The retail paper bag market is projected to grow from USD 1.8 billion in 2025 to USD 2.8 billion by 2035, registering a CAGR of 4.3% during the forecast period. Sales in 2024 reached USD 1.7 billion, reflecting steady growth driven by increasing demand for sustainable and eco-friendly packaging solutions.
| Metric | Value |
|---|---|
| Industry Size (2025E) | USD 1.8 billion |
| Industry Value (2035F) | USD 2.8 billion |
| CAGR (2025 to 2035) | 4.3% |
This growth is attributed to the rising environmental concerns, government regulations banning single-use plastics, and the surge in e-commerce and retail sectors seeking biodegradable alternatives.
The market's expansion is further supported by innovations in paper bag designs and materials, enhancing their durability and appeal to both consumers and retailers.
In June 2025, Mondi, a global leader in sustainable packaging and paper, launched its re/cycle PaperPlus Bag Advanced, a high-performance paper bag designed to protect humidity-sensitive goods, while significantly reducing plastic content. PaperPlus Bag Advanced is a future-ready alternative for customers seeking to reduce plastic and meet performance demands without compromising on efficiency.
At Mondi, we are ready to support our customers, considering the environmental impacts of our products at each stage of the value chain. Following our own MAP2030 goals, we are working hard to offer solutions that contribute to a circular economy while being fully tailored to our customers’ needs said, Max Melzer, Head of External Sales Industrial Bags at Mondi
Manufacturers of paper bags are focusing on producing biodegradable and recyclable bags. Innovations include the development of water-resistant coatings and the use of soy-based inks for printing, enhancing the environmental friendliness of paper bags.
Additionally, advancements in manufacturing technologies are improving the strength and durability of paper bags, making them suitable for a wider range of products. These innovations are aligning with consumer preferences for sustainable packaging and are expected to propel market growth in the coming years.
The retail paper bag market is poised for significant growth, driven by increasing environmental awareness, regulatory support, and consumer demand for sustainable packaging. Companies investing in innovative, eco-friendly solutions are expected to gain a competitive edge.
The market's expansion is further supported by the growing e-commerce sector and the shift towards plastic-free packaging. With continuous advancements in materials and manufacturing processes, the retail paper bag market is set to offer lucrative opportunities for stakeholders over the forecast period.
The below table presents the expected CAGR for the global retail paper bag market over several semi-annual periods spanning from 2024 to 2034.
| Particular | Value CAGR |
|---|---|
| H1 (2024 to 2034) | 4.0% |
| H2 (2024 to 2034) | 4.6% |
| H1 (2025 to 2035) | 3.6% |
| H2 (2025 to 2035) | 5.0% |
In the first half (H1) of the decade from 2024 to 2034, the business is predicted to surge at a CAGR of 4.0%, followed by a slightly lower growth rate of 4.6% in the second half (H2) of the same decade. Moving into the subsequent period, from H1 2025 to H2 2035, the CAGR is projected to decrease slightly to 3.6% in the first half and remain relatively moderate at 5% in the second half. In the first half (H1) the market witnessed a decrease of 40 BPS while in the second half (H2), the market witnessed an increase of 40 BPS.
The market is segmented based on material type, end-use industry, thickness (GSM), and region. By material type, the market comprises kraft paper, recycled paper, coated paper, and specialty paper. In terms of end-use industry, the market is categorized into grocery & supermarket, foodservice & QSR, fashion & apparel, electronics & appliances, healthcare & pharmacy, gifts & novelties, and homecare & lifestyle retail.
Based on thickness, the market is segmented into below 80 GSM, 80-120 GSM, and above 120 GSM. Regionally, the market is analyzed across North America, Latin America, East Asia, South Asia & Pacific, Eastern Europe, Western Europe, Oceania, and the Middle East & Africa.
.webp "Retail Paper Bags Market Analysis By Thickness (GSM)")
Kraft paper has been estimated to account for 51.6% of the retail paper bag market by 2025, supported by its superior tensile strength, tear resistance, and compatibility with a wide range of retail packaging formats. Both virgin and recycled kraft variants have been extensively used across carryout and promotional bags due to their cost efficiency and availability in both bleached and natural brown finishes.
Printability on kraft paper using water- and soy-based inks has been optimized for branded communication and eco-positioning. Mechanical durability under high-volume retail use has been enhanced through multi-ply construction, reinforced handles, and gusseted bases. These improvements have allowed kraft bags to substitute plastic counterparts in medium- and heavy-load categories.
Major retailers and supermarket chains have transitioned toward kraft paper bags, supported by bulk procurement advantages and reduced environmental taxation. Regulatory bans on plastic in major urban markets have further driven demand for kraft-based formats, which align with both recyclability and composability norms.
