Commentary & Analysis
High Folding Carton Growth Driven by Sustainability and Increasing Demand in Emerging Regions
With a market value exceeding $110 billion in 2019, the cartonboard packaging industry will experience high growth at the end-user level, approaching $150 billion in 2024, according to Smithers Pira’s latest report, The Future of Folding Cartons to 2024. This growth is driven by the sustainability movement and increasing demand in emerging regions.
Published: August 27, 2019
With a market value exceeding $110 billion in 2019, the cartonboard packaging industry will experience high growth at the end-user level, approaching $150 billion in 2024, according to Smithers Pira’s latest report, The Future of Folding Cartons to 2024.
This growth is driven by the sustainability movement and increasing demand in emerging regions, especially Asia-Pacific, where an additional 11 million tons of material, worth over $20 billion at current prices and exchange rates, will be required to meet demand relative to 2019 volumes.
Asia-Pacific was responsible for 58% of the market share in 2018, and is expected to make up 64% of the market share in 2024. North America and Western Europe made up 15% and 11% respectively in 2018, and their market shares are expected to decline to 12% and 9% respectively. The rest of the world will collectively experience a miniscule decline, from 16% in 2018 to 15% in 2024.
Sustainability Creates New Opportunities
Shareholders are demanding more sustainable packaging, and many companies and corporations have begun recognizing that sustainable business practices can improve financial performance. They are responding with the adoption of explicit sustainability goals, hiring of specialist teams, and provision of regular feedback to their corporate stakeholders on their progress towards achieving these goals.
The sustainability movement is creating opportunities for folding cartons as more environmentally friendly alternatives to thermoformed foamed polystyrene (PS) and plastic.
In the fresh and fast food markets, cartonboard is replacing foam clamshell cartons and trays with stretch wrap. While not yet a common alternative, cartonboard trays are available in both folding carton and micro-flute formats, white or brown, printed or plain, and many suppliers have already taken advantage of the gap created by the demise of the foamed PS clamshell and tray and other plastic formats.
Cartonboard for Consumer Goods
In the personal care market, many producers are looking at viable alternatives to replace or reduce plastic packaging, especially in the toiletries and cosmetics markets. Extensive research is taking place to find possible sustainable alternatives to plastic bottles and jars in this sector, ranging from cartonboard containers to biodegradable bottles and jars. In many instances, further R&D is necessary before a lasting solution is likely to materialize.
Other markets utilizing cartonboard include healthcare, consumer electronics, and household care products; more innovation and the push for sustainability is expected through 2024.
A wide range of materials are used in functional and barrier coatings applied to paper and board packaging materials, designed to provide a barrier for the products packed against the ingress or egress of water and water vapor, oil and grease, oxygen, and odor. The market for functional and barrier coatings on all paper-based packaging materials was worth almost $7 billion in 2018 and is set to increase by 7.6% annually on average between 2019 and 2024 to reach a total of over $10.3 billion. Not all of this material is being used on cartonboard as this includes all paper packaging, but there will be significant growth in demand for barrier materials on cartonboard packs over this period.
With the global focus on sustainability steadily gaining momentum, much of the innovation seen in the cartonboard packaging market has centered around this theme. The replacement or reduction of plastic packaging is a common thread across many new designs in this market, with the food industry often at the center of these developments.
Recycled materials are slowly gaining market share from virgin fiber materials as a result of the sustainability pressures being brought to bear on this market.
Lightweighting and Luxury Packaging
Board makers have responded to the demands of the market for greater sustainability in a number of areas, including the development of lighter weight boards that do not compromise the balance between aesthetics, product protection, and cost, and are able to withstand better the tensions encountered in today’s supply chain from high-speed processing equipment to stacking and handling challenges, while retaining the required aesthetic appeal. Due to physical limitations, there will be a point at which no further lightweighting is possible, but that point has not yet been reached and this trend is expected to continue over the short-to-medium term.
There is a growing demand for luxury or premium packaging in a number of end-use sectors, and the cartonboard industry has risen to this challenge with the development of a range of high-end products. Contrasting the trend to more and more recycled content, these premium boards are generally made from fresh, virgin fibers to enhance both the performance and aesthetics of the board, as well as providing excellent print surfaces that allow the designer to make the most of the techniques available in the printing and finishing market.
Trends in End-Use Sectors
Food and drink products accounted for more than half of the consumption of cartonboard packaging materials in 2018, and their market share is likely to increase slightly through 2024, with dry foods and confectionery expected to show the highest volume growth. Healthcare products will show an increase in market share within non-food categories, due largely to the organic growth in this market sector.
Drivers behind the growth in demand for healthcare products include aging populations requiring more medication, expanding and improving healthcare systems in the emerging economies, and increasing disposable incomes.
Ecommerce has taken a hold in the fresh food sector of the market, with numerous brands emerging in the meal-kit home delivery space. Pet food producers have also latched on to the ecommerce bandwagon, with pet food subscription services now offering home deliveries of customized pet food recipes.
The market for chilled foods is also showing steady growth, driven by growing consumer demand for convenience, smaller family units, and more frequent shopping trips. The movement toward smaller pack sizes and single-serve packs continues to add stimulus to cartonboard consumption in the preserved food sector.
Sustainability is becoming a key issue among brand owners in the household care and personal care markets, and much effort is being made by packaging developers to create innovative, sustainable packaging designed to attract demanding buyers.
A noticeable decline in demand for cartonboard packaging for tobacco products is now evident in most parts of the world although some growth is still anticipated in some of the transitional or emerging markets such as Eastern Europe, Africa and Asia.
To learn more about key growth drivers and trends in the packaging industry, please visit https://www.smitherspira.com/products/market-reports/packaging-industry-market-trends-analysis-report.