Megatrends to watch in the paper and packaging industry

May 9, 2017

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By Max Blocker

The world is changing at a rapid pace and in ways never imagined. Global business and society are being shaped by several dynamic forces, or megatrends, that are impacting every industry, including the paper and packaging sector.

I recently participated in a discussion at Paper2017 about what paper and packaging companies should consider when planning around global megatrends. Here are the trends I addressed and their significance to paper and packaging:

Accelerating urbanization. In the 1950s, less than 30% of the world’s population lived in cities. Currently, that proportion has risen to 50% and by 2030, the United Nations projects that some 4.9 billion people will be urban dwellers. This shift is driving an increased demand for urban housing and construction materials, including paper, pulp and wood alternatives to cement and metals.

Climate change and resource scarcity. Demand for water and other natural resources will grow along with population. This will pressure society to reduce water usage and repurpose materials like paper and packaging. According to Smithers Pira, paper and paperboard recovery in the US and Canada has increased by 81% since 1990, and has reached a recycling rate of 70% in the US and 80% in Canada. And the rapid growth of online shopping and delivery on demand services has fueled usage of cardboard and the development of new eco-friendly protective packaging solutions.

Demographic shifts. Explosive population growth in some areas and declines in others are contributing to demographic shifts in economic power. For example, some societies are aging rapidly while the average age of others is getting younger. Millennials hold huge buying power and their buying and behavioral habits and preferences are very different from previous generations. At the same time, 71% of people live on less than $10 per day, according to the Pew Research Group. Today’s low-income consumers in developing countries are tomorrow’s middle class.

Shift in global economic power. The focus on China and other developing markets is another signal of the shift in global economic power. The demand for paper pulp is growing rapidly in developing countries. Increased economic power enables increased consumption. China, India and the rest of Asia are the fastest growing users of paper per capita. Food and Agriculture Organization of the United Nations data shows that in 2014-15, India became the world’s fifth largest paper and paperboard producer, overtaking the Republic of Korea, and the fourth largest fiber furnish (pulp and recovered paper) importer by overtaking the Republic of Korea and Italy.

Technological advancements. New innovative advancements have changed how we live and work. The use of 3-D printing, robotics, IoT, and drones are disruptive game-changers for industrial companies, especially paper and packaging. For example, smart, IoT packaging is projected to grow extensively. On a global basis, Smithers Pira predicts the smart-packaging industry will grow during the five-year period to 2021 at an annual rate of 8% to $7.8 billion. IoT packaging will grow at an astounding 18% per year to almost $2.2 billion.

At PwC, we have the privilege of meeting with thousands of companies each year and engaging with leaders at various events around the macro-global changes we are seeing. Over the last few years, it has become increasingly clear that strategies are being developed and executed around global megatrends as companies search for profitable growth and leaders look to meet the evolving needs of their constituents.

As we think about opportunities – for us as individuals, for our teams, for our companies – the megatrends open up new avenues. Paper and packaging organizations that analyze, study and respond to these trends have the opportunity to create massive value for their stakeholders.

 

©2017 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.  This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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