The use of paper packaging advances in Brazil due to retail demand

Plastic substitution with paper-based products is driven by customer demand for sustainability and delivery

The use of paper packaging, such as corrugated cardboard, cardboard and paperboard, has been growing in Brazil in recent years, mainly due to the replacement of plastic solutions with paper packaging, Gabriella Michelucci, Brazilian Paper Packaging Association (Empapel) chairperson of the board, said in an interview with Fastmarkets, citing data from the Brazilian Packaging Association (Abre).

Michelucci emphasized that this shift, which began to become more pronounced in 2018, has different impacts and growth rates across various segments “depending on the existing technology that allows the material substitution.”

She cited examples such as paper bags, cups, food trays and paper sacks, stating that they are already a reality, but with room for further advancement.

Retail is driving plastic substitution

In the case of Brazilian company Suzano, the world’s largest producer of bleached eucalyptus kraft (BEK) pulp, the retail sector played a significant role in quintupling the sales of their Greenbag line, which produces paper specifically for making durable and physically resistant bags, in 2022 compared with 2021.

“There are two fundamental factors driving the consumption of paper bags. The first is the increased demand from society for sustainable products, and the other is the arrival of Covid-19,” a Suzano spokesperson told Fastmarkets. The company did not disclose the segment’s revenue for the period.

According to Michelucci, the retail sector is indeed one of the main contributors to the substitution of plastic solutions with paper, driven by the beverage sector, takeaway food (deliveries and on-the-go), processed foods and e-commerce.

Preference for food and goods delivery

In the delivery sector, one of the leading platforms in Brazil, iFood, expects a 20% growth in the paper bag segment in 2023 compared with 2022.

Without providing specific value projections, Alexandre Lima, iFood’s sustainability manager, said that the use of paper bags in delivery is following a global trend. He said that the company has a role in developing good packaging solutions at competitive costs, promoting the use of paper products among its partners.

According to Suzano, certain consumer habits were consolidated during the pandemic, and delivery is one of them.

The company added that despite the increased demand, there are challenges. The first challenge is the cost, since current alternatives such as plastic solutions are cheaper. The other challenge is related to the adaptability of the supply chain, since all the machinery is currently consolidated to work with other materials.

Moving in the right direction, but greater efforts needed

In 2022, the gross value of packaging production in Brazil reached 123.2 billion Reais ($25.66 billion), a 3.9% increase compared with 2021, according to a study by the Getulio Vargas Foundation (FGV), commissioned by Abre. Plastic is the most used material, present in one-third of packaging. Metal and corrugated cardboard packaging each account for about 20% of the market share.

Michelucci believes there are “greater efforts” from brand owners to adopt sustainable solutions and a growing demand for this movement from consumers. She stated that consumers are demanding manufacturers and retailers make increasingly sustainable alternatives.

The paper and corrugated cardboard packaging market is moving strongly in this direction.

Gabriella Michelucci, Brazilian Paper Packaging Association (Empapel)

She also mentioned that the issue of single-use plastics is constantly being discussed, including regulations adopted in the EU to address packaging waste that is currently not being recycled.

In line with this, Suzano pointed out that the movement in the European bloc will be expanded to other regions and countries in the future. “If consolidation occurs, we will have a force of law strongly changing this market,” the spokesperson said.

Regarding packaging material producers, Michelucci said that they are all conducting research to ensure the circularity of packaging solutions, as well as implementing measures for reverse logistics in the production chain.

“Lightweight, intelligent and resistant materials [are getting] ready to replace plastic packaging, along with the corrugated cardboard packaging sector announcing new operations,” she added.

Economic recovery can help to advance paper packaging

In Brazil, the 1.9% growth of the GDP in the first quarter of 2023 could contribute to the advancement of the sector, according to Suzano.

“As the main segment of this line [paper bags] is retail, with the warming of the economy and improved consumer spending, we believe there is indeed a positive impetus,” the company spokesperson said.

Suzano highlighted two trends that support this perspective. The first is the increased availability of resources for sustainability-related promotion or pilot initiatives. The second is that, for now, paper bags are more prevalent in higher-value products, and with the improvement of the economy, more people have access to these goods.

“We remain optimistic about the economy and its positive impact on this line,” the spokesperson said.

This article was first published in PPI Latin America, the industry’s most trusted pulp and paper market news and prices for Latin America. Speak to our team to find out more about subscribing to our products and services.

Case Study

Learn how to monitor packaging prices using cost and price indices and understand the underlying cost drivers, from material cost to labor, energy and more. Examples include cartonboard, liquid container and paper bag.

What to read next
Can the food export market and shifting consumer habits help sustain Brazil's paper packaging sector, defying domestic challenges?
A new incentive program for companies with large investments in Argentina might unlock the country’s mining potential in the medium term, market participants recently told Fastmarkets
From price adjustments in the GCC to shifts in consumption patterns, learn what's driving the latest Middle Eastern containerboard price movements in June
Brazilian aluminium producer Alumar has strategically entered the low value-added tax (VAT) market in the São Paulo region since the beginning of 2024, market participants told Fastmarkets over the last month.
Amid inflation pressures, the North American pulp and paper market is seeing significant hikes in containerboard prices, underscoring the critical importance of price data in the industry
Just 10 days after they were implemented, Brazilian importers have fully consumed the 62,300 tonnes of Galvalume reserved for import license quotas that were supposed to supply the market until the end of September, according to figures sent to Fastmarkets by the country’s Industry, Development and Trade ministry (MDIC)