Can paper really replace plastic in packaging?

Some paper companies are betting their money on it!

Waste paper at paper mill
An image of waste paper handling and sorting at a paper mill. Photo for generic illustration only VISY-Smithfield Photographer Anita Horan

Global paper and packaging companies are looking to take away market share from plastic packaging with investments in either virgin fiber paperboard or recycled paperboard to replace the use of plastic packaging. When you are serious, investments of this type need to be serious although you are appealing to the ESG mandates of brands who need to clean up their packaging act.

As we wrote a few days ago, the Sweden-based BillerudKorsnas announced on 20 December 2021 that it is acquiring North America-based Verso for US$ 825 million to ‘ignite’ its growth in that continent. The acquisition is to create “one of the largest providers of virgin fiber paper packaging board with a cost and quality advantage.” Similarly, Atlanta US-based Graphic Packaging Holding is investing US$ 600 million in a recycled board project in Kalamazoo, Michigan to produce more environmentally friendly paperboard that brand owners can use to pack their products in the hope of pleasing their investors and consumers with a greener supply chain.

The fact is that the new paperboard manufacturing projects are expensive and they not only to produce packaging paper that can replace various plastic packaging components that tend to be cheaper but also to produce these higher utility products with a lower carbon footprint – that is, with lower supply chain costs and more efficient use of energy and water.

Graphic Packaging is a spin-off from Coors Brewing that was started to make moisture-resistant boxes for shipping beer in refrigerated trucks. Since the early 1990s when it became an independent company, it has become a large company in the Southern US pine belt where its mills make paperboard from sawmill scraps and forestry products unfit for lumber. An active research and development company, it currently has 2,400 patents and another 500 patent applications that are pending. In recent months it has been rationalizing its paper mills by consolidating its plants to reduce the overall carbon footprint. And just as BillerudKorsnas has invested in Verso in North America, Graphic in November 2021 purchased Sweden-based AR Packaging in Europe for US$ 1.45 billion in cash.

Europe is still seen as the market that sets the trends in sustainable packaging and ESG investment. This is also Graphic has tried out its KeelClip, a paperboard substitute for plastic six-pack rings for carrying beverage cans. Although the KeelClip is easy to recycle, the emissions generated by its manufacture and logistics are higher at 19.32 grams of CO2 in comparison to the plastic 6-pack ring at 18.95 grams of CO2. Thus Graphic is now developing its DiamondClip (also knowns as the EnviroClip) that could be just as strong but would produce half the carbon footprint of the plastic 6-pack rings.

Graphic has attracted investment by issuing US$ 100 million in green bonds that were oversubscribed 20 times and smaller stakes by other ESG investment firms. The problem with plastic is that only 14% of plastic packaging is collected and only one-third of plastic waste is collected. According to the WEF, Ellen MacArthur Foundation, and McKinsey research published in 2019, only 12% of plastic is recycled, 28% is incinerated and 60% remains in the environment with an unfortunately large amount winding up in landfills and the rivers and seas.

The problem with paperboard packaging is that it is already more expensive than plastic and in many cases, plastic laminates are more versatile with better moisture and oxygen barrier properties. With the use of water-based coatings and other improvements to replace plastic, paperboard becomes even more expensive. This is one reason that large plants with sustainable raw materials, energy, and logistic efficiencies are needed and require substantial technology and investment. But the big bets by companies such as BillerudKorsnas and Graphic Packaging indicate that the brand owners and consumers will pay a slightly higher price for paper-based packaging to decrease the use of plastic.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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