Analysis: Current State of the Folding Carton and Paperboard Packaging Industry

Over the course of the last decade, brand owners have shifted their mindset around materials, says Ben Markens, president of the Paperboard Packaging Council, transitioning from a substrate-neutral approach to packaging to one that emphasizes sustainability. This has been a positive development for the paperboard packaging and folding carton segment, Markens continues, which touts the inherent recyclability of its products and renewability of fiber-based materials.

This transition has spurred several brands to explore alternatives to plastic packaging formats, whether rigid or flexible, leading to opportunities for folding carton printers to capitalize on this desire for recyclable and renewable packaging.

“I don’t believe the brands are substrate neutral anymore,” Markens says. “I think they see it as an advantage to start to make this move away from non-renewable materials, especially as legislative intervention is becoming more common.”

The advantages of paperboard packaging have led to sustained growth in recent years, with carton shipments growing 5.5% year-over-year in 2020 and another 0.2% in 2021, according to the Fastmarkets RISI 2022-23 Trends Industry Outlook & Market Data Research Report for the Paperboard Packaging Council. In even more good news for folding carton converters, the report adds that the expected folding carton demand growth calculates to 1.3% on average annually from 2021 to 2026.

Sustainability is Driving Growth and Opportunity

Sustainability can take many forms, but among the most important to brands and consumers is recyclability, and according to Benjamin Graham, the push toward recyclability has provided significant tailwinds to the paperboard packaging industry. Graham is president and CEO of Bell Inc., a Sioux Falls, South Dakota-based independent, non-mill integrated printer and producer of a variety of paperboard packaging, including folding cartons for the food industry, and packaging for the quick service restaurant (QSR) and e-commerce segments.

Graham explains that while nonfood-contact folding cartons have an easier path into the recycle stream and ultimately being recycled, the direct food contact packaging inherent in the QSR space has made innovation in recycling and compostability increasingly important. He says that in addition to working on recyclability solutions for QSR packaging, the industry is also exploring how the input materials impact compostability, and ensuring direct food contact packaging can be more environmentally friendly while maintaining its structural integrity.

“They’re looking at the input materials to help understand the compostability and the lifecycle of the packaging because most of that is going into the standard waste stream,” Graham says. “Then, it’s also the downstream nature of sorting at the garbage collector level too to see if there’s some of that fiber that we can get back into the system. I think it’s really about building a product that’s more environmentally friendly and compostable.”

At the brand owner level, sustainability has been a long-standing priority. In fact, in NAPCO Research’s Digital Packaging: The Time is Now study, 265 brand owners were surveyed about their top packaging priorities and challenges. Meeting environmental standards and objectives was cited as a top priority, with 75% of respondents stating that it was either an “essential priority” or a “high priority” for their business. This desire to create more environmentally friendly packaging is now emerging in the form of packaging innovation geared toward recycling.

Markens says brand owners transitioning formerly plastic packaging applications to paperboard are initiating some of that product innovation. Among the more prominent examples of this plastic to paperboard transition comes from Mentos, which was highlighted in the association’s 2022 North American Paperboard Packaging Competition.

Graphic Packaging International received the Paperboard Package of the Year award in the 2022 Paperboard Packaging Council North American Paperboard Packaging Competition for its Mentos Gum Boardio Canister. This paperboard-based package provides an alternative to the previous rigid plastic design. | Credit: Paperboard Packaging Council

The Boardio Canister for Mentos Gum submitted to the competition by Graphic Packaging International earned the competition’s top award — the Paperboard Package of the Year — for transitioning the gum’s previously 100% rigid plastic bottle into a paperboard-based package consisting of 90% renewable fibers. Other examples of this shift have occurred among major brands as well, including Old Spice and Secret deodorants, which launched products in paperboard tubes. Markens also points to the KeelClip, another innovation from Graphic Packaging International that replaces plastic beverage holder rings with a paperboard holder for cans. This paperboard packaging innovation that is taking hold in the U.S. first began in Europe, Markens explains, but is now being spurred in North America by consumers willing to pay a premium for sustainable packaging that aligns with their values.

“Certainly in Europe and we’re starting to see it here, 10 years ago when you did a survey, people said, ‘We’re not willing to pay a penny more for more sustainable packaging,’” Markens says. “Now they are.”

Spreading the Word on Paper-Based Packaging

At the forefront of spreading the message in support of paper-based packaging, the Paper and Packaging Board, a checkoff program that operates with oversight from the U.S. Department of Agriculture, has launched several initiatives aimed at educating consumers about the environmental benefits of all kinds of paper-based packaging, including folding cartons.

Most recently, the Paper and Packaging Board debuted an initiative encouraging consumers to choose paper-based packaging in their daily lives and be a “papertarian.” The initiative incorporates 30-second promotional spots featuring Retta, the actress and comedian best known for her roles in television shows “Parks and Recreation” and “Good Girls,” and empowers consumers to select paper-based packaging when they are out shopping due to its recyclability and renewability. Mary Anne Hansan, president of the Paper and Packaging Board, explains that the initiative reinforces the positive connotations that consumers largely already have toward paper-based packaging, compared to alternatives that may be more challenging to recycle.

“We have such a strong leadership position in terms of consumers’ perception of the industry’s products, and renewability and recycling,” Hansan says. “This idea of making a better choice is really consistent with our research about what consumers think about paper anyway and, frankly, how poorly they think of plastic. Because they don’t think of plastic as a good environmental choice.”

While consumers do tend to associate paper-based packaging as an environmentally friendly option, Hansan says there is still more education needed in the marketplace. For example, she says the Paper and Packaging Board tracks consumer sentiment of paper-based packaging. In one survey question, adult survey respondents, quantified as persons aged 18 years or older, were asked to indicate at which stage of their experience with a product they think about the recyclability of a package.

In the most recent data, from December 2022, 42% of respondents stated that this thought process occurs at the time they are disposing the package. Meanwhile, 25% stated that they think about recyclability of packaging at the time they make a purchase, and 11% think about it before making a purchase. While it is encouraging that so few respondents stated they either rarely or never think about recycling (15% and 7%, respectively), Hansan says she would like to see more consumers start thinking about recyclability earlier in the purchasing process.

One of the ways the Paper and Packaging Board has promoted the recyclability of paper-based packaging to consumers is through its Box to Nature initiative. This program consists of a graphic that can be printed on folding cartons and other paper-based packaging and reads “This box has up to 7 lives. Our planet has one.” It also provides a reminder to empty and flatten the box before recycling, and a QR code that consumers can scan for more information.

“It’s a little different than a How2Recycle mark or a Corrugated Recycles mark because it’s reminding [consumers] that this is bigger than them and that you can make a meaningful contribution just doing the right thing and recycling the right way,” Hansan says.

Hansan adds that 75% of consumers indicated they would be more likely to recycle their e-commerce box after exposure to the Box to Nature graphic, helping the industry get back more fiber.

A Focus on Folding Carton Innovation

Beyond the sustainability attributes of folding cartons and paperboard packaging, converters and brand owners are collaborating to produce innovative applications that extend the appeal of folding cartons.
Markens cites the expansion of packaging embellishments as an opportunity for folding carton printers to make their packaging more enticing for consumers. Folding carton add-ons, such as hot and cold foils, UV inks, and clear plastic windows, are being implemented into folding cartons, and in addition to providing a high-end connotation for the consumer, Markens explains that embellished folding cartons remain a strong sustainable option.

For example, he says that a recent study of hot and cold foil indicated that it can be repulped along with a paperboard carton. And for cartons that implement clear plastic windows, which allow the consumer to see the product inside, the recycling process utilizes a ragger that can remove the plastic from the carton and ensure the remaining paperboard can be recycled unimpeded.

“If you think about a box of pasta, that window is pretty small,” Markens says. “So, 99 and three quarters percent of that package is recovered and the de minimis amount of plastic film does end up getting screened out.”

Graham shares that folding cartons and paperboard packaging can also provide security attributes via its tamper-evident properties. This is particularly important for food safety, along with other market segments including pharmaceuticals and cosmetics.

“When two pieces of substrate are bonded together, there’s a natural fiber tear that happens when it’s been tampered with, so those specific features are already built into paperboard,” Graham says. “As a package for a consumer, it’s a great way to display as well as protect the product in the marketplace.”

Lingering Pandemic Challenges and Optimism on the Horizon

Despite the goodwill around folding cartons and paperboard packaging, there are still challenges that emerged during the pandemic that converters have had to face. Material sourcing has been difficult throughout the packaging segment as a result of the supply chain struggles that impact a wide variety of industries. Graham explains, in the paperboard segment, supply chain volatility that occurred due to mill backlogs has improved. There is some tightness around paperboard supply, however, but Graham says he does not see that as a bad thing necessarily because it ensures the industry maintains its inventories and does not run into a situation where there is too much or too little supply.

Labor, meanwhile, is a lingering challenge that Graham expects to continue into the future. However, automation solutions continue to emerge in the packaging industry and are helping provide relief in areas of the business that historically required manual labor. Graham points to material handling as an example, as well as the IT side of production including automated job tracking, workflow, and enterprise resource planning.

But despite these lingering challenges, Graham says the paperboard industry and folding carton production are in healthy positions moving forward. Particularly as brands, consumers, and retailers all prioritize sustainability and recycling, folding cartons will continue to be a strong packaging segment for the foreseeable future.

“It’s a great time to be in paperboard packaging,” he says. “We’ve been talking about it for a long time, but it really genuinely feels like the sustainability piece is actionable, rather than just being pie in the sky and sort of esoteric. It’s now at the point where the end-users and the customers are putting value on it, and it’s actually driving decision making. We’re seeing that brand owners are making a decision based on substrate, which I think is very helpful for our space.”