RISI study reveals food service paper sector growth

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RISI study reveals food service paper sector growth

June 09, 2014 - 19:59

BRUSSELS, June 1, 2014 (PPI Magazine) - Expansion of the quick service restaurant industry has fueled increasing demands for specialty papers in the food service sector. As this trend continues, it is expected that global growth for food service papers will increase at an approximate rate of 1.4% per year through 2016 bringing demand to 1.5 million tonnes by 2016.

These and other key findings were released in a new study by RISI, the leading information provider for the global forest products industry. The study, Specialty Food Service Papers, provides a detailed analysis of the growing food service paper sector. It focuses on barriers and opportunities facing potential entrants to the sector. The study examines global usage of this sector's key specialty grades and identifies the key companies producing in this market. Details include information on product lines, capabilities, and papers used.

William Studstill, director of graphic paper at RISI, says it is the first food service paper study that he is aware of in RISI. "The study is the result of our desire to expand our specialty papers coverage (in fact, we see this as the second report of a three-part series). The first was the Specialty Packaging Papers Study that we published at the end/beginning of 2012-2013. We plan for the third report to focus on the label and release paper area, but we do not have a specific timeline for that one yet."

Studstill explains, "Despite lacking certain inherent properties such as grease or moisture resistance, paper has become an increasingly attractive option for food service use. Many applications used for "take-out" packaging are disposable products such as bags, wraps, bakery sheets, cups, etc, making paper a more sustainable option compared to other competitive materials.

"Because this is a growing market, opportunities may exist for commodity graphic paper and packaging producers to convert their equipment to make these specialty food service grades," continues Studstill.

The food services industry accounts for about 40% of the global specialty packaging market, the topic of the first study. The study focuses on lightweight grades, 18-120 g/m2, and defines 14 end use grades. Of the 14, the top six account for 70% of the total demand.

Grease and stain-resistant and waxing base/waxed papers are the two leading food service grades.

Grade categories studied include beverage and food processing filer, coffee filter, food wrap, glassine and greaseproof, grease and stain resistant, placement/tray liner, waxing base/on-machine waxed, tea bag, food casing and C1S food service.

Heavier weight papers used for cups, plates, take-out containers are not included nor are lighter weight sanitary tissue and towel.

North America and Europe combined share more than 60% of the market while Asia has a smaller base, its growth is driving a meaningful market share gain.

Studstill notes that paper for food service applications is growing based on its attractiveness as renewable and recyclable. Growth rates for food service papers far outpace those of commodity paper grades although growth rates are uneven regionally.

Looking at the mill level, 126 mills were identified for the study. Producers tend to have low pulp integration and have MG and coating capability. There is a wide range of cash costs, +/- 40% around the industry average. As can be expected, the food service paper industry has a complex value chain with more than 1,000 converters. Of the mills studied, 60 were chosen for benchmarking base paper manufacturing costs.

A total of 106 food service paper converters were included, along with information as to their product lines, capabilities and paper (types) used. The value progression chain may include more than one converter along the path to distribution to the final end user.

Analysis included in Specialty Food Service Papers Study:

  • Market size and trends
  • Cost benchmarking data for 60 mills
  • Regional and global converters and distributors
  • Barriers for potential market entrants
  • Specific end-use product applications
  • New raw material developments
  • Global trade trends

In conclusion, the food service sector offers significant, growing demand. Grease resistance is the most important functional quality. Of the mills, 85% also supply packaging markets.

For more information, see www.risi.com/foodservicepapers or contact the study's authors, Jon Rager, jrager@risi.com, or William Studstill, wstudstill@risi.com.

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