The year 2021 unleashed an internet shopping frenzy. However, supply chains got stuck, production materials, including paper, were missing. Companies started pre-stocking in panic. In 2022, however, the shopping euphoria subsided and Czechs began saving. Spending in stores has been decreasing for more than a year and a half.
What does the demand for cardboard packaging, which is usually a good indicator of future development, say about the further development of the economy?
The production of boxes shows the stabilization of the economy. Video: Filip Horáček, Seznam Správy
The interest in the boxes is decent, says the Czech branch of the German packaging company Thimm. One of the five largest domestic manufacturers of paper boxes produces corrugated cardboard boxes in Všetaty near Prague, in which shipments from e-shops, food, drugstores and cosmetics are packed. The company covers about 15 percent of the market’s needs.
“For fast-moving goods, I do not see a decrease in the consumption of boxes. Rather, it has moved from brands to private labels, however, both sides need boxes in which the goods must be delivered,” says Martin Hejl, director of the Thimm company, which produces packaging for many companies, including the largest ones, such as drugstore producer Procter & Gamble. the Ikea furniture chain, the Madeta dairy, the Staropramen Brewery or the Intersnack chip manufacturer.
Online business is no longer growing by tens of percent year-on-year as it was during the pandemic, but according to Martin Hejl, it has returned to the trajectory of moderate growth from the pre-covid years. “After periods of harvest and incredible consumption, demand has reached somewhere where it was expected in 2018 and 2019,” he said.
One of the largest domestic manufacturers of packaging, Model Group, is also observing the gradual calming down of the market. “It seems that at least the declines that we observed practically from the second half of 2022 have stopped,” predicts director Josef Chalupný from the boxes. He does not believe that the online business will reach for the numbers from covid again. “At the moment Christmas is saving the segment, but we don’t foresee a return to the 2020/2021 numbers,” he said.
Another leading packaging company, DS Smith, which operates on the Czech market, is even more optimistic. “Current trends in the corrugated market indicate not only a significant increase in demand, but also fundamental changes in consumer behavior and regulations. The growth of interest in sustainability and environmental consideration is evident, especially in the fruit and vegetable category,” said director Martin Němec. In the case of fruit and vegetables, a third of consumers are willing to pay extra to replace plastic packaging with paper.
Packaging is generally a very reliable indicator of economic development, because practically everything has to be packaged. Either in a transport package or a commercial one that the customer can see. However, the situation was complicated by covid.
Builder packaging is on the decline
Due to disrupted supply chains, most companies have built up enormous stockpiles of packaging and key commodities. From the second half of 2022 to the first half of 2023, according to Chalupné, interest in packaging fell because companies across the market were getting rid of stock. Extreme inflation came into play and demand for consumer goods fell.
“At the moment, we can see an extreme drop, especially in fields that are connected to the construction industry, and I don’t see much reason for optimism here yet,” observes the director of the Czech branch of the Swiss family company Model Group.
The problems in the construction industry can also be easily read from the sale of work gloves, as described by SZ Byznys Petr Vaněrka, the head of construction company Pro-Doma. “They say that when they stop buying work gloves, it’s the first signal,” said Vaněrka, adding that the gloves have already stopped being sold.
According to Chief Thimm, the domestic economy will be helped in the future by the trend of localization of production, which is moving to Europe and the Czech Republic, for example, from Asia.
“You can see the trend of moving foreign production from Asia to Europe or the second trend of moving production from Western to Central Europe. It can be seen that some technology companies are starting to produce in the Czech Republic and some of them are buying packaging. Consumption will increase, which has never been here before,” he believes.
Boxes are lighter
Paper box manufacturers are also helped by the gradual retreat from plastic packaging, which in some cases is replaced by cardboard packaging. “For the packaging that people take home from fast-food restaurants, packaging from paper, i.e. from corrugated cardboard, is appearing more and more these days. In the future, there will be significantly more paper packaging,” predicts Hejl.
Another ecological trend is the lightening of packaging. It is relatively well-known that plastic bottles are becoming lighter, but this is also happening with cardboard packaging.
“28 years ago, 200 grams of paper per square meter was normal. We test weights of 60 and 80 g per meter,” he said, adding that the cardboard should still withstand the same load. “You can catch up with the technical load-bearing capacity through people’s creativity and by adding, for example, one corrugated board, and instead of three-layer cardboard, you have, for example, five-layer cardboard. The field of innovation that is coming to our industry is huge,” said Hejl.
2023-12-31 18:20:56
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