Paper manufacturers were anticipating the industry would shrink due to Japan's declining population, but are instead expanding output due to an unexpected boost from tourism and the increased demand for toilet paper that has followed.
An industry official said the current situation was unforeseeable "10 years ago, when we thought the market would shrink due to the aging population and low birthrate."
However, Nippon Paper Industries Co., Daio Paper Corp., Oji Holdings Corp. and Mitsubishi Paper Mills Ltd. have all moved to increase production of paper beginning either this year or next year, on the heels of a record 28.69 million foreign visitors to Japan in 2017.
According to estimates by the Japan Tourism Agency, foreign tourists spent ¥4.42 trillion ($40 billion) last year, an all-time high, with industries including hotels, public transportation, home electronics and cosmetics benefiting the most.
But the toilet paper business is also receiving a boost from the surge in visitors, as demand for rolls has grown from hotels.
Government statistics show domestic sales of toilet paper have been moving in sync with the number of foreign visitors to Japan over the past several years.
The value of toilet paper sales has increased for four consecutive years since 2014.
According to the Japan Paper Association, demand for printing paper has continued to fall, but sales of toilet and tissue paper are expected to continue to surge.
The number of foreign tourists has grown for six consecutive years since 2012.
The government aims to further boost the number of tourists to 40 million in 2020, when Tokyo hosts the Olympic and Paralympic Games, and 60 million in 2030.