Consumer demand and tighter legislation Europe wide are just two factors that will boost growth of the paper-based packaging's market share of the packaging industry. Rising raw material costs have moved sustainability to a top position on every packaging manager's agenda. Marco Siebel took a closer look at how sustainability in paper is developing in leaps and bounds
Paper – November/December 2014 Feature
By Marco Siebel, contributing writer
Successful innovation through sustainability
Every day, more companies decide to invest in more eco-friendly packaging, such as paper packaging. Of the recycled packaging materials available on the market, paper continues to account for the majority of demand. Currently in second position with a 34% market share, behind flexible and rigid plastics with their combined 37%, paper and board has the second largest market share in the packaging industry.
The importance of sustainability of packaging will continue to grow over the next two years and is expected to become a more important factor than the cost factor – the number one challenge for companies today.
Paper-based packaging provides versatile and responsible solutions for product manufacturers, retailers and consumers. Since paper is both biodegradable and recyclable, it is often seen by the final consumer as a preferred packaging material. Improving paper’s barrier properties is seen as a critical step in increasing its viability as a packaging material. To adhere to food safety regulations, water-based technologies are gaining acceptance. Water-based coatings can be custom-formulated to meet the packaging requirements of a wide range of food products.
Consumer pressure and reality
According to a CEPI study from 2012, more than 80% of European consumers preferred paper-based packaging and labels. They believed paper packaging to be more convenient, and believed manufacturers and brand-owners should embrace paper-based packaging more than consumers have seen them doing so far. Almost every news article on sustainability mentions that there is a growing awareness of environmental issues amongst the consumers. However, food safety remains their main concern.
Mark Caul, technical manager for packaging at Tesco, comments: "When it comes to the broad subject such as plastics, board and paper, aluminium and steel, they all have a place, so substitution is much harder than people think. And you really have to be careful when substituting materials based on environmental reasons, because there could be unintended consequences.
"Environmental, sustainability, green, these words are all used, and they need to be used properly with consideration. If I look at the carbon footprint of packaging of a business, typically for us it’s about 5%. High on our agenda is food waste. Packaging is about protecting the food, and packaging needs to be fit for purpose, it is not necessarily about big trends and movements in board, that it is more sustainable. I’m not sure I’d subscribe to that belief. It’s more about protecting the food and new packaging which is fit for purpose – there are great advantages over some materials and disadvantages over some others," he says.
"What we see is responsible timber sourcing. You can see that in products such as benches and other products, and I can foresee the day that it might hit packaging. I wouldn’t be surprised at all. In which case the traceability of your sourcing is going to be the big important thing."
Government regulations that mandate packaging recycling rates have helped boost the paper market, as companies aim to increase their resource efficiency by collecting more recycled material. While companies still invest in developing new types of sustainable packaging, such as plant-based plastics, or bioplastics, the term biodegradable has become tainted since discussions on its definition and real-life properties have started.
Large quantities of biodegradable packaging end up in landfills where they are deprived of oxygen, causing the decomposing packaging to generate methane, the extra-potent greenhouse gas. Landfills are the third biggest source of man-made methane emissions to the atmosphere. If packaging didn’t have that quality of biodegradability, landfills would be less of a nuisance to the environment. One way companies are dealing with stricter regulations is to decrease packaging size and make packaging more lightweight, allowing them to save on transportation costs and carbon footprint.
Paper packaging on the increase globally
The global consumer packaging market is currently valued at approximately €300 billion, of which the paper and carton industry represents approximately €100 billion. The future promises to be bright for the paper and carton industry. The food contact paper and board sector in particular is expected to experience sustained growth of 6% annually, reaching an estimated value of €50 billion by 2017. The BRICS markets represent roughly 1/3 of global demand, with the American continents accounting for 1/3, and Europe for another approximate third. Oceania and the African continent account for a minute amount according to the most recent FSC report. Paper packaging sales in Europe have only gone up slightly overall, France being the exception: it saw a decline in sales in 2013, due to not adapting the selling price of final products to the risen costs of raw materials.
Increase of market share in the food sector
China’s middle class of 150 million people is expected to reach 500 million within the next 10 years, equalling today’s total population of the EU. With Asia’s steady 7% economic growth per year and its middle class population growing, brands are focusing on how to get new consumers, and how to keep them. As long as the paper packaging industry hasn’t solved the various barrier limitation problems, plastics will continue to grow on the global market. For developing countries, we see that rigid plastics materials rapidly take a strong market share, as the processing industry for those materials requires significantly less capital than the glass, metal, or paper industries.
As wealth in developing markets grows, we will see a rise in recycled packaging consumption. Since food packaging makes up a large chunk of municipal solid waste, companies may look at recycled paper packaging as a way to reduce their landfill waste.
New innovations in the food industry have prompted higher demands for paper packaging. Paper is increasingly being used as a substitute for polystyrene packaging. The paper packaging industry has been developing barrier coated boards and papers, helping it to close the gap with plastics packaging, also expected to grow.
