March 20, 2024
Exploring boxmaking at a global level – from Europe to Asia to Latin America
It’s a small world, after all. Through economic swings and international turmoil, the worldwide corrugated industry shares common challenges and opportunities. “I have witnessed this market’s remarkable growth, which has also withstood various global challenges but has emerged stronger than ever,” says Andrea Mora, executive director of the Association of Corrugators of the Caribbean, Central, and South America (ACCCSA).
As the industry embraces the post-COVID pandemic age, each region across the globe anticipates significant progress for the sustainable, recyclable packaging that is corrugated.
The World in Snapshots
The global corrugated packaging market could reach $371.8 billion by 2032, up from $245.3 billion in 2023. That’s a year-over-year growth of 4.7%, according to Expert Market Research. Much of the growth can be attributed to the rising demand for sustainable and eco-friendly packaging.
Globally, four trends are driving all packaging upward, according to a new Smithers report. Growth in emerging countries is expanding the global economy. Rising income means more consumer spending on packaged goods. Urbanized consumers in China and India will spend more on goods. And health care and pharmaceuticals will continue growing to meet the needs of aging populations, especially in such developed markets as Japan.
The state of corrugated reflects all of these trends. Here’s a quick trip around the world, with a view to corrugated.
EU and U.K.
The European Union (EU) corrugated box market is projected to increase by 4.92% compound annual growth rate (CAGR) through 2028, according to market research company Technavio. More than 75% of European goods are packaged in corrugated, and more than 40% of corrugated packaging contains food products, reports the European Federation of Corrugated Board Manufacturers (FEFCO).
In the United Kingdom, a slowdown in volume in the first half of 2023 was showing signs of turning upward by year’s end, Neil Osment, managing director of paper packaging industry analyst NOA Prism, told the Sheet Plant Association this past fall. Factors affecting U.K. and European volume for 2023 included inflation, cost-of-living pressures compelling consumers to buy fewer and cheaper goods, rising supply chain costs, and the legacy of rising energy costs.
Lightweighting is popular in Western Europe, where box weights come in around 80% of U.S. weights, according to FEFCO. And now, rightsizing is in demand for its power to deliver the efficient packaging consumers crave but also to save costs as shippers adopt dimensional weight pricing. Sustainability and convenience are also behind the rising popularity of retail-ready packaging, especially in Western Europe, according to Smithers.
Latin America
Latin America also expects year-over-year growth, at a 2.1% increase in production of corrugated boxes. In research presented for ACCCSA, Numera Analytics revealed a challenging 2023 but higher hopes for 2024 due to a recovery from pandemic-era inventory reductions, an increase in corrugated paper imports, and a “limited increase in installed capacity over the next five years,” says Mora.
Asia-Pacific
Year-over-year growth in the Asia-Pacific corrugated board packaging market is projected at 6.1% through 2029, according to Data Bridge Market Research. China is the dominant player as producer and consumer of corrugated packaging, followed by Japan and India. India’s production is expected to overtake Japan’s in coming years, becoming the world’s third-largest producer, says Ryo Hayama of the Japan Corrugated Case Association and vice president of Asia for the International Corrugated Case Association (ICCA).
Corrugated packaging is finding receptive audiences, from demand for boxes for food and beverages in Indonesia, to rising consumer spending in Vietnam, to economic growth in Malaysia and the Philippines.
India’s corrugated packaging market is “experiencing robust growth,” with CAGR projections of 10% to 11% by 2028, says M.L. Agarwal, managing director at Ankit Packaging Ltd. and first vice chairman of ICCA. Drivers fueling this impressive rate include a growing gross domestic product and economy, with higher spending on consumer goods generating demand for packaging.
Two Sides of Government Interventions
Sustainability is a leading motivator for the corrugated industry’s innovations and breakthroughs. In the EU, FEFCO tells the story of corrugated’s 89% recycled content and a recycling rate exceeding 90%. The corrugated sector, FEFCO says, is “a front-runner in contributing to the EU Green Deal.”
