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The demand for US kraft paper packaging has experienced some volatility over recent years. In 2021, significant growth was seen due to the impact of the Covid-19 pandemic. However, this increase proved to be just temporary as weakness emerged in 2022-23. A rebound in demand was observed in 2024, partly driven by structural changes in e-commerce, as large companies began replacing plastic packaging materials with paper packaging.
But to gain a better understanding of the market dynamics, it is important to consider the performance of bleached and unbleached kraft papers and not just the overall demand. This raises several questions: Have both types experienced similar growth, or has one outpaced the other leading to distinct demand trends for each? To address these questions, this analysis will provide a brief overview of the demand for bleached and unbleached kraft paper products throughout the last 15 years.
Bleached (white) kraft paper is more suitable for printing when vibrant colors and branding designs are required to stand out, making it ideal for high-end retail packaging that aims for a premium appearance. Bleached paper is also often preferred for food wrapping and medical packaging as it creates an appealing impression of cleanliness.
In contrast, unbleached (brown) kraft paper is primarily used for industrial purposes, shipping and heavy-duty applications. It also has a rustic aesthetic and is more environmentally friendly, as its production process does not involve the chemical bleaching phase.
The primary difference between bleached and unbleached kraft paper products lies in their specific end-use applications and distinct production processes involved, which affect their costs. Bleached paper products are generally more expensive due to the additional processing required for bleaching, which uses more chemicals and resources during production.
According to Analytical Cornerstone, Fastmarkets’ database, bleached kraft papers are more than 20% costlier to produce than unbleached. The most significant factor contributing to this difference is the amount of chemicals used in the manufacturing process, with bleached papers spending about 2.8 times more on chemicals than unbleached ones.
Imports of converted bags and multiwall sack products make up a sizable share not only of their respective segments but also of overall US kraft paper demand. While it is not possible to split imports of converted bags and multiwall sack products into bleached and unbleached, it is interesting to see the growth they have achieved.
The share of imported converted products had increased modestly over time until there was a jump during Covid-19 to meet the growing demand for paper packaging in 2021. That year, the volume of imported converted products rose by 35%, leading its market size to move from 10% in 2019 to 16% by 2022, settling at this level since then.
The demand for unbleached products saw a significant increase of 14% in 2014, allowing their market share to surpass that of bleached ones. Since that time, the market share of unbleached products has trended upward, reaching 57% in 2024. This indicates the rise and strong resilience of unbleached kraft paper products over the last 10 years.
At the same time, demand for bleached products has declined and even been weaker during slowdowns, suggesting a tougher market for these products during economic crises or even when there are unfavorable conditions for the paper packaging industry.
As a result, the bleached market share has tightened over time, dropping from the high 40% range in 2013 to just 27% in 2024.
One of the reasons that unbleached products performed better is due to government regulations toward sustainability, such as bans on single-use plastic bags in stores, making unbleached kraft papers (paper bags) a more sustainable alternative.
The first state-wide ban on single-use plastic bags was implemented by California in 2014, and since then, similar bans have spread across states and several cities in the country, further benefiting the market for unbleached kraft paper products.
Shifts from plastic to paper packaging have significantly increased the demand for kraft paper packaging, particularly for the bag and sack segment which includes paper mailers. In North America, Amazon reduced its use of single-use plastic packaging by approximately 18% in 2024 compared with 2023, lowering its share of plastic in shipments from 65% in 2023 to 37% in 2024. This also suggests that there is still room for continued expansion of paper packaging in e-commerce.
These shifts, combined with robust growth in e-commerce, will contribute to the increased demand for kraft paper products, particularly for unbleached papers in the coming years.
Overall, bleached kraft paper demand has declined by 27% over the last 10 years, resulting in a loss of 300,000 tons. Despite this decline, if we dive into all four US kraft paper packaging segments, there is still some resilience of bleached products on the food wrapping side.
In fact, bleached food wrapping holds a dominant share of 90% and has maintained this level for years, revealing a strong consumer preference for these products. Bleached is an essential component for the food and wrapping segment, as it creates a perception of cleanliness and a premium appearance that is preferable for consumer-facing food products.
On the other hand, the demand for bleached bags, along with their market share of total bag and sack demand, has significantly declined over time. In 2013, they accounted for nearly 30% of the market; however, this share was cut almost in half in 2014, following the introduction of the first statewide ban on single-use plastic bags. Since then, the market share of bleached bags has continued to trend downward, reaching nearly 4% in 2024, making it even tighter than all other segments.
The rise in imports of converted bags may help explain the decline in both the volume and market share of bleached bags over the past decade. As the demand for imported bags has increased, the demand for bleached bags has decreased. This trend suggests a potential shift toward import substitution, which could significantly impact the market position of bleached bags. A similar pattern is also observed for bleached multiwall sack versus imports of converted multiwall sack products.
Unbleached products have become more popular than bleached ones and are expected to continue to lead the market, contributing largely to the expansion of kraft paper packaging demand in the US.
Continued shifts from plastic to paper, along with government regulations promoting sustainability, tend to bolster the demand for unbleached kraft paper products even further.
However, although unbleached kraft paper holds the largest market share and shows stronger growth, both bleached and unbleached kraft paper serve distinct market segments and each has its own role in fulfilling different consumer needs.
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