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Within the recycled materials market, paper packaging is the largest sector, accounting for around 65% of all recycled packaging. Paper and paperboard also have the highest recycling rates worldwide (with the exception of glass in some countries). Demand for paper packaging will continue to grow, due to the manufacturing economies of China and other emerging countries. In fact, the overall market for recycled paper packaging will grow at a CAGR of 5% to reach $139 billion in 2018.
In the US and Canada, paper and paperboard recovery has increased by 81% since 1990, and has reached a recycling rate of 70% in the US and 80% in Canada. European countries have reached an average of 75% for recycling paper, with some countries like Belgium and Austria achieving almost 90% recovery. In the UK and many other countries in Western Europe the paper recycling rate is 80%. Eastern Europe and the rest of the world tend to lag behind in paper recycling, mainly due to a lack of adequate recycling infrastructure.
Recovered paper accounts for 37% of the US pulp supply. The demand for paper pulp is growing rapidly in developing countries; China, India and the rest of Asia are the fastest growing users of paper per capita. The increase in the transit packaging sector in China, combined with growing consumerism, is leading to rapidly growing demand for paper packaging. Paper packaging demand has been growing at a rate of 6.5% since 2008, far higher than anywhere else in the world. Along with this demand for paper packaging, the demand for recycled paper is also increasing.
Containerboard packaging represents the largest market for recycled paper packaging. About 30% of the paper and paperboard recovered in the US is used to produce containerboard which is the material used for corrugated packaging. A large amount of recovered paperboard is exported to China, while the rest is used to produce other paper packaging such as boxboard, which includes folding boxes. In 2011 exports of recovered paper to China and other countries accounted for a huge 42% of the paper collected in the US for recycling.
What's next for paper packaging?
It is estimated that the demand for recycled paper will exceed supply by 1.5 million tonnes of recycled pulp per year by 2018. The paper industry is investing in paper packaging plants in the developing world to satisfy growing demand in these regions.
In the future, paper packaging is the most obvious choice for replacing polystyrene. Many key players in the industry have already switched to or are experimenting with paper products. For example, Starbucks uses only paper cups and is actively involved in paper recycling initiatives including closed-loop systems in select locations. Further improvements in paper recycling will also help to grow the market, as recent advances have made it possible to recycle coated paper packaging along with corrugated paper. This will reduce the cost of recycling significantly, driving up the demand for recycled paper.
Paper packaging in the food-service industry
One of the fastest growing markets for recycled paper is the food-service market. Although it represents a small percentage of the overall market for recycled paper (<1% of the total recycled paper market), it is expected to grow faster than the overall demand for recycled paper packaging. With the economy improving, the food service market will start to see more growth, and that combined with increasing consumer awareness of litter and solid waste caused by discarded plates and glasses will drive the demand for recycled paper. Industry players are also getting active in this market as pressure from governments and various environmental groups keeps increasing.
To find out more about the sustainable paper packaging market, download our report, The Future of Sustainable Packaging to 2018, now.
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