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Paper-based packaging: future looks rosy as baton passes from high street to ecommerce

Jul 13, 2021 | Corrugated Packaging, Market Research, Packaging Research and Analysis

Paper-based packaging:  future looks rosy as baton passes from high street to ecommerce


For some time now we have talked about the demise of the high street, caused by the collapse of bricks and mortar retailing and the burgeoning success of ecommerce and any resulting packaging insights.

Sadly, the effect of Covid has simply brought forward this inevitable change. The high street is no longer suffering a slow lingering death; the high street is in a state of terminal decline. What started with Woolworths in 2009, saw its latest victim with Debenhams in 2021. While the Debenhams brand will live on, it will only be online, having been bought by fast-growing online fashion retailer Boohoo. The same fate for Topshop, whose IP – but not its stores – was bought by ASOS.

So, what does this mean for paper-based packaging industry trends? For this important sector of our economy, it’s good news. Cardboard boxes became famous in early 2021 by hitting the mainstream papers, with reports of a widescale shortage and big online retailers (guess which ones!) snapping up any spare cardboard supply.

However, scratch beneath the surface of the packaging sector itself, and there are some interesting trends, as our analysis of the paper packaging market sector reveals. While demand is consistent for corrugated, it is where the demand is coming from which is of particular interest. It is almost like a relay race where the baton of demand from one sector (bricks and mortar retail) has been handed over to another (ecommerce).

In the early days of the pandemic, demand for corrugated and cartons for the food service industry in particular almost disappeared, and this actually caused a brief dip in global demand for corrugated. In the UK, mid-2020 volumes were down by an estimated 0.5%.

Paper packaging suppliers who counted the food service industry among their major clients were experiencing large falls in demand for corrugated. By contrast, those mainly supplying mainstream food and drink into retail were booming.

Further hidden in this trend were some interesting regional variations. For example, demand fell away more steeply in the North West during the first lockdown, where customers tended to be of a more industrial nature. However, in the South West, where a growing number of food and drink producers are based, paper packaging producers experienced increased, buoyant demand.

The picture emerging from Covid was levels of demand for corrugated depended on which sectors were being served and in which regions.

Economists predict a V-shaped drop and recovery – in other words sharp drop/sharp recovery, which is exactly mirrored by this graphic:

 UK Corrugated Production – Impact of a Covid year – 2015 to 2025








Going forward, our predictions are for the food sector to remain buoyant, sustaining its paper-based packing suppliers, but we are now seeing a significant shift within this sector from shelf ready packaging (SRP) towards distribution outers (or what we at NOA describe as MODIE – mail order, distribution, internet and ecommerce cartons).

With an increase in online food sales, retailers will progressively want producers to adjust production away from the more complex SRP style packaging formats, and provide goods instead in simpler corrugated packaging formats, which never has to hit the shelves.

The result, we predict, will be a significantly changed work mix for cardboard manufacturers as producers alter production away from SRP format packs and towards distribution outers styles .

A quick word about sheet plants (small, regional factories making small runs of cardboard boxes). In 2014 we published a report, Changing Dynamics in the UK Sheet Plant Market, which reviewed the state of the sector at that time. Back then, sheet plants were facing many challenges, and experiencing a definite low point.

Move forward seven years and we have updated our research and produced a new report. It shows for those sheet plants which innovated and grew, by investing in their factories are now capitalising on this huge demand for corrugated. Their agility in offering quick turnaround to the FMCG market puts them in pole position for serving ambitious start up food and drink producers. These same companies are now attractive targets for investors wanting to come into this very buoyant division of the paper packaging market.

These well invested packaging companies are taking on new clients all the time, as more and more businesses enter the ecommerce space and need corrugated packaging – and not just a few hundred boxes per month, but in some cases tens of thousands. Some sheet plants were experiencing uplift in demand for cardboard packaging by 20 to 30 per cent in January 2021.

If sheet plants are the bellwether of ecommerce – and we believe they are – then watch this space for developments with interest and we look forward to producing yet another paper packaging report in a few years’ time as we chart the fortunes of retailing. In the meantime, we bid a sad farewell to SRP and a grateful welcome for MODIE and internet packaging.

At NOA, we specialise in packaging market research and packaging industry analysis, marketing for the sector and of course – through our MD Neil Osment – one-to-one coaching services at senior level.


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