Reinvestment in kraft paper mills and new FSC-certified sourcing programs have been announced to meet rising retail bag requirements. This shift has been reinforced by consumer expectations for sustainability in carry-home packaging and compliance with emerging packaging directives in the EU, North America, and parts of Asia.
Grocery and supermarket stores have been projected to hold 43.8% of the retail paper bag market by 2025, driven by the frequent need for bulk packaging and regulatory mandates banning plastic alternatives. Paper bags have been widely adopted at checkout counters, self-bagging stations, and home delivery segments across regional and national grocery chains.
Functional performance under moisture, weight, and variable handling conditions has been addressed through reinforced bottom seals, anti-wicking coatings, and dual-handle formats. Custom-printed designs and barcoded variants have enabled ease of scanning and store branding, while grease-resistant liners have been added for fresh and frozen food applications.
Transition from single-use plastic has been mandated in several states and cities, prompting large-format retailers and food cooperatives to deploy kraft and recycled paper bag programs. These shifts have been supported by customer loyalty incentives and store-level sustainability audits.
Retail bag policies favoring biodegradable and recyclable formats have resulted in significant bulk-order contracts with paper converters. Regional paper mills have expanded output capacity specifically for grocery retail clients, aligning with operational scale, short lead times, and circular economy targets.
Demand is rising for green and sustainable packaging
Companies worldwide are yielding to an existing environmental care; therefore, a vicious push is constructed mainly by the plastic bag of economy to companies which are required to speed up developing green packaging materials such as paper shopping bags.
At the moment, with the increased focus on plastic contamination and waste dumping, it has resulted in numerous nations applying strict policies on single-use plastic and pushes the retailers towards the path of biodegradable forms, such as paper bags.
Retail brands, the household names, and internet-based companies are speeding up paper-based packaging substitution to appease customers, according to civic demands, and affirm the company's sustainability initiatives favorably. This also means that green-conscious consumers need companies that stick to green packaging procedure, which again compels companies to utilize these bags as a part of their branding and marketing strategies.
bags are considered an asset for brand value by most industries; they are easily printable with their logos and designs, or as ecological statements bags. The international retail market for paper bags is experiencing a speedy growth because of the constantly growing impact of sustainability on consumer trends.
Expansion of Retail and E-Commerce Sectors
The retail outlets, supermarkets, high-end boutiques, and e-commerce websites are growing at an unprecedented scale; therefore, the retail paper bag market is getting a helping hand. Current situation of increasing urbanization, disposable income, and shopping habits of today, it is evident that enormous spending on large fashion segments, grocery, electronics, and lifestyle items has to translate into higher demand for premium and aesthetically attractive packaging.
Within the fashion or clothing segment, department stores, organic food stalls, paper bags are becoming a symbol of premium looks and eco-friendliness. Most of the online shops have already resorted to paper packaging and recycled cartons in order to satisfy environmental standards and appeal to green consumers.
Furthermore, paper-based packaging has infiltrated leading online shopping platforms and institutional food delivery services road mapping the way towards a sustainable packaging mode. Along with additional growth in the world retail market, to maintain the new influence, the demand for paper bags of branded and quality type shall mercilessly increase.
High Cost and Supply Chain Restriction
A stark market issue confronting the growing retail paper bag market is the high cost compared to plastic bags. It calls for increased costs of raw material procurement, significant energy use, and water usage, thereby rendering paper bags expensive. Wood pulp price fluctuations and significant supply chain interruptions because of factors like inconstancy of high-quality paper raw materials availability can result in cost instability and interfere with retail paper bag demand.
Paper bags lack the strength plastic bags possess and thus are easy to tear when carrying heavy loads. This issue has especially raised concerns about a potential loss of functionality and being cost-ineffective for small enterprises that might not have a large customer base to finance medium and larger-quantity paper bag production.
The section below covers the future forecast for the retail paper bag marketin terms of countries. Information on key countries in several parts of the globe, including North America, Latin America, East Asia, South Asia and Pacific, Western Europe, Eastern Europe and MEA is provided. USA is expected to account for a CAGR of 3.2% through 2035. In Europe, Spainis projected to witness a CAGR of 3.9% by 2035.
| Countries | Value CAGR (2025 to 2035) |
|---|---|
| USA | 3.2% |
| Germany | 2.8% |
| China | 5.2% |
| UK | 2.7% |
| Spain | 3.9% |
| India | 5.4% |
| Canada | 3.0% |
In the United States, strict state-level regulations on single-use plastics are strongly driving retail paper bag use. Various states such as California, New York, and New Jersey have prohibited plastic bags to reduce plastic pollution, thus compelling retailers to adopt paper-based alternatives. Most local governments impose charges for plastic bag usage to make consumers opt for reusable or biodegradable paper bags.
Therefore, the USA Green packaging initiatives of the Environmental Protection Agency (EPA) and corporate sustainability programs of the big retailers encourage the utilization of green packaging. The big supermarket chains have now made the transition to paper bags that are recyclable to adhere to government regulations and customer demand.
Plastic substitution by paper bags in the retail industry will thus be further enhanced by growing awareness among the public and government support, which will in turn enhance market growth in the coming years.
Corporate sustainability goals and green branding drive army the retail paper bag market in the UK. A vast majority of the UK-based retailers and supermarket brands such as Tesco, Sainsbury's, and Marks & Spencer also have some grave sustainability targets in place to reduce their carbon footprint on the planet.
Thus, the British government has imposed stiff levies on plastic bags and even hard-line rules on single-use plastic packaging, which compelled business houses to switch to the paper route. UK shoppers also care about the environment and wish to identify with brands that promote sustainability and ethical sourcing.
They now use quality paper bags with custom designs to present that image directed at green consumers. Growing demand for recyclable and biodegradable packaging and business sustainability objectives are now likely to witness the retail paper bag industry in the UK record high growth in the near future.
The Retail Paper Bag Market is witnessing significant growth due to the global push for sustainable and eco-friendly packaging solutions. Governments worldwide are imposing strict regulations on plastic bags, leading to increased adoption of paper bags in retail, food service, and grocery sectors. Rising consumer awareness regarding environmental sustainability, coupled with the shift toward biodegradable and recyclable materials, is fueling market expansion.
Retailers are investing in customized and branded paper bags to enhance brand visibility and customer engagement. The demand for durable, reusable, and recyclable paper bags is particularly strong in luxury retail, fashion, foodservice, and supermarkets. However, challenges such as higher production costs compared to plastic bags, limited water resistance, and supply chain disruptions affecting raw materials could hinder market growth.
Key Developments in Retail Paper Bag Market
| Report Attributes | Details |
|---|---|
| Current Total Market Size (2025) | USD 1,877.4 million |
| Projected Market Size (2035) | USD 2,860.2 million |
| CAGR (2025 to 2035) | 4.3% |
| Base Year for Estimation | 2024 |
| Historical Period | 2020 to 2024 |
| Projections Period | 2025 to 2035 |
| Quantitative Units | USD million for value and million units for volume |
| Product Types Analyzed (Segment 1) | Sewn Open Mouth, Pinched Bottom Open Mouth, Pasted Valve, Pasted Open Mouth, Flat Bottom, Others |
| Material Types Analyzed (Segment 2) | Brown Kraft Paper, White Kraft Paper |
| Thickness Types Analyzed (Segment 3) | 1 Ply, 2 Ply, 3 Ply, More Than 3 Ply |
| End Use Industries Analyzed (Segment 4) | Food and Beverages, Pharmaceuticals, Apparel, Consumer Electronics, Construction, Others |
| Regions Covered | North America; Latin America; Western Europe; Eastern Europe; South Asia and Pacific; East Asia; Middle East & Africa |
| Countries Covered | United States, Canada, Mexico, Brazil, Argentina, Germany, France, United Kingdom, Italy, Spain, Netherlands, China, India, Japan, South Korea, ANZ, GCC Countries, South Africa |
| Key Players influencing the Retail Paper Bag Market | Hood Packaging Corporation, Paper Sacks Factory, Novolex, United Bags, Inc., Holmen Group, Georgia-Pacific LLC, OJI Holding Corporation, WestRock Company, DS Smith Plc, Ronpak, B&H Bag Company, Smurfit Kappa Group PLC, International Paper Company, Hotpack Packaging Industries LLC, National Paper Products Company |
| Additional Attributes | Dollar sales by product type (flat bottom, pasted valve), Dollar sales by material type (brown kraft, white kraft), Sustainability trends in paper packaging, Growth of food and fashion retail sectors, Regulatory mandates for plastic alternatives, Regional demand in environmentally-conscious retail practices |
| Customization and Pricing | Customization and Pricing Available on Request |
The global retail paper bag industry is projected to witness CAGR of 4.3% between 2025 and 2035.
The global retail paper bag industry stood at USD 1.8 billion in 2024.
Global retail paper bag industry is anticipated to reach USD 2.8 billion by 2035 end.
East Asia is set to record a CAGR of 5.4% in assessment period.
The key players operating in the global retail paper bag industry include International Paper Company, WestRock Company, OJI Holding Corporation, Smurfit Kappa Group PLC.
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Retail Paper Bag Market
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