In October 2014, Tetra Pak launched the industry’s first carton made entirely from plant-based, renewable packaging materials. It will be the first in the market to have bio-based low density polyethylene (LDPE) films and bio-based high density polyethylene (HDPE) caps, both derived from sugar cane, in addition to Forest Stewardship Council (FSC ) certified paperboard.
Specific designs for specific target groups
In Germany, more than 50% of consumers make a purchasing decision at the point of sale – in most cases it is not the price but the packaging that tips the scales in favour of purchasing a particular product. Not only the visual design and the size of the product count, but also its material choice.
About colours and going green
Colours have a significant impact on the mood and behaviour of people. Pale yellow in hospitals – you won’t see it. So it follows that the success of a product can be significantly impacted by the choice of colours on its packaging. According to a study by the Johannes Gutenberg University in Mainz, the colour of the package proves to be the most important factor in the consumer’s final seconds’ decision making moment. In packaging design, colour schemes are differentiated according to the age, gender, culture and average income of the respective target group.
While sustainability design used to be limited to brown packaging, earthy colours and textured paper – all three still being very popular – today brands dare to move away from the clichés. Companies often remain loyal to their brand colour scheme to reap the benefits of a successful brand recognisability. They stick to the moss green colour scheme associated with Sunday afternoon forest walks with the dogs; Coca Cola’s ‘life’ version, containing the natural sweetener stevia, and boasting a green label, will be on sale in France from January 2015. France will be the third European country after the UK and Sweden where consumers can discover a coke with a more ‘sustainable taste’
Wide demographic appeal
In Europe we are seeing demographic changes such as the decrease in numbers of the classic family model, and the increase in average age, each having their influence on packaging trends. Add these changing demographics to the increased market share competition between established FMCG producers, and we increasingly see package designs that get kids’ attention as well as their mums and dads.
Lotte Krekels, packaging manager at Carrefour Belgium comments: "We have our Carrefour Kids line of products, which has its own website and product designs. We are collaborating with a local Belgian children’s book illustrator who has illustrated the well known Danish Cookies tin in a Polish design style after the illustrators’ one- year stay in Poznan. We hope that consumers will keep the tin and use it after the cookies are gone. Talking about cookies and their ingredients: for our Kids line of products, even stricter food safety rules are put in place, eliminating some and limiting other ingredients that nutritionists find more suitable for adults than for children."
With the European recession expected to last until the end of 2017, managing costs is vital for a company’s survival. At a time when the Chinese double digit growth has become single digit growth, (government has set a 7.5% indicative target for 2014), global demand for paper pulp is lagging. On top of that, South American pulp and paper companies are adding some 30 million metric tons of paper pulp to the global market through 2020. A significant pulp overcapacity will be the likely result, reducing costs, enabling companies to make the shift from plastics to the more sustainable paper packaging.
South America as pulp producer
South America has become an important pulp and paper producer. The continent’s capacity expansion is enabled by an increase in agricultural productivity; arable land mass is being used with short-rotation eucalyptus and shorter rotation pine, both unavailable in colder climates. Producers will put 20 million metric tons of chemical pulp to the global market through 2018.
Despite increased demand for sustainable packaging on the consumer side, and despite the fact that more than 2 million tonnes of paper capacity has been shut down in Europe since 2012, demand on the producer side has fallen. Pulp overcapacity is likely to result in lower prices, possibly stimulating the use of paper and board in the growing packaging industry.
Jori Ringman, sustainability director with the Brussels-based Confederation of European Paper Industries (CEPI) says: "Paper-based packaging has a good environmental track record throughout its life cycle, already living true the circular economy for many years, starting from the fact that wood fibres are renewable and recycled to a high degree. In addition to being renewable and recyclable, paper-based packaging is also biodegradable and compostable."
The latest report from the European Recovered Paper Council (ERPC) shows that paper and board is the most recycled packaging in Europe compared to any other material at more than 81% (see graph). And the members of the ERPC are working closely together along the value chain to improve this rate even further in areas such as waste prevention, eco-design and research & development.
Ringman continues: "In Europe, all paper and board has a pedigree: we source from legal, sustainably managed forests and have traceability for the materials used in packaging. Paper-based packaging is really a product ‘made in Europe’ with over 80% of the raw materials coming from the EU. In Europe, paper is showing the way for other materials in traceability of sources and recycling. We are also championing water recycling where water is reused several times, having made it possible to reduce water intake by half in the past two decades. In addition, 93% of the water intake is now returned to the source in good quality.
"European paper and board has for a decade managed to decouple economic growth from environmental impacts: not only have we dramatically reduced our carbon emissions, but all environmental impacts likewise. And the performance is still improving," he stresses.
"The paper industry is actively participating in the European Commission’s initiatives for environmental footprints. Global food wastage amounts to as much as 1.3 billion tonnes or one third of food produced worldwide. Paper packaging can be part of a solution to alleviate this serious problem by minimising wastage and food damage along the chain."