Paper packaging easier to manufacture vs glass, metals
Smurfit Kappa & WestRock merger is set to become the largest packaging company from a revenue standpoint as assessed by Frost & Sullivan.
The global packaging industry is witnessing a shift towards paper-based packaging, driven by its ease of manufacturing and sustainability advantages over glass and metals.
Saurabh Todi, Senior Research Analyst at Frost & Sullivan, said that paper recycling is increasingly gaining popularity as a sustainable alternative, with recycling rates in certain European countries reaching over 90%.
He explained that the key to paper's rising dominance lies in its lower energy intensity in manufacturing compared to glass and metals, coupled with its lightweight nature, resulting in reduced emissions per unit of packaging.
One of the major advantages of paper over plastics is its faster degradation rate and compostability. "Paper faces minimal sorting challenges, making it relatively easier to manufacture and recycle," Todi noted. This ease of processing, along with growing consumer and regulatory pressures against single-use plastics, is bolstering the demand for paper packaging.
The trend is further reinforced by the impending merger of Smurfit Kappa and WestRock, set to create the largest packaging company from a revenue standpoint. This merger, as assessed by Frost & Sullivan, signifies a major shift in the competitive landscape of the paper-based packaging industry.
"With a combined revenue of over $34 billion, this merger will not only form the largest paper packaging entity but also potentially the largest packaging company from a revenue perspective,” Todi said.
The merger, uniting Smurfit Kappa's strong presence in Europe with WestRock's footprint in the Americas, is expected to enhance the global competitiveness of the combined entity. This consolidation will create a significant gap between the new entity and its closest competitor, International Paper Company, which reports over $21 billion in revenue.
As companies expand their presence in the paper packaging market, regulatory and industry standards around sustainability become increasingly crucial. "Paper packaging is mainly impacted by regulations around unethical or unsustainable deforestation, and the contamination and ecological impact it causes," Todi remarked.
Certification programs like the Forest Stewardship Council (FSC) and the Program for the Endorsement of Forest Certification are essential for ensuring responsible forest management and sourcing practices.