Cartonboard industry looks east for five-year growth

April 1st, 2016

New data released by Paper Force and Asia Pulp & Paper Group (APP) identifies the Asian market as critical for the growth of the cartonboard industry, driving demand for both folding cartons (e.g. folding boxboard) and liquid cartons (e.g. milk cartons).

According to the findings from the report, “Paper based packaging trends to 2019”, the Asia-Pacific region will increase its share of global volume demand for folding cartons from 56% in 2013 to more than 63% in 2018. The prominence of the region will also be compounded by a wider global increase in consumption of folding cartons from 47 million tonnes in 2013 to 63 million tonnes in 2018.
Asian growth is expected to significantly surpass the global average in a number of sectors. Asia will outpace the worldwide increase in the confectionary sector by 41%, the preserved foods sector by 29% and the soft drinks sector by 35%. This is forecast to be largely at the expense of developed markets, with the EMEA share of demand falling from 25% to 21% and the Americas declining from 19% to 16% across 2013 to 2018.
Meanwhile, Asia, together with Australia, is expected to drive strong underlying growth in global liquid packaging board output. While the sector will grow from just under four million tonnes in 2013 to five million tonnes in 2019, Asia and Australia is expected to account for 60% of incremental tonnage over the period, despite only accounting for 25% of demand today.
The report identifies a number of drivers of demand in Asia which account for the growing importance of the region for the cartonboard industry:

Diversification of consumption patterns – Increasing numbers of western and international products are being consumed by Chinese and other Asian consumers as they travel more and experience western food and other products, driving cartonboard consumption growth.

Shift from informal to formal markets – The shift from ‘informal’ ‘unpackaged’ to ‘formal’ ‘industrially packaged’ consumption will drive long-term growth in liquid cartonboard and folding carton demand across food and beverage areas. For example, currently the majority of the milk market in India (world’s largest milk market) is mainly unpackaged, and a growing shift to packaged consumption is having a major impact on liquid cartonboard material demand.

Single-serve packs – An increasing number of single-person households coupled with a growing demand for convenience, has driven demand for smaller packs, which involve more packaging than the larger packs they replace. The single-slice pizza box has become increasingly popular in Asia and particularly in major cities such as Shanghai.

Larry Jackson, Managing Director of Paper Force, Australian Affiliate of Asia Pulp and Paper, said:
“We are seeing a global shift in cartonboard demand, which will have implications across the industry. The prominence of the Asian region will re-focus international supply chains, and manufacturers will need to respond quickly to capitalise on the emerging markets. The middle classes in Asia are increasingly becoming a global force and, if manufacturers hope to be internationally competitive in five years’ time, then they will need to ensure that they are positioned to serve the Asian markets. These emerging Asian markets present an exciting opportunity for all Australian manufacturers right on their doorstep.”
Dr Graham Moore, Strategic Consultant, Smithers Pira, said:
“With cartonboard use covering a wide range of end use applications, its overall demand is linked with prevailing economic conditions. In the developed economies, cartonboard demand has been flat, but the slowly improving economy should lead to better local demand and a growing export market in the near future. In contrast, in the developing economies of Asia, the rise in overall incomes and expanding middle classes is resulting in a surging demand for a range of products packaged in cartonboard. Such demand will continue to stimulate increased consumption of the grade.”