As the world embraced digitalization, many were concerned for the future of the paper industry. In the last few years, the industry has regained its footing and maintained an average growth of 1% per annum from 2010 to 2018. This growth is estimated to reach 5.8% in 2021. In this new era of the paper industry, the packaging segment is the hero. While global graphic-paper demand has been in decline since 2015 – even longer in developed markets, demands in the packaging segment have maintained a positive growth between 2010 and 2018. 

Global movement towards sustainability is in full gear, creating disruptions and shifts across all industries. Regulatory breakthroughs to phase out the use of single-use plastics have been enacted by governments across the world, including Australia, the United States, Europe, China, and Indonesia. 

Fast Moving Consumer Goods (FMCG) companies are moving fast to adjust, with an emphasis on recyclability. This has led to the rise of paper as the preferred material for packaging due to its biodegradability and recyclability, which makes it a more environmentally conscious choice with proper management. Big brands such as McDonald’s, Apple, and Amazon have switched to paper packaging in recent years. Between 2021 and 2024, the paper packaging market is forecasted to reach a growth of 4.1%. 

Another industry that has spearheaded the move towards paper packaging is the food and beverages sector. In 2019, paper and paper-based materials make up 31.9% of food packaging. In addition to biodegradability, paper packaging also offers more possibilities for design and printing compared to plastic and metal packaging. 

In Indonesia, the growth of the paper packaging market, which is estimated to be 4.6% from 2020 to 2025, is driven by the rapid growth of e-commerce and the food and beverage industry. Indonesia’s overall packaging market is estimated to grow by 2.4% between 2019 and 2024 to reach 159.2 billion units. Paper and board packaging sits at second place after flexible packaging at 36.4% market share.

Such paper packaging market transformation is also the driver for the specialty pulp and paper chemicals industry, which is forecasted to grow by 3.1% annually from 2020 to 2027. Packaging and labeling make up a significant chunk of this growth, with a total consumption of USD8.9 billion in 2019. The biggest growth will be seen in functional chemicals, which cover pigment, latex, and coating agents. This trend is also prevalent in Asia Pacific, which makes up over 46.9% of the pulp and paper chemicals in 2019. The paper packaging market in Asia Pacific is estimated to record a growth of 4.5% between 2021 and 2026. 

This shift has been felt by Bahtera. Amid this boom in paper packaging, demands for water and oil repellent coating from the food industry are increasing. Growth in demands will continue to increase in Indonesia, which is among the 10 largest pulp and paper producers globally with a capacity of around 16 million tons per year in 2018. The country’s key industry players are looking to significantly increase production capacity with the arrival of new manufacturing equipment, which is expected to boost capacity to around 3.6 million tons annually. 

The move to sustainability will continue as countries are gearing up towards stricter, more restrictive regulations. The European Union is looking to enact an even more ambitious plan for the reduction of packaging waste through a review of its Packaging Waste Directive. India is enacting plans to phase out single-use plastic by 2022, while Australia has set an ambitious target of 100% reusable, recyclable, or compostable packaging by 2025. While this shift poses a challenge for the paper industry and the chemicals industry, it also provides an opportunity for a transformation towards a better industry and a better planet.