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Juliet, how is the switch from plastic packaging to cardboard going?

Europe looks very different to the US. But for the first time in a decade or more, we're finally seeing fibre or paper-based packaging taking back share from plastic. 

But not as fast in the US? 

Yes, unfortunately. In the European market we are massively biased towards recycled input. About 80 per cent of the market is recycled containerboard and 20 per cent is virgin containerboard. In the US, it's a completely different picture. It's about 65-70 per cent virgin material.

Cultural differences?

I think it's fair to say that in Europe, the average consumer is far more sustainability conscious. Brands are very conscious of the reputational damage that can be done from being seen to be doing environmental damage. We also have more limited access to fresh fibre and much better collection of used cardboard, which enables this more circular system.

Then on the other hand, you have a much bigger regulatory push both from the EU as a body and from national governments. So it comes from both ends really, and the US is lagging on both these fronts. 

I mean, sustainability does often come at a cost.

Well, I was at a conference last week and one of the European boxing CEOs was saying that the average box in in the US is 40 per cent heavier than the average box in Europe. So clearly there is overspec’ing and excess of material use in the US that we have simply moved away from in Europe. 

So from a European business perspective, they're trying to sell product into the US market that they think is better and is also cheaper or at least cost competitive. You're asking customers to spend the same for a better product that's more environmentally friendly: it should be a no-brainer. 

But it isn’t quite happening? 

We're seeing that switch happening very, very slowly. 


I think inertia is much stronger than you might expect it to be. And the cost benefit that companies see from packaging is still such a small part of the overall cost of a product, so the impetus to switch for a cost benefit is quite low.

But it does also sound like a real competitive advantage for the Europeans if they’re using a better technology?

There is probably an underestimation from the guys making the paper in Europe of the hurdle involved in reconfiguring the US machinery to run the different grade of paper. Some European firms are saying that they will participate in the costs involved in the reconfiguration of machines to enable that transition, which tells you that it is a problem. 

But it does seem like that shouldn't be a massively big hurdle. And certainly if brands were pushing the packaging producers hard, why wouldn’t they be changing over? So I think clearly there is an absence of sufficient pressure from the brands to catalyse that change. 

So we need more pressure and more global consistency from the multinationals?

The irony is that in Europe the lightweight, more sustainable board is the standard material. But the same brands are using different, heavier, less environmentally friendly material in the US.

You'd hope that over the next decade, as sustainability pressures mount and cost pressures mount, that the US brand owners are more conscious of the amount of material that they're using.

Plus consumers should vote with their feet.

I think consumers are saying: “Oh, it's cardboard, it's not plastic. Great!” Thinking about what kind of cardboard is next level.

Juliet Pursaill

Juliet Pursaill

Equity Research

Patrick Graham

Patrick Graham

Senior Investment Writer

Stephen Gardner

Stephen Gardner

Digital Editor