Home deliveries driving higher demand for paper bags

10th August 2022 By: Darren Parker - Creamer Media Contributing Editor Online

Home deliveries driving higher demand for paper bags

Mpact CEO Bruce Strong

An increase in consumers ordering products for delivery to their homes instead of shopping at retail stores in the first half of this year has led to a “rapid” increase in demand for bag paper – one of the new products manufactured by JSE-listed paper and plastics packaging manufacturer and recycler Mpact.

Mpact CEO Bruce Strong told Engineering News on August 10 that there had been an increase in demand for products such as container board and carton board across a number of sectors as a result of this shift in consumer spending habits.

He noted that there was strong demand growth in locally produced packaging materials because companies that previously imported their packaging had been struggling to do so in the current global economic and socio-political environment.

“They’re looking to buy locally now. This has put us in a position where we can’t even meet the demand with our current supply because it’s so out there,” Strong remarked.

Although he expected this high demand to taper off as global markets stabilised and imports became more reliable and cost effective again, Strong noted that there had been a fundamental shift towards multinational companies sourcing more products locally than in the past in an effort to mitigate against the supply chain risks evident in global sourcing.

“As long as they continue doing that, then we should continue to benefit,” he commented.

Aside from the home delivery paper bag demand increase, demand for Mpact’s new paper-based punnets and paper bags, which serve as alternatives to traditional plastic punnets, had also grown, with offtake of paper punnets more than doubling over the past year. Demand for paper courier bags also saw significant growth.

“Quite a lot of that increase has been new business based on demand for sustainable alternatives to plastic,” Strong said.

This increase was partially offset by lower sales in the fruit sector over the first half of the year, as producers delayed orders as a result of supply chain and market uncertainties arising from port constraints in South Africa and sanctions against Russia.

Strong noted, however, that these delays and their impact were short-term owing to the nature of the product – as most fruit producers could not delay for more than a couple of weeks. However, the delay in the purchase of plastic jumbo bins – which are capital items for fruit producers – would have a longer-term impact.

Mpact reported on Monday that its paper business’ revenue of R4.9-billion was 5.9% higher than last year. In general, the company’s paper segment revenue increased 15.3% and external sales volumes increased 7.4%.