Resetting cost competitiveness in pulp and paper packaging
The pulp and paper packaging industry is undergoing a structural reset. For several years, the industry has faced slowing demand with limited growth, partially due to factors such as the COVID-19 pandemic, the war in Ukraine, the conflict in Iran, and increased use of tariffs. Persistent overcapacity across grades and elevated volatility in input costs, particularly for fiber (in certain geographies such as Europe and large parts of North America) and energy (across the globe), have also had an impact.
For decades, the pulp and paper packaging industry operated on a stable economic model: high asset intensity, strong variable margins, and a focus on maximizing throughput to absorb fixed costs. That model is now under sustained pressure.
At the same time, companies have expanded their capacity and converted legacy assets (such as reconfiguring newsprint machines to produce containerboard), creating persistent oversupply in several segments. In parallel, postpandemic demand has normalized, e-commerce growth has stabilized, and consumer demand has weakened, leading to flat or declining volumes across many end markets.
Packaging and paper manufacturing: Resetting costs | McKinsey