However, FEFCO has also spent recent years in “frenetic efforts to mitigate the potential consequences of harmful legislation,” Director General Eleni Despotou wrote. FEFCO supports the ambitious circularity provisions of the EU’s proposed Packaging and Packaging Waste Regulation (PPWR), meant to make all packaging on the EU market recycle-ready by 2030.
But as PPWR nears implementation, FEFCO is seeking language making reuse and recycling complementary, avoiding excessive reuse targets that would favor plastics despite their harmful environmental impact. Noting corrugated’s inherent circularity, FEFCO is advocating for a finalized PPWR containing “a balanced and realistic approach that secures competitiveness and harmonizes the internal market.”
“The corrugated cardboard industry is committed to supporting the PPWR objectives while promoting circular packaging options for the benefit of the environment and society,” Despotou said in a statement.
Other regions are more sanguine about government interventions. Indian industry has moved from a highly regulated to a “very liberalized framework” with minimal oversight, Agarwal says. The nation’s paper industry, based in 100% recovered fiber, fits into the green category of low-polluting industries, he adds.
Plus, the “Make in India” initiative is driving demand for corrugated upward by incentivizing manufacturing to expand and supply domestic markets as well as exports.
“Policies and incentives laid out are attracting industry desirous of moving out of China or broad-basing their supply source,” says Agarwal. “Rapid expansion of infrastructure is reducing bottlenecks and movements of goods and reducing costs, making India more competitive globally.”
In Japan, businesses and industries develop and implement voluntary action plans, aligned with government goals and minimally regulated.
“The idea is to gently regulate things through voluntary action plans,” says Hayama. Currently, Japanese associations and partnerships are pursuing voluntary action plans to combat global warming by reducing total emissions; reducing waste ink and carbon dioxide emissions by consolidating ink colors to a standard 18; and reducing product weight and maintaining cardboard recovery rates at their current 95%, up from 84% in 2004.
In Latin America, manufacturers are “continuously improving their processes to meet industry regulations,” says Mora. “For example, they have certified raw material production fields and energy-efficient plants. Manufacturers are constantly striving to reduce the use of pollutants such as single-use plastic in packing production. Challenges persist in recycling materials, but we are making progress.”
Worldwide, corrugated feels the effects of global turmoil, but industry leaders, tempered by the pandemic, say they have learned to take upheavals in stride. Instead, many industry veterans struggle more intensely with internal pressures.
In India, for example, the nation’s status as a major energy importer puts cost pressures on commerce, and currency fluctuations “tend to skew international trade,” Agarwal says. Although global turmoil can send shudders through Indian corrugated’s supply chains and logistics—heavily reliant on imports to meet oil and recovered fiber requirements—the industry’s deep roots in the domestic market have insulated it from “international vagaries and conflicts.”
Japan is also confronting challenges from global conflicts but is “particularly struggling with soaring prices for raw materials and energy,” says Hayama. Raising prices on food and consumer goods is difficult, and the same goes for “the cardboard boxes used to package these items.”
“As the government has implemented price pass-through as a priority policy, a virtuous cycle of price pass-through and wage increases is gradually beginning to emerge,” he says.
Opportunities Beckon
Corrugated is benefiting from international and domestic market forces, say global leaders.
Global e-commerce has slowed since the pandemic but is expected to reach $5.4 trillion in 2026, up from $3.3 trillion in 2022, according to Morgan Stanley.
Corrugated occupies 80% of packaging demand in e-commerce, and the complex logistics and handling of direct-to-consumer delivery require cost-effective secondary corrugated board packaging, according to Smithers.
“Box manufacturers around the world have realized the importance of packaging designs today that connect with consumers’ styles, market realities, new technologies, and sustainable challenges,” says Mora, whose ACCCSA provides training and events that help members keep pace with consumer expectations. “Consequently, corrugated box companies are investing in improving their production processes, understanding raw materials origins, and focusing on design innovation and continuous training of professionals.”
