SAO PAULO, April 9, 2019 (PPI Latin America) -Beverage carton producers see increasing demand in Latin America driving investments in the region. Growing awareness from consumers regarding sustainability and a push for convenience are making the industry look to new possible applications for paper based packaging solutions.
SIG Combibloc, which produces 4.5 billion packages in its production site in Brazil, is entering the Argentinian market after already opening offices in Chile and México. The company’s head of marketing for Latin America, Andressa Joaquim, toldPPI Latin Americathat projections for the demand obtained by the company indicate over 3.9% annual growth between 2017 and 2022 in Brazil alone.
“Despite the recent recession, the Brazilian economy is starting to grow again and improving economic conditions should support the growth in volume of packaging sold,” Joaquim said.
The Swiss company has recently launched a paper drinking straw to go with portion-size packages that previously were designed to be used with plastic straws. Nestlé became the first customer to use this solution, which was tested for a market launch in Dominican Republic. SIG’s executive highlights that many cities in the world have already banned plastic straws and this trend should reach Latin America as well. “It is a matter of time.”
Tetra Pak, which produces over 11 billion packages in Brazil, is betting on developing new segments together with consumer goods companies. The company recently worked on fomenting solutions for the industrialized coconut water market, for example.
“Consumers are becoming more aware and attentive to issues related to sustainability. They expect concrete actions of the brands and these are changes that impact the food and beverage industry,” said the marketing director for Tetra Pak in Brazil, Vivian Leite.
Worldwide, Tetra Pak sold over 189 billion packages in 2018 and one quarter of the company’s sales are made in the Americas.
Leite said all of Tetra Pak packages made in Brazil use liquid packaging board (LPB) as raw material, but there are countries in Latin America that use sack kraft paper.
According to Klabin’s commercial paper director Flavio Deganutti, the regional LPB market tends to grow as household income increases and the choice for healthier and premium products becomes an even more relevant trend.
Although there is little data available specifically to measure Latin America consumption of LPB, the region corresponds to around 5% of total global demand of boxboard and LPB is known to be a market of 3.5 million tonnes worldwide, as Klabin’s director pointed out in an interview toPPI Latin Americain February.
In a presentation to investors at the end of 2018, the company said it expects the LPB market worldwide is to grow 1.2% yearly between 2017 and 2025.
Exports.Overall boxboard production in Latin America is also being impacted by a change in global trade dynamics.
According to a study recently published by RISI,World Boxboard Study: Americas, Chinese boxboard companies are retreating from the export market in order to supply their own domestic market. This comes as a consequence of the Chinese ban on mixed paper imports. As a result, Brazil and Chile will increase their exports, the study predicts.
Klabin has already set a new tone for future investments, stating that new capacities will be focused on exports. In its new growth cycle, Klabin plans to include a new boxboard PM, which is expected to startup around 2022.
According to comments done by Klabin’s executives in the past, a new boxboard machine in Brazil would only become viable if new and larger contracts with carton packages suppliers are closed.