By Anne Kauranen

HELSINKI (Reuters) – Finland’s Stora Enso is considering an investment of up to 1 billion euros ($1.13 billion) to produce more consumer packaging board as customers increasingly seek renewable materials over plastic, the forestry company said on Wednesday.

It said customers such as food group Nestle or online fashion retailer Zalando are responding to consumer demands by replacing plastic with wood-based board in packaging.

To meet the growing demand, Stora Enso is exploring the possibility of converting an idle paper machine at its Oulu site in Finland into a line to produce renewable consumer packaging board.

The plan would involve an investment worth 900 million to 1 billion euros ($1-1.13 billion) spanning 2023-2026, it said.

“If the world doesn’t transform and our investment case stays where it is, then there is very high likelihood that this will go through,” Hannu Kasurinen, Stora’s head of packaging materials, told Reuters.

Once a feasibility study is completed, Kasurinen said a final investment decision could be taken in the fourth quarter with start-up in 2025.

The conversion would mean potential annual top line sales of 800 million euros, an 8% increase from the group’s current level, while packaging materials and solutions already account for nearly 50% of Stora’s sales.

“For the first time, we have seen that the demand for wood-based packaging material has overtaken that of plastic and that is very encouraging,” Kasurinen said.

Stora Enso said it is the largest consumer board maker in Europe where it competes with Finland’s Metsa Board and Austria’s Mayr Melnhof Karton, while globally it competes with U.S. firms Westrock and Graphic Packaging.

($1 = 0.8818 euros)

(Reporting by Anne Kauranen; editing by Jason Neely)