The packaging and paper industry is in a state of flux. After more than a decade of structural tailwinds, external shocks such as macro uncertainty, cautious consumers, and structural changes in CPG behavior have shaped a new environment. This compendium—a collection of McKinsey’s greatest insights on the packaging and paper industry this year—aims to help packaging and paper companies make sense of this shift and set a strategy for the future.
Our article, “No ordinary disruption: State of the packaging and paper industry,” lays out how the industry got to this point: Weak demand and inflationary cost pressures have led to decelerating growth and margins across major substrates (paper, plastics, glass, and metal). Indeed, these companies can no longer rely on volume growth or price increases to sustain margins. Execution has become paramount. Leading companies are combining a focus on execution with developing new capabilities and pursuing innovation. And they have already seen organic growth of more than 200 basis points above the market through interventions in these areas targeting just the commercial excellence function.
Data and AI are an integral part of the path forward, and two articles—“Rewiring the packaging industry: Gen AI and commercial excellence” and “Reinventing the European pulp and paper operating model”—dive deep into their role in innovation. In commercial excellence, in particular, targeted use of gen AI could enhance pipeline confidence, improve conversion, and sustain growth. Companies can also harness AI to establish a more integrated operating model; our analysis suggests that midperforming European pulp and paper players could potentially improve EBITDA by as much as ten to 15 percentage points through a combination of AI-supported portfolio steering, intelligent operations, commercial discipline, and organizational redesign.
As leaders explore new avenues for growth, one option that holds promise is M&A—and particularly programmatic M&A, as shown in the article, “Reigniting growth through M&A: A playbook for paper and packaging companies.” By pairing operational excellence with high M&A deal activity, companies have seen faster revenue growth, higher gross margins, and better ROIC compared with peers.
Finally, “Resetting cost competitiveness in pulp and paper packaging” highlights one last tool in these companies’ toolboxes: cross-functional interventions to target the total cost baseline of a mill. In a lower-growth and more volatile environment, cost savings become a critical determinant of competitiveness.
Together, the strategies in this compendium can help packaging and paper companies convert the current disruption into a durable competitive advantage.
