| |NOVEMBER 20229The immediate future of the paper & forest products sector will be mainly characterized by two principal dimensions of change such as sustainability & digital analyticsnot result in irreversible damage to the ecosystem. With sustainable industry practices in harvesting forest products a major area of business development, the forest products continue to be in huge demand from both developed as well as developing economies.While the major, rapid change in the paper & forest products sector is nothing new a few decades ago, the main product from forests was wood for fuel. However, over time it transformed into pulpwood & saw timber. In the present age, forest products have a key strategic role in the life of customers across diverse range of areas & consumers that are surrounded by products which are either completely or partially from the forest industry. These include products from wood right from housing to packaging products to newspapers & magazines. Not just that, forest products have also played a major role for customers during the pandemic and lockdown phase. For instance, these were used as raw materials in the production of face masks, tissue products for the health & hygiene sector and as corrugated board for e-Commerce packaging as consumers shifted to work from home.Moving ahead, forest products are emerging as real alternatives to enable overcome several sustainability challenges in industries such as textiles, building materials & packaging. In the past years, the pace of transformation in the industry has augmented with several frequent disruptions that are outpacing development. To help enterprises navigate through the current changes over the next few years, the years have been identified as three eras of substantial change since the year 2000, with the present period emerging as the most transformative.GLOBAL MOVESThe first era (from the years 2000-2010) of transformation in the paper & forest products industry was segmented by global shifts, with numerous megamergers as well as production changes, and also the increase of large Asian corporations. This period was segmented by geographic shifts in pulp & paper manufacturing, with scale-up of Greenfield capacity in new areas, in the east for paper & south for pulp. As a consequence, the industry went through strong growth among Asian as well as south American market participants that went on to develop into significant players. FORCED RESTRUCTURINGThe second era of change (from 2010-2020) observed the demise of graphic paper, that was accompanied by a significant focus on a forced restructuring of the pulp & paper industry with asset closures as well as mill conversions. This was one of the most challenging eras for this industry since it led to huge decline in demand for graphic paper and forced enterprises to shift their assets into packaging & tissue capacity however, the period was also characterized by mill closures. Therefore, in order to manage this various global diversified pulp & paper organizations were also involved in divesting adjacent business areas & exiting a few geographies with an aim to focus back on their core businesses.THE TRANSFORMATIONAL CHANGEThe 2020s however is ushering in a very diverse kind of transformation. This 3rd era of transformational change is going to be characterized through the next wave of industry disruption such as digital & analytics that is going to be coupled with surge in efforts in sustainability. The demand for current paper & forest products is rising structurally as an important substitute for packaging as well as construction materials therefore the next level of disruption is set to include a surge in productivity & its output is going to be combined with a sustainability-led transformation.Furthermore, a few permanent behavioral changes like the surge in online shopping & new environmental regulations specifically post the pandemic are likely to increase during these times, leading to further disruption and it will in turn make it difficult for pulp & paper enterprises to plan reliably without taking any pre-emptive action.THE ROAD AHEADThe immediate future of the paper & forest products sector will be mainly characterized by two principal dimensions of change such as sustainability & digital analytics. Numerous specific megatrends are influencing though these are overarching dimensions. Apart from these, three key external forces are affecting these scenarios directly and these include new value chain dynamics the repercussions of the pandemic, & the regulatory environment. And these factors are most likely to have a greater impact on the industry than ever before.
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