German paper sack industry goes through the pandemic safely and stably

Among other reasons, it cites its ability to deliver and meet deadlines as well as the continuously high quality of its packaging solutions. This is one result of the current industry barometer of the Gemeinschaft Papiersackindustrie e.V. (GemPSI). In addition to a review and outlook, the report informs about market trends and moods in the industry. The focus of this issue is the paper sack market for building materials. The German paper sack industry closed the 2020 financial year with a proud increase: from January to December, it delivered a total of seven per cent more paper sacks than in the previous year. The largest increases were recorded in the market segments cement (+16.5 per cent) and building materials (+15.1 per cent). The food segment excluding milk powder remained unchanged. The leader among the declining segments is packaging for chemical products with only -5.6 per cent. GemPSI members rate their business situation slightly better than in the previous year with a value of 2.16 points.

High demand in the building materials sector

According to the GemPSI members, the increased demand is primarily due to the strong construction industry as well as a boom in the do-it-yourself (DIY) segment - presumably caused by the lockdown situation - last year. They also see a connection between the slumps in the chemical and food sectors and the pandemic. This is because the order volume for restaurants, large canteens and kitchens fell due to nationwide closures. Sustainable packaging continued to be in vogue. Paper sacks made of brown sack paper as well as material reductions with unchanged performance were in the focus of paper sack customers.

Safely through the pandemic

Thanks to the early introduction of numerous security measures at the beginning of the pandemic, German paper bag manufacturers were able to maintain production and supply chains and provide their customers with maximum security of supply. They will maintain these measures for the time being in 2021 and accept additional time and costs for this. Many customers have built up adequate safety stocks at the beginning of the first lockdown to counteract any supply bottlenecks. By the end of the first quarter of 2021, however, a development is emerging that is reminiscent of last year's hoarding purchases of pasta and toilet paper. "As a result, a paper bag shortage is looming, although there would actually be enough for everyone," explains GemPSI Chairman Alfred Rockenfeller. "We would like to appeal to the common sense of our customers to build up stocks over a longer period of one to two years. Because this way capacity bottlenecks and the associated price developments can be reduced."

With optimism into 2021

Despite the continuing uncertainties caused by the pandemic, the industry representatives are optimistic about the current business year. Two-thirds expect the trend to remain the same, one-third anticipate growth. They are most likely to expect growth in building materials (excluding cement) and seeds. Thanks to their ability to deliver and their adherence to delivery dates, the consistently high quality of their packaging solutions, their innovative strength and their consulting competence, the GemPSI members feel they are optimally positioned in the packaging market. In addition to a high level of technical expertise, they offer their customers environmentally friendly and high-performance packaging solutions that are individually tailored to their requirements and in line with current legislation. GemPSI members therefore assess their general business prospects quite positively with a value of 2.3. In terms of turnover, more than 80 percent expect a stable development, while the remaining respondents anticipate an increase. The major challenges include cost fluctuations in the area of raw materials. For example, paper sack manufacturers are currently confronted with sharp increases and supply bottlenecks in the procurement of paper and PE film.

Developments in the paper sack market for building materials

With a market share of 55 per cent, the paper sack market for building materials including cement is one of the largest in the German paper sack industry. Since building materials are becoming more and more similar in terms of quality and application, differentiation via the functions of the packaging is becoming increasingly important for manufacturers. According to the GemPSI members, they attach particular importance to dust freedom, storage life, moisture protection, easy handling, filling speed as well as recyclability. In addition, they are increasingly asking for smaller packaging units than the usual 25 kg containers.

DIY market as driver for sustainability trend in building material bags

Sustainability aspects are also gaining importance in this segment: in addition to the recyclability of a packaging, building material manufacturers are increasingly interested in solutions made with recycled raw materials and bio-based barriers. According to GemPSI members, this development is being driven by the DIY markets. Their customers are looking to use packaging made from renewable and recycled raw materials that can be easily recycled. Against the background of EU climate policy, GemPSI members assume that the sustainability of building material packaging will become even more important in the future and will go hand in hand with issues such as CO2 neutrality and closed material cycles. Due to the increasing complexity and lack of standards for assessing the sustainability of a packaging, they expect a higher consulting volume in the future. With innovative as well as high-performance products, paper sack manufacturers want to keep their sales at a high level in the long term and support their customers in achieving their climate goals. The contents of the industry barometer were compiled with the help of a questionnaire and desk research based on relevant third-party publications. The entire industry barometer is available for download.