmful materials, the European Union (EU) passed a ban on specific single-use plastics in July 2021.

They defined these products:

  • “Made in whole or in part of plastic and is not conceived, designed or placed on the market to be used several times for the same product”.

The ban targets products for which more affordable and environmentally friendly alternatives are available. Through these more sustainable materials, Europe has become a market leader with a specific type of packaging: the aseptic packaging.

Think back to your high school days when lunch was served. Remember those iconic cardboard milk cartons you were served? If so, you know aseptic packaging! And it’s also an expanding market, one that’s expected to grow to $81 billion by 2027. But what exactly makes this packaging trend so unique?

Aseptic packaging uses a special manufacturing process in which products are sterilized separately before being combined and sealed in a sterile environment. And because it’s environmentally friendly, aseptic packaging is making its way onto more store shelves.

It is commonly used for beverages, foods, and pharmaceuticals, which is why the sterilization process is so critical: it helps extend shelf life by safely preserving the product with fewer additives.

Various materials are layered together, providing the protection that is required by aseptic standards. This includes materials such as:

  • Paper
  • Polyethylene
  • Aluminum
  • Movie

These material alternatives significantly reduce the need for plastic packaging. As these sustainable options become more integrated into the European market, influence is making its way to the US So what changes have been made to accommodate this market shift?

USA shifting to sustainability

Many US steel mills have converted key machinery to accommodate the growing demand for alternative packaging. For example, PCA (Packaging Corp. of America) announced plans in 2021 to permanently convert one of its paper machines to produce liner board used in corrugated packaging. The conversion would take three years to complete and cost $440 million.

The shift to replace plastic packaging with more sustainable materials is one example of this, and the growing interest in these products made paper mills take notice.

Many US companies have taken the lead when it comes to the sustainable packaging market. Sustainability goals and development are big initiatives for these brands, often driven by the environmentally friendly packaging options they market.

An example is boxed water. An alternative to the commonly used plastic water bottle, Boxed Water was the first company to offer sustainable packaging for these types of single-use products in 2009.

Their brand focuses on providing “a better solution” to help the planet with 92% plant-based packaging and reduced plastic waste. The packaging literally says “boxed water is better” as it is 100% recyclable and refillable with a 36% lower carbon footprint. Products like boxed water is where we see the shift towards packaged products growing.

Companies committed to sustainability

Boxed Water is not the only company advancing the use of sustainable materials. As consumer shopping habits continue to shift toward greener options, the big brands are taking notice. Companies often refer to the 17 Sustainable Development Goals published by the UN when detailing their green initiatives.

For packaging, these may seem like compromises for:

  • Recyclable materials
  • Plastic waste reduction
  • Reduce greenhouse gas emissions
  • sustainability produced

In many cases, these changes focus on the packaging of new products. Specifically to more sustainable options so items can be reused or recycled.

Sustainability is creating new opportunities for companies to trade in waste plastic for environmentally friendly options. As this trend continues to grow, more paper mills are likely to shift their focus from labels to renewable packaging production. With fewer mills remaining, competition for production time is likely to increase.

Ultimately, we are seeing the current market change before our eyes.

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