Paper Bags

It is expected that the paper bag demand will start to see a notable increase from 2023 to 2026 at a CAGR of 4.5–5 percent and reach 27.21 MMT by 2026, driven by growing demand for a paper bag from food & beverages, restaurants, groceries, pharma, and the growing trend of the online shopping with the contributing factor for the growth is the rising income and changing consumption patterns

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    Paper Bags market report transcript

    Paper Bags Global Market Outlook

    • The paper bag market is expected to grow at a rate of 4.5–5 percent from 2023 to 2026, attributing to rising demand for paper bag from restaurants & grocery stores, food & beverages, building & construction, and pharmaceutical/healthcare industry, along with increasing consumer environment sustainability concern and awareness issues, like biodegradability, health problems, and global warming produced by plastic, leading to a higher shift to paper packaging and their prices vary depending upon the specifications and applications

    • The paper bag market is expected to increase in the upcoming years, as the demand is expected to increase, due to sustainability concerns and government regulation and their prices vary depending upon the specifications and applications

    • The food & beverages market will continue to dominate the demand for a paper bag. Water-based dispersion and Biopolymers Coated Paper Bag is used as a substitute to replace fossil-based polymer coating and plastic films, due to their easy recyclability, ability to compost, and degrade on their own and is expected to make inroads into their market, especially for food packaging applications

    Global Porter’s Five Forces Analysis: Paper Bag

    Supplier Power

    • The supplier market is consolidated with a string of acquisitions recently. The top players account for a large chunk of kraft paper market and hence have higher bargaining power

    • Also bags and sacks accounts for only 40 percent of the total supplies giving a niche and limited supply of paper for bags.

    • There is threat of forward integration, wherein kraft manufacturers are providing converting and printing services themselves. E.g.: International Paper

    Barriers to New Entrants

    • The industry has large players and also niche players who provide expert design solutions for paper bags.

    • Existing players have better control over the paper bags supply chain (raw materials, innovation and cost reduction opportunities)

    • Large buyers also look out for experience in the market as a main criteria and this gets difficult for small players to gain business.

    Intensity of Rivalry

    • There are very few converters of retail paper bags since it is a small segment and very limited share is up for grab.

    • Design and innovation is the key differentiator for the players and competition is high on these lines

    Threat of Substitutes

    • Reusable bags like non woven polypropylene and woven polypropylene are available. However it is a plastic recyclable fabric which might come under scanner in regulations later.

    • Cotton bags are being used. However they don't provide good decoration options.

    Buyer Power

    • Buyers are concentrated within retail and groceries and food service industry. Currently the volumes purchased by retailers and grocers are limited with plastic bags having a chunk of the market. This will change with plastic ban and increase the volumes placed by retailers giving them better bargaining power.

    • However retailers place carry bags at high priority since that is a way of product differentiation. So, special printing requirements and designs are outsourced to these converters putting them at better position to negotiate.

    Cost Structure Analysis : Paper Bags

    • Margins for the North America and Europe paper bag producers are high, due to high feedstock prices, which, in turn is driven by the regions’ structural capacity deficit

    • LATAM does not have a cost competitive feedstock, yet the prices and margins of paper bag are the lowest

    • Sack Kraft Paper accounts for 55–65 percent of the raw material cost is the key cost driver

    • In LATAM, the unemployment rate is higher than in Europe and US and the labour wages are significantly lower compared to the western countries.

    • LATAM has the lowest raw materials cost, followed by Europe and the US

    • The difference between total production costs among the regions are narrow, due to high labor costs in Europe and US


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