The European paper market is expected to grow at a CAGR of 4.3% over the forecast period. The increasing demand from e-commerce applications provided a boost for the paper market in Europe as consumers turned to online shopping during the lockdown.
- The sharp rise in the demand for the hygiene market segment has primarily supported the market growth, which is further expected to continue with elevated hygiene requirements as health and hygiene products demand remain the priority for consumers, government, and companies.
- Furthermore, the packaging paper and carton board registered significant growth in 2021 owing to the demand for different applications. According to the Confederation of Paper Industries (CEPI), the packaging paper and board production by CEPI members increased from 49,831 thousand metric tons in 2020 to 53,545 thousand metric tons in 2021.
- Decreasing consumption of graphic papers due to digitalization in Europe negatively impacts the paper market growth in Europe. Further, the demand for domestic wood supply by the end-users is rising continuously. The increasing utilization of wood sustainably and innovatively is creating a shortage of raw materials required for paper and restraining market growth. In addition, high energy and rising raw material prices further negativly impacting the market growth.
- The demand for carton boards increased as a result of the COVID-19 pandemic, with particular spikes in demand for the production of packaging for dry foods, confectionery, frozen food, and pharmaceuticals. Another significant pandemic-related impact on European paper markets has been the trend in the hygiene paper business. Further, the pandemic accelerated e-commerce, which has given a boost to the paper market.
- In addition to the COVID-19 pandemic, the outbreak of the Russia-Ukraine war also has major implications for Europe's paper industry. While soaring energy prices will also be of concern for the energy-intensive paper industry, with several countries in Europe heavily dependent on Russian natural gas.
Europe Paper Market Trends
Case Materials Type is Expected to Hold Major Share
- Corrugated case material (CCM), known as containerboard, is a type of paperboard specifically designed for the production of corrugated boards made up of two types of paper: liner board and corrugating medium (or fluting). It is largely used for corrugated packaging products.
- The Confederation of Paper Industries (CEPI) statistics show that the production of case materials in Europe increased by 8.3% in 2021 compared to 2020, owing to the rising demand from end-user industries preferring eco-friendly packaging solutions to promote sustainability.
- Another factor contributing to the rise in containerboard demand is the growing online shopping, which has emerged as a structural consumer change accelerated by the pandemic. As a result, containerboard demand significantly increased, with e-commerce accounting for the majority of the gains creating the need for case materials.
- As corrugated board packaging keeps moisture away from the products and withstands long shipping times, it is increasingly being adopted by companies to offer customers better outcomes, especially as means of secondary or tertiary packaging. Processed foods, such as bread, meat products, and other perishable items, need these packaging materials to be used at once, thereby driving the demand.
Germany Holds Largest Share in the Market
- Germany is one of the major markets of paper in Europe, with a large number of major paper manufacturers and processors settled in the state. According to the Federal Office of Statistics, in 2021, 34% of packaging industry revenue in Germany was generated by paper packaging.
- Although graphic paper consumption in Germany has decreased in recent years, the demand from the packaging industry has increased significantly for various end-user industries applications. In the meantime, the rapid development of the online commerce market also contributed to the growth of paper consumption in the country.
- The increasing adoption of sustainable packaging solutions and increased regulations related to packaging materials in the country created a need for paper from the packaging industry. Thus, vendors in the market are introducing paper-based packaging solutions. For instance, in February 2022, Amcor PLC, a leading packaging manufacturer, launched paper-based packaging for snacks and confectionery, and many FMCG brands in the country tested Amcor's LifeSpan's material. Such innovations from the packaging manufacturer will further encourage other vendors to innovate paper-based packaging, which would bolster the demand for paper.
- Several paper manufacturers in Germany are expanding their production capacities to offer paper as a sustainable alternative solution for the packaging industry. For instance, in February 2022, Sappi, one of the leading providers of paper-based solutions, announced that it is further expanding its capabilities to produce recyclable high-barrier papers by deploying a cutting-edge coating machine into operation at its specialized paper mill in Alfeld.
Europe Paper Market Competitor Analysis
The European paper market is fragmented in nature, with the presence of many players operating in the market. Leading market players are constantly adopting various organic and inorganic strategies, such as capacity expansion mergers, partnerships, new product launches, collaborations, and acquisitions to dominate the market. Stora Enso AB, Smurfit Kappa Group PLC, UPM-Kymmene Oyj, Metsa Group, and Mondi PLC are some of the key market players.
In October 2022, Stora Enso decided to invest approximately EUR 1 billion (USD 1.53 billion) in converting the Group's Oulu site in Finland's remaining idle paper machine into a high-volume consumer board production line. The investment contributes to the Group's renewable packaging growth strategy by providing new volume for expanding packaging segments. The production of the converted machine is expected to begin in early 2025.
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