A decrease in demand for pizza boxes could disrupt a key OCC end market, according to new research.
RaboResearch, an arm of Dutch bank and financial services company Rabobank, on May 26 published a report titled “Weakness in U.S. pizza chains drags down pizza box demand.”
Since 2020, pizza chains have reported a decline in sales, decreasing demand for pizza boxes. According to the report, this comes as containerboard mills already face significant general demand loss. The report also predicts that pizza box demand will remain weak through 2025.
Pizza restaurants use 3 billion pizza boxes, or 600,000 tons of corrugated paper, each year, according to the American Forest & Paper Association, making pizza boxes an important market for cardboard manufacturing and recycling.
The report says the decline may be due to rising food costs, greater health consciousness among consumers and food delivery apps making other cuisines more accessible. The report also suggests the decline could be the counterswing of pizza chains’ rapid growth during the COVID-19 pandemic.
Pizza takeout and delivery have decreased less than overall pizza chain sales as consumers opt to get food delivered rather than eat out, according to the report. Delivery-focused chains like Domino’s and Papa John’s saw between 2% and 5% dips in sales adjusted for inflation since 2020, while the more dine-in-reliant Pizza Hut dropped by 25%. The disparity suggests pizza box demand may not be as affected as the general pizza industry.
Other recent industry changes show mixed predictions for the future of corrugated packaging demand. Georgia-Pacific is closing its containerboard mill in Cedar Springs this year due to poor market conditions. Meanwhile, Green Bay Packaging recently invested over $1 billion into its Arkansas linerboard mill, suggesting the company is optimistic about corrugated packaging markets. Most cardboard product prices were steady through May and market analysts believe the Georgia Pacific closure will benefit the market, according to Packaging Dive.
“Pizza boxes remain a crucial outlet for many corrugated producers, who are suffering from wider loss of demand across the board,” wrote report authors Xinnan Li and JP Frossard. “Corrugated producers should focus on innovations that elevate the consumer experience.”
Rabobank’s report suggests pizza box manufacturers address the decline in demand by providing custom messaging on boxes to win over clients and working with other cuisine restaurants with expanding delivery markets.
