Price of Paper Bags
Let's go back to spring 2020, when the price of kraft paper, which is primarily used for manufacturing sturdy paper bags, was under half the price of today. With the arrival of Covid, we closed stores and dampened social life. The reaction to the situation was a cooling of demand for paper bags. Customers frequently canceled already running orders and waited to see how the situation would develop. At the turn of spring/summer 2020, restrictions were relaxed and with that came a revival of demand and orders for paper bags and paper packaging in general. Autumn through winter was like a business roller coaster. At the beginning of 2021, the gastro bag segment and paper bags for goods and food delivery jumped dramatically.
Wood, as the input raw material for paper, began to be lacking in construction as well. Wood harvesting in 2020, with regard to the ongoing bark beetle calamity, was record-breaking. However, in the following year, wood began to run out. This was compounded by China's several-year-long wood purchasing spree, and America joined in as well. Besides wood itself, China began increasing demand for paper in 2021 and was willing to overpay European market prices. When you imagine closed Chinese factories for part of 2020 and the subsequent revival of global demand for consumer products, the effort to catch up on weak months and increase production and transport of goods seems understandable (you've certainly read about container shortages and transport price increases). Increased production and transport means increased transport paper packaging, which equals higher paper consumption and we're back to Chinese manufacturers' willingness to overpay European paper prices.
We get to spring 2021 and we're in a situation of strengthening demand for paper from Chinese manufacturers, prices are rising and revived demand from European traders for paper bags is growing nicely. Paper manufacturers report overcapacity and price increases. In Western European countries, new startups for delivery services are starting up, using large quantities of paper bags. And these startups, "pumped up" with billions from investors, have no problem signing blank orders with paper bag manufacturers to secure capacity. And bag manufacturers confirm increased prices to paper manufacturers, who pay higher prices to energy suppliers. You may have noticed at the end of last summer and during autumn that some retail chains didn't have paper bags or offered temporary solutions. And some of them even went back to plastic bags and tried to convince us of their ecological advantage over paper. Times are changing and retail shopping predators were probably surprised that some bag manufacturers didn't confirm contracts or didn't want to accept previous standard requirements.
Hard to forget the Bohemia Energy case, which somewhat became a symbol of the sharp increase in energy prices. We entered autumn 2021 with another increase in paper bag prices. I would briefly interrupt the escalating market situation and look at the price structure of a paper bag.
Bag Price
When looking at a paper bag, it might seem that in the cost calculation, the price of the paper itself plays the leading role. And it does. However, the bag is glued and printed and unsurprisingly, there was an increase in prices for these materials. The bag is printed and assembled on machines that consume increasingly expensive energy, in halls that are heated with again more expensive energy. The bag itself would hardly reach the consumer without a paper box, whose price is jumping (similar story as with the bag). The cardboard box is on a wooden pallet. Paper, boxes, pallets, all of this is transported to production and subsequently bags to warehouses, to distributors and customers. Lack of transport capacity and sharp increases in fuel further add to the increase in the price of the bag itself.
The fourth quarter of 2021 was complicated in the paper bag industry. Despite rising prices, there was enormous interest in bags, unfortunately this didn't correspond to production possibilities of both bags themselves and paper. There were large supply outages that couldn't be replaced from other overcapacity. We entered this year without great hopes for improvement. Previous planning in terms of weeks to two months was gone and currently we have to plan production up to a year ahead. In January there was another price increase. However, I still didn't know what February would bring.
The horrific conflict in Ukraine brings incredible human suffering. As a small boy, I lived with my parents in western Ukraine for some time and maybe that makes it even worse for me when reading current news. Consequences from imposed sanctions on Russia and the ongoing conflict are spreading throughout Europe. Maybe I wasn't alone in hoping for calming after the Covid period, instead however came further energy price increases, the threat of gas shortages and logical price increases of production arising from it. And price changes not only of energy and supply conditions are happening on a daily basis.
When I look back to 2019, it was then possible to conclude a contract for annual bag supply in volumes of units to tens of millions of pieces with annual price fixing. In 2020 we managed it for only half a year and in 2021 we complicated held the price on a quarterly basis. When today (approximately mid-March 2022) you try to order new production of paper bags in volumes of hundreds of thousands to millions of pieces (for which not long ago many manufacturers would have been grateful), the manufacturer will probably thank you and refer you to 2023, when you can try to discuss it again. And you haven't even gotten to price negotiations.
I would like to write in conclusion that everything will calm down soon and be better. I believe it will be. I just fear that it won't be this year. We've gotten into very turbulent times when business conditions change very quickly and we try to balance as much as possible. We're securing more bags for you in stock, reserving production capacity in a much longer timeframe so we don't repeat last autumn. We negotiate every production price, we try to maintain input prices as much as possible. However, until the situation calms down and stabilizes, we unfortunately won't stop possible price adjustments. Previously we managed to maintain the same prices of stock bags for several years in a row. If it were only up to us, we would gladly manufacture for you at stable prices and in short terms.
Hang in there and let's believe in a calmer future.
Current prices of paper bags can be found in our e-shop
Unprinted paper bags
- Prices of unprinted paper bags are listed for each product in the e-shop.
- We ship unprinted bags immediately.
Paper bags with custom print
- Just select a bag from our offer in the e-shop and use the "REQUEST A QUOTE" button to send us your inquiry. You can also send the inquiry to our email [email protected]
- Based on the inquiry, we will immediately send you a price calculation.
- We deliver printed paper bags within 2-3 t weeks. Deadlines are calculated from order confirmation with preview and subsequent payment of the advance invoice.
