Optimism Returns Despite Ongoing Challenges

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It’s hard to believe it but 2024 marks the 25th annual State of the Industry Report. Throughout the years of producing this report, we’ve seen a lot of different perspectives, especially with the pandemic and economic uncertainty influencing the past few years. This year we seemed to see the industry come to the consensus of cautious optimism — despite continued inflation, many in the industry see a market that’s rebounding.

We get this snapshot every year during the first quarter by sending out the State of the Industry survey to FPI members as well as non-members within the industry. This gives us the viewpoint of folks we don’t always hear from, and it provides non-member participants a chance to view the report. Most importantly, it tells us what the industry thinks when looking back at 2023 and ahead to 2024.

This year, the report truly highlights the fact that the industry is just as cautiously optimistic as the FPI staff. Only 34% of foodservice packaging manufacturers and suppliers experienced growth in volume, compared to 60% in the previous survey. This is demonstrated in profit growth with more than 60% worsening or staying the same in 2023 compared to 2022. Highlighting the optimism, nearly 60% of the industry expect volume expansion and 77% expect profits to grow or remain the same. Foodservice operator respondents saw increased sales and were optimistic that this trend would continue in 2024.

In yet another sign that the market is stabilizing, nearly 40% of the North American manufacturers respondents reported another year of planned corporate expansion primarily through expansion of current facilities, an increase over 2023. Consistent with previous years, 60% of North American converter respondents plan to purchase machinery in 2024.

While long noted as an area of opportunity, chain quick-service restaurants are now seen by survey respondents as one of the greatest areas for market expansion, followed closely by perennial favorite, the fast casual segment. This is due in part to the convenience of being able to eat foods on-the-go or away from home. Grocery stores and convenience stores are also noted as opportunities for market expansion because of increased foodservice options. As always, convenience was noted as an influence across all market segments.

It’s really encouraging to see a wave of optimism coursing through the foodservice packaging industry, in spite of a challenging few years. Our industry is finding pathways to growth and expansion while showcasing the resilience and adaptability at its core.

We’d like to thank the organizations that participated in this year’s survey. If you haven’t participated before, but are eligible (raw material or machinery supplier, converter, foodservice operator or foodservice distributor), please think about participating next year. We realize it’s a time commitment on your end, but the survey is meaningful because of your responses. If you’d like more information or would like to be on our list for next year, let us know.

Foodservice Packaging Industry Shows Signs of Optimism Amidst Challenges, Reveals Latest Survey

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In the 2024 State of the Industry Report released by the Foodservice Packaging Institute, industry findings demonstrate a market rebounding from recent economic insecurity and cautious optimism, despite the ongoing challenges posed by inflation and economic uncertainties. The annual survey, which assesses the perspectives of manufacturers, suppliers and operators, uncovered that only 34% of respondents experienced growth in volume, with more than 50% seeing a decline.

However, in a turn toward optimism, nearly 60% of the industry stakeholders anticipate expansion in volume, and a promising 77% expect profits to either grow or hold steady in 2024. This positive outlook is further supported by foodservice operators, who reported increased sales and a hopeful stance for the coming year.

“Despite the challenges of the past few years, it’s encouraging to see a wave of optimism coursing through the foodservice packaging industry,” said Natha Dempsey, president of FPI. “Our members are not just navigating through uncertainty; they are finding pathways to growth and expansion, showcasing the resilience and adaptability at the core of this industry.”

The 25th State of the Industry Report also highlighted a shift toward stabilization within the market, with nearly 40% of North American manufacturers moving forward with corporate expansion plans, a slight increase from the previous year. Expansion efforts are primarily focused on enlarging current facilities, with less than 40% considering new plants or mergers and acquisitions.

Findings identify chain quick-service and fast-casual restaurants as primary areas for market expansion, attributed to consumer preferences for convenience. This trend extends to grocery and convenience stores, which are increasingly offering more foodservice options.

Despite optimism, the industry faces ongoing challenges, including government legislation, lack of qualified labor, and concerns about the public perception of packaging as “waste.” The survey identifies these, alongside recovery/end-of-life options for packaging and margin compression, as critical areas needing attention.

“As we look to the future, it’s clear that our industry’s capacity for innovation will play a pivotal role in addressing these challenges,” Dempsey said. “Collaboration and continued dialogue among all stakeholders will be key to navigating the road ahead, ensuring sustainability efforts and fostering growth.”

FPI members and contributing participants received complete survey results. A complimentary executive summary of the report is available at FPI.org/resource. For more information, contact FPI’s Ashley Elzinga at aelzinga@fpi.org.

Paper Cup Recycling Hits New Milestone in the U.S. With Increased Cup Acceptance at Over 40 Paper Mills

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Today, the NextGen Consortium, an industry collaboration managed by the Center for the Circular Economy at Closed Loop Partners, joined the Foodservice Packaging Institute (FPI) in announcing a major milestone in paper cup recycling in the U.S. Multiple paper mills, from Georgia to Wisconsin, have announced that they will now accept single-use polyethylene (PE)-coated paper cups in bales of mixed paper or polycoat cartons and aseptic packaging. This brings the total number of North American mills accepting paper cups to more than 40, marking significant progress as demand for recycled fiber content grows in the U.S., amidst increasing sustainability commitments and policy tailwinds. The new mills to accept cups include Newman and Company, Inc., Philadelphia, PA; PaperWorks Industries, Wabash, IN; Resolute Forest Products, Menominee Mill, MI; Greif Mill Group in Austell, GA and Milwaukee, WI, among others listed in FPI’s end market map.

Every year, an estimated 250 billion cups are used globally—the majority of which end up in landfills after a single-use. Historically, paper cups had been deemed ‘unrecyclable’ because of their plastic lining, resulting in low recovery rates and valuable materials ending up in landfill. In recent years, as mills compete for diminishing supplies of newspapers and office paper in the recycling system, there has been growing interest in opportunities to recover material categories that contain high-quality fiber, such as paper cups. Many mills––especially new and retrofitted builds––have undertaken repulpability studies to determine whether they can successfully recover the valuable fiber from coated paper packaging, such as fiber cups, for use in recycled fiber products. Positive outcomes of the studies have led to higher acceptance of fiber cups at mills. According to FPI, the dozens of paper mills that now accept paper cups in mixed paper bales represent more than 75 percent of U.S. mixed paper processing demand.

By accepting recovered paper materials, including cups, and reprocessing them into new products, mills play a pivotal role in advancing the larger paper cup recovery process. As more mills effectively recover fiber from paper cups, cup recycling is incentivized further upstream in materials recovery facilities (MRFs) and communities looking to improve their waste diversion efforts. While only 11 percent of communities in the U.S. officially accept cups in their residential recycling programs today, the increasing number of mills that accept cups signals a greater opportunity to grow cup recycling efforts.

“Alongside advancing reuse and material innovation, strengthening paper cup recovery and recycling is critical to keeping cups from going to waste in landfills,” said Kate Daly, Managing Director of the Center for the Circular Economy at Closed Loop Partners. “Paper mills play a critical role in strengthening end markets for cups. By pulling materials through the system, mills accepting cups can drive increased cup processing in recycling facilities and cup collection in communities. We are thrilled to see cup recovery reach this important milestone in the United States, moving us closer to a waste-free future.”

For several years, the NextGen Consortium and Foodservice Packaging Institute have collaborated to strengthen existing materials recovery and recycling infrastructure to recapture more paper cups. Both organizations have released critical reports and research to guide paper cup recovery and recycling, such as NextGen’s report Closing the Loop on Cups and FPI’s White Paper on the The State of Paper Cup Recycling. While the challenges are significant, collaboration among various stakeholders involved in paper cup recovery can help address its scale and complexity.

“We are thrilled to work with a growing set of mills in their efforts to recover poly-coated paper cups,” says Natha Dempsey, President of FPI. “Reliable and responsible end markets for cups catalyze new opportunities for community partnerships, especially in regions that previously didn’t have the capability to recycle them.”

“The mix of recovered paper we receive has changed dramatically over the last several years, now including much more plastic that we have to separate in the repulping process. Paper cups contain good fiber and are no more difficult to recycle than many of the other prominent packaging categories we see today. We look forward to the value it will bring to our outputs at our mills in Austell, GA and Milwaukee, WI,” said Jeff Hilkert, VP Paperboard Sales of Greif Mill Group.”

In addition to working with the mills that are now accepting cups, the NextGen Consortium and FPI continue to work with several other interested mills to run studies that can help determine the viability of paper cups in their system. Furthermore, they are also working with groups up and down the value chain––including brands, MRFs and communities––to ensure more cups can be recycled, especially where viable and robust end markets exist. This collaborative work is a key step forward in increasing the supply of recycled content to meet growing demand, and reducing the amount of valuable materials being sent to landfill.

About the NextGen Consortium
The NextGen Consortium is a multi-year consortium that addresses single-use food packaging waste by advancing the design, commercialization and recovery of food packaging alternatives. The NextGen Consortium is managed by Closed Loop Partners’ Center for the Circular Economy. Starbucks and McDonald’s are the founding partners of the Consortium, with The Coca-Cola Company and PepsiCo as sector lead partners. JDE Peet’s, Wendy’s and Yum! Brands are supporting partners. The World Wildlife Fund (WWF) is the environmental advisory partner. Learn more at www.nextgenconsortium.com.

About the Center for the Circular Economy at Closed Loop Partners

The Center for the Circular Economy is the innovation arm of Closed Loop Partners, a firm at the forefront of building the circular economy. The Center executes research and analytics, unites organizations to tackle complex material challenges and implements systemic change that advances the circular economy. The Center for the Circular Economy’s expertise spans circularity across the full lifecycle of materials, connecting upstream innovation to downstream recovery infrastructure and end markets. Learn more about the Center for the Circular Economy at closedlooppartners.com/the-center/

About the Foodservice Packaging Institute

Founded in 1933, the Foodservice Packaging Institute is the trade association for the foodservice packaging industry in North America. FPI promotes the value and benefits of foodservice packaging and plays an active role in advancing the recovery of FSP to support the circular economy. The association serves as the industry’s leading authority to educate and influence stakeholders. Members include raw material and machinery suppliers, manufacturers, distributors and purchasers of foodservice packaging. For more information, visit www.FPI.org.