India was a “late and slow starter” in e-commerce but is now among the world’s fastest-growing regions, creating a demand for corrugated, says Agarwal.
As India’s consumers evolve, they expect sustainability, personalization, and convenience, and access to luxury and high-end goods in packages equally reflecting “innovative designs, premium printing techniques, and luxurious finishes,” he notes.
Corrugated’s versatility is also behind growing demand from the fresh food and beverage sector. In Latin America, the dominant meat and agricultural export sectors need lightweight packaging for cost-effective shipping, according to a Technavio projection.
However, Mora sees exports in medical supplies and technology as key growth drivers in some Latin American countries. “Not all the countries that export goods have experienced rapid growth,” she cautions. “Specifically, countries that primarily export agro-industrial products have not seen significant growth in recent times.”
In Europe, health-conscious consumers demanding fresh fruits and juices are helping corrugated grow, Technavio reports.
In the EU, trends replacing plastics with corrugated food and beverage packaging present “a constant and consistent opportunity for the corrugated industry,” Osment has found. While short-term prospects for corrugated show erosion in value and profit pressures, medium-term prospects are sunnier due to corrugated’s flexibility, ability to meet e-commerce and brick-and-mortar retail needs, and consumer pressure on brand owners to move away from plastics and toward fiber.
The food and beverage segment is booming amid urbanizing populations with busier lifestyles. “The Indian F&B industry is constantly expanding, requiring safe and efficient packaging solutions for processed food, beverages, and dairy products,” says Agarwal.
In regions around the globe, the corrugated industry is leveraging technology and automation to meet myriad, sophisticated demands, including the fit-to-product and box-on-demand systems inspired by e-commerce.
Mora notes that boxes are “crucial in protecting our client’s products throughout the entire supply chain.” In Latin America’s box market and international trade, the technology enabling made-to-order boxes helps fill demand for high mobility of goods, technology integration in logistics, innovation, and sustainability.
“Boxes can grow or shrink in size,” she says. “Manufactured from recycled paper, they are part of an increasingly digitized production to fit the demands of the wholesale and retail markets.”
Increasingly, Indian corrugated box manufacturers are adopting advanced technologies such as high-speed printing and automated boxmaking.
“This leads to better efficiency, cost reduction, and product differentiation, boosting the overall market,” says Agarwal. And while customer demand for just-in-time delivery is further incentivizing automation, the high cost of money in India stands as the only drawback to automating.
Bright Future
Even as they adopt automation and pursue growth, many players in the corrugated industry remain independent.
Latin America’s mid-size and large corrugated companies are family-owned or part of family business groups, says Mora.
“The domestic market has driven primarily their development and sustainability,” she says. “Many companies have already expanded globally, adapting their products for e-commerce and meeting market demands for sustainability, safety, traceability, and certifications.”
Japan’s independent corrugators and boxmakers are “a strong element of the region’s industry,” says Hayama. “The corrugated board industry is a local industry with strong regional ties, so corrugated case users with factories in rural areas often do business with local boxmakers, and there are several companies that serve as the main suppliers for major users.”
Any globalization typically comes in the form of setting up production overseas for proximity to customer bases, he adds.
Still, change is looming in some regions. In India, small and mid-size family-owned companies, not inclined toward consolidation, currently dominate the industry. An integration era “has just begun,” with some box plants starting their own mills and a few paper mills integrating into boxmaking. Global interests that have explored the Indian market usually walk away from “the cutthroat competition.”
“However, with growing demand and the advent of global players in user segments, opportunities are good for such global players to relook at the Indian market,” Agarwal says. “Overall, the M&A (merger and acquisition) landscape in the Indian corrugated packaging industry is nascent and evolving. While challenges remain, the drivers of consolidation and the need for competitive advantage are likely to fuel more M&A activity in the coming years.”
Whether in India, Latin America, the EU, or Asia-Pacific, corrugated is rising to meet the world’s need for packaging that delights consumers, protects a globe’s worth of goods, and contributes to greening the planet.
M. Diane McCormick is a freelance journalist based in Pennsylvania.
