Australia's Paper Bag Market Experiences Weaker Demand
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Intense competition from imports and falling domestic demand have driven down revenue in the paper bag and other paper product manufacturing industry in Australia over the past five years, according to a new report from IBISWorld, Los Angeles, Calif., USA, reviewed by Stationary News (Sydney, Australia) this week.
Falling domestic demand has forced industry operators to lower prices, despite input costs rising, while imports have increased as a share of the domestic market. As a result, IBISWorld forecast industry revenue to decline at 2.3% yearly over the five years through the forecast period of 2015-16, with a slight rise of 1.1% projected for the current year. This will amount to a total of $764.4 million.
Domestic demand has declined over the past five years, largely due to a weak retail environment.
However, growing demand for adhesive labels from food manufacturers has supported revenue. This has been due to stricter food labeling requirements and has helped curb the industry’s decline.
Competition from external sources has significantly affected the industry, with these pressures expected to persist over the next five years.
Imports have posed a significant threat to industry profit margins, with foreign companies leveraging lower labor and production costs. As a result, imported products are significantly cheaper than locally-made products, which has forced industry operators to lower prices and absorb increasing input costs, at the expense of profitability.
Competition from overseas manufacturers looks set to intensify, with imports growing as a proportion of domestic demand over the next five years.
IBISWorld has furthermore reported that demand for industry products is expected to see more decline over the next five years, driving revenue lower. Each year there's currently predicted to be a revenue loss of 0.8% in the forecast period by 2021.
The industry is likely to receive some support from food manufacturers as they demand adhesive labels and food packaging. However, significant competition and rising imports are expected to force industry prices, revenue, and profit lower over the next five years.
