Following the news that Japanese Nippon Paper Industries has agreed to buy Australian packaging company Orora Limited’s Australasian fiber business for US$1.15bn,

Shagun Sachdeva, Consumer Insights Analyst at GlobalData, a leading data and analytics company, offers her view: 

“The Australasian fiber business includes B9 Paper Mill, units of fiber converting, specialty packaging, cartons, bags, functional coatings and WRS packaging distribution. The deal seems to be a part of Nippon Paper’s two-pronged strategy of becoming a stronger player in paper packaging and compete with market leader Visy Industries.

“According to GlobalData, the total packaging material market is growing at a steady pace in Australia and is expected to cross 8 billion kgs in 2022. With all major forms of packaging, including flexible, glass, paper, metal and plastic, growing positively in Australia, it becomes strategically imperative for Nippon to expand its portfolio.

“Nippon Paper had identified paper packaging as a key growth area under its Sixth Medium-Term Business Plan in 2018 due to growing environmental and garbage disposal concerns over plastic.

“The deal will also allow Australian Paper, a wholly owned unit of Nippon Paper, to foray into new categories such as box and cartons, in addition to paper bags and sacks.

“On the other hand, Orora can focus on higher growth Australasian glass and aluminum beverage cans business where it has stronghold. It will also retain its North American packaging business, where it is a dominant player.”