Shifting consumer demand requires forest industry companies to adapt

July 25, 2018

The forest industry is an important economic motor, and it is always changing, with new strategies and investments under development. For instance, the ongoing digitization of media markets and the increase in internet-based communication has led to a decline in the demand for ‘traditional’ products made from trees, such as printing and writing paper. While the digital age has reduced the need for some traditional forest-based products, in other cases it has increased demand, with production of products such as tissue, carton board, and packaging paper on the rise. It is expected that this trend will continue given the increasing market for home delivery and flexible packaging for food products. In addition, demand for wood for housing is projected to grow. There are housing shortages in India and China, while, engineered wood, which is manufactured by binding wood fibers together to precise design specifications, such as cross laminated timber, is seeing increased use in residential and high-rise buildings in North America and Europe. The latter is also known as the “tall wood building movement”.

Beyond engineered wood, corporate sustainability goals and consumer demand for safer, less toxic parts of renewable materials. In 2017, global demand for biomaterials and chemicals reached USD 1 billion, a 28 percent increase from the prior year. Moreover, regulations related to reducing greenhouse gas emissions will likely continue to play a major role in shaping demand for bio-based products and consequently transform the forest industry. Certain policies have already begun to influence timber products markets, such as European mandates requiring renewable energy sources to supply 20 percent of total energy by 2020. In addition, innovations in nanotechnology are already expanding the range of applications for wood, with new types of coatings and novel wood fiber and plastic composites now available. As technology advances and enables further manipulation of cellulose on a molecular level, even more revolutionary products may be created that could have a profound impact on the forest industry.

Forest products companies must respond as shifting demand, technology, and regulation transform the industry. To adapt, companies need to investigate new opportunities. Companies should also strengthen their core businesses by identifying their comparative advantages and improving efficiencies. Indufor is well positioned to offer advisory services, with decades of experience in forest market analysis and benchmarking, supply chain analysis, focused on cost-effectively managing natural resources sustainably. Our approach may include:

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