Rabobank experts: Post-mega merger era reshapes packaging industry competition

The packaging industry is entering a post-mega merger era, defined by consolidation, a prolonged downturn, and rising geopolitical uncertainty. 

Packaging Insights speaks with Rabobank Packaging & Logistics senior analysts Xinnan Li, Natasha Valeeva, and Jim Owen to examine how the sector is evolving. The discussion explores shifting competitive dynamics, future growth prospects, and the increasing impact of regulation and private equity on the industry.

What is the packaging industry’s mega merger era, and why are we now operating in a post-mega merger time?

The mega merger era saw a wave of large global deals in packaging, such as Smurfit-WestRock, IP-DS Smith, and Amcor-Berry. While the number of transactions didn’t rise, deal value surged. We now call this the post-mega merger era: a more consolidated landscape where producers face intensified global competition from dominant transatlantic players. These large combinations will also trigger divestitures, creating new opportunities for other industry players.

How is the packaging industry adjusting to the post-mega merger era?

Packaging producers worldwide are navigating a prolonged downturn and increasing risk of oversupply, all while facing a more consolidated and competitive market. As a result, many are refocusing on core businesses and returning to operational fundamentals. For small and mid-sized players, differentiation is increasingly critical. Competing on short-term pricing is unsustainable, especially as larger competitors benefit from scale, efficiency, and national reach. To stay competitive, these companies must build deeper customer relationships and target niche segments that offer higher value, even if they require more complex processing. 

How are volatile global conditions affecting the packaging industry’s growth prospects?

Volatile global conditions are constraining near-term growth for the packaging sector through weakened demand, elevated costs, and geopolitical uncertainty. Geopolitical tensions and recent trade disruptions have weakened supply chains and outlooks, even as tariffs are expected to remain milder going forward. 

Elevated inflation in the US and Europe continues to push up the cost of goods sold, while rising unemployment dampens consumer spending. Although falling energy prices could offer some relief in 2026, ongoing geopolitical risks keep volatility high. In response, industry players are prioritizing core operations, supply chain resilience, and risk focused M&A strategies as they navigate a more uncertain and competitive environment.

How do you expect extended downturns to affect investment in innovation in the packaging sector?

Volatile global conditions are constraining near-term packaging growth through weakened demand, elevated costs, and geopolitical uncertainty.In short, investment in packaging innovation has slowed, with sustainable packaging innovation being hit particularly hard. Packaging companies are prioritizing near-term cash generation and operational stability rather than longer-horizon projects, given the longer return cycles typical of innovation in this sector. Capital is increasingly directed toward immediate synergies, cost savings, and efficiency gains, not moonshot initiatives. That said, we expect investment in innovation to rebound as companies begin looking for their next growth frontier.

What role does private equity play in the packaging industry?

Private equity firms have been major consolidators in the packaging sector, particularly in plastic converting and, more recently, in packaging distribution. Their typical buy-improve and/or grow-exit cycle spans three to seven years, enabling them to deliver returns to investors. PE firms acquired a significant number of packaging businesses between 2019 and 2021, either directly or through platform companies. As these investment cycles mature, we expect many of those assets to come to market beginning in 2026 and 2027.

How are tightening packaging rules influencing the competitiveness of smaller packaging companies?

The tightening of sustainability-focused packaging rules is making it increasingly difficult for smaller packaging companies to stay competitive. In Europe, aggressive packaging regulatory requirements, such as the Packaging and Packaging Waste Regulation and the Regulation on Deforestation-free Products, significantly raise compliance costs and operational complexity. These conditions inherently favor larger players with scale, diversified material portfolios, and in-house regulatory capabilities. 

In North America, the fragmented, state-by-state rollout of EPR similarly increases the value of scale, footprint flexibility, and multimaterial expertise. Because larger companies acquire downstream recycling access and design for recyclability capabilities, smaller firms struggle to absorb these expenses or adapt as quