Ready to make 2019 the best year ever for your paperboard packaging company? If you’re hungry for success, and we know you are, there are a few things you need to know about the marketplace over the coming years. These six concepts come directly from PPC’s Trends Report—a folding carton market data report created by the economists at RISI.
Read on to understand the “playing field” in 2019 and beyond. That way you’ll be sure to hit a home run for your company.
1. Enjoy Stable Growth
Unlike other industries, paperboard packaging has enjoyed slow and steady growth for years—and will continue to do so for the near future. Generally high economic growth, accelerating nondurables consumer spending, and the heated war on plastic packaging all appear to be contributing to our industry’s stable growth. Folding carton shipments are expected to increase at a 0.8% average annual rate over the next five years, and 2019 will see the highest rate of growth during that period, at 1.8%.
2. Consumer Spending is a Boon for Folding Cartons
Unemployment is at its lowest levels in years, real wages are finally rising, and consumer net worth is the highest it has been in decades. That means consumers are buying stuff! As a result, real nondurables consumer spending should accelerate by 2.0% over the coming years. Conditions for the consumer are good, and consumer spending translates most directly to demand for goods packaged in folding cartons.
3. Competition Will Remain
Despite the generally positive economic outlook, you will face challenges in 2019 and beyond. Overseas competition will continue to challenge domestic carton manufacturers even though the U.S. dollar is slightly weaker than most global currencies. Furthermore, competition from alternative packaging methods and materials is expected to persist, especially with low-priced oil keeping plastic manufacturing costs down.
4. Sustainability: The Gift That Keeps on Giving
You understand the environmental benefits of renewable, recyclable paperboard firsthand—and now companies and consumers are catching on, too. Society has become concerned with the potential long-term environmental impacts of plastics, which are non-biodegradable. As a result, a growing number of restaurants and fast food establishments have set scheduled plans to transition from plastic to paper packaging. The word about paperboard’s sustainability is getting out, and that’s great news for the planet and our industry!
5. Prepare for a Slower 2021
Economists predict that an economic slowdown will hit the United States in 2021. Following three years of strong growth, folding carton shipments are forecast to decline by 0.2% in 2021. You should certainly factor this contraction into your long-term plans. However, remember that the market will ultimately grow (by 0.08%) over the next five years. By 2022, the total value of carton shipments should reach approximately $10.0 billion, up from $8.4 billion in 2017.
6. Cheers! Focus on Beverages
The beverage market is by far the largest end-user of folding cartons in the United States. Shipments of cartons to this sector have been expanding by 1.1% annually over the last five years—despite anemic economic growth following the Great Recession in 2008.
Spending on alcohol for off-premises consumption will be the main driver for folding carton demand growth. Within this category, wine and spirits will grow the most, but beer spending will also be robust. The improving outlook for U.S. consumers will help boost beverage consumption, translating into folding carton shipment growth of 1.7% on average over the next five years! If you need to tell your salespeople where to hunt, tell them to start in the beverage segment.
The Trends Report covers six more end-use categories—some of which are growing, like beverages, and others that will decline or remain stable. PPC members can download the report for free, while nonmembers can access a summary. We hope you will use this excellent tool to achieve great success in 2019. Here’s to the year ahead!