Bain & Company has released its Paper & Packaging Report 2026: Adapting today, shaping tomorrow, offering a detailed assessment of the structural forces reshaping the global paper and packaging industry. The report paints a clear picture of an industry under pressure from low profitability, persistent overcapacity, and uneven demand recovery, particularly across Europe, while also identifying concrete strategies that leading companies are using to build resilience and restore growth..

One of the report’s central messages is that overcapacity remains a chronic challenge. Bain notes that many paper and packaging companies continue to plan for growth that outpaces market reality, leading to capital investments that exacerbate oversupply. Rather than waiting for competitors to exit, leading producers are proactively improving their cost position, closing uncompetitive assets, converting machines to more attractive grades, and using scenario-based planning to guide decisions. Examples cited include capacity closures by major producers in graphic papers and pulp as demand declined, reinforcing the need for disciplined, data-driven portfolio management.

Artificial intelligence emerges as a major enabler across operations. Bain highlights maintenance as a high-return opportunity, where AI-driven predictive and prescriptive models are already improving equipment uptime, reducing maintenance costs per ton by up to 23 percent, and cutting spare parts inventories by up to 40%. Beyond the plant floor, AI is also transforming sales and operations planning, enabling continuous forecasting that integrates internal data with external signals, including economic indicators, competitor behavior, and commodity movements. These tools are helping companies detect demand inflection points earlier and align production, inventory, and pricing decisions more precisely.

Supply chain strategy is another focal point of the report. Bain argues that supply chains built for global scale are giving way to more regional, resilient networks, shaped by geopolitical risk, labor disruption, and new regulations such as the EU Deforestation Regulation and the Packaging and Packaging Waste Regulation. Leading companies are shortening supply chains, increasing traceability, and deploying automation and AI to gain end-to-end visibility. In this environment, supply chain performance is no longer a back-office function but a core competitive differentiator discussed at the board level.

On the demand side, Bain identifies sustainability as a decisive driver of customer choice, even as companies reduce external sustainability messaging. The report finds that 59% of packaging customers would switch suppliers within three years if sustainability criteria are not met, and many are willing to pay a premium for credible sustainable solutions. In luxury packaging, Bain highlights a shift from sustainability as restraint to sustainability as value creation, with advanced papers, lighter structures, and digitally connected packaging enhancing both environmental performance and brand experience.

M&A also continues to play a strategic role, though with fewer but larger deals. Bain observes that consolidation is being used to improve cost positions, expand geographically, and move downstream into higher-value segments, particularly in packaging and converting. However, the firm cautions that success increasingly depends on rigorous pre-deal strategy, realistic synergy assumptions, and disciplined post-merger execution in a more volatile economic environment.

Overall, Bain’s message is clear: the era of incremental change is over. Paper and packaging leaders that combine cost discipline, AI-enabled operations, resilient supply chains, and monetized sustainability offerings are already outperforming peers. Those who delay risk being left behind as the industry undergoes one of its most consequential transformations in decades.