The backlash over disposable coffee cups has vindicated a paper merchant’s move into food packaging as it targets a return to profit.

With growing pressure from customers and politicians, it will not be long before all coffee and sandwich shop owners stop using unrecyclabe cups.

That’s the message of Sittingbourne-based paper distributor Denmaur.

Major chains in the industry are applying pressure on manufacturers to supply fully recyclable products after MPs called for a 25p “latte levy” to be charged on all disposable cups.

The move to a less wasteful ‘coffee culture’ has prompted Denmaur, one of the UK’s largest independent paper merchants, to ramp up its work with a food-packaging producer that does not use the plastic coating hated by environmental groups.

Yet consumers may be forced to pay more for their coffee as production of recyclable cups means that manufacturers slow down production to make a better quality product.

Paper-only versions have a greater risk of leaking than those covered in polyethylene.

Denmaur commercial director Nick Gee said: “A lot of the big retailers are aware they are going to have to go down this direction.

“The challenge is about getting the manufacturers to change the paper reels going into these products.

“There aren’t many converters in the UK who produce these things, and it’s a case of getting them to adapt their machinery to get the seams correct first time at a 100% rate.

“That might mean slowing production down by a micro-second. The effect on the price of a cup could be one or two pence per cup.”

Denmaur Independent Papers, which employs 42 people at its Sittingbourne headquarters, has begun supplying manufacturers with these flat sheets of paper, which are converted into coffee cups, as part of a broader expansion of its range over the past two years.

Its decision to diversify comes as the industry adapts to falling demand for traditional graphic paper and newsprint.

Cutbacks in marketing campaigns, particularly around the time of the Brexit vote, also damaged revenues.

The company reported annual pre-tax losses of £249,000 in its latest accounts, having made a profit of £1.9 million the previous year, after the demise of some large printers and “fierce” price cutting in its sector.

It contended with three “high-profile bad debts” and was affected by the collapse of magazine group Polestar in April 2016, which saw many magazine titles move production overseas.

One of its major clients was Headley Brothers until the Ashford printer was bought out of administration in March last year. Its new owner has since collapsed.

However, Mr Gee expects a return to profit when Denmaur reports its results for the year to April, helped in large part by the move to a new central warehouse in Coalville in the Midlands.

The firm made a “sizeable investment” in the facility, which holds 20,000 tonnes of paper, and allows next-day deliveries to most of the UK.

Mr Gee said: “It’s not just the fact you face the bad debt when companies go under. It’s the loss of business.

“It’s fair to say we’ve replaced the majority of that in terms of volumes, and the company is feeling the benefits of the investment in the warehouse.

“We are back in a reasonable shape profit-wise.

“This year will show a good profit, and we hope next year to be back to where we were in 2015-16.