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Supermarket Dilemma : Battle of the Bags: Paper or Plastic?

June 13, 1986|JUBE SHIVER Jr. | Times Staff Writer

But in 1978, scientists developed a resin that allowed the sack to be made with a thinner, yet stronger, plastic. With that technological boost, plastic's share of the market grew dramatically--from a 5% market share in 1982 to a 25% market share now. By 1988, the industry predicts that plastic bags will hold 50% of the market.

"At first plastic sacks couldn't compete--they were like the Gucci bag, they were so expensive," said Schmieder of Mobil Chemical Co. "But the stronger resin allowed us to compete with paper. It was a tremendous breakthrough."

Difference in Cost

Safeway's Del Campo claimed that plastic bags still can cost more than paper in some parts of the country. But plastic and paper industry analysts generally agree that today plastic is about 10% to 15% cheaper than paper.

On the West Coast, 1,000 plastic bags cost about $24, contrasted with $26 to $30 for paper, said one supermarket executive who did not want to be identified. Plastic also takes up less space under the checkout counter, and is cheaper to transport than paper.

Even the forest products industry is concerned that paper grocery bags may not be an affordable option over the long term.

The paper industry is slowly losing capacity as mills that produce material for brown paper grocery bags--so-called unbleached kraft paper--are closed or converted to manufacture more profitable products, such as office and computer paper.

In February, for example, Champion International Corp. of Stamford, Conn., sold its kraft paper operation to Stone Container Co. for $428 million. Champion is also spending more than $200 million to convert a kraft paper plant in Pensacola, Fla., to make more lucrative bleached paper products for office supplies and other use.

Companies Converting

Another large forest products company, Atlanta-based Georgia Pacific, recently finished converting its kraft paper mill in Crossett, Ark., to manufacture bleached paper products. Meanwhile, Gilman Paper Co. of New York shut down its grocery sack division in December after losing more than $10 million since 1980, said John Giblin, the company's marketing manager.

"There's no massive impact yet," said Lawrence Ross, a paper industry analyst at Paine Webber. "But the paper companies know the writing is on the wall. The paper companies have already provided for a reconfiguration to produce other grades of paper."

Yet the leading manufacturer of kraft paper, Stone Container Co. of Chicago, which had net income of $3.78 million on sales of $1.23 billion in 1985, believes that there is still money to be made in supplying paper grocery bags.

Samuel Posner, vice president of Stone's retail packaging division, said it was the strength of the dollar against most foreign currencies in 1985 that hurt the kraft paper industry more than competition from plastic bag producers. He said many mills were converted simply because they had become outdated. "They wanted to convert their mills to make them state of the art," he said.

But Posner acknowledged that the long-term outlook for paper is not bright. "The paper market is not a growing market," he said. But for the time being, he said, "there's a place for both items. I think the consumer will see to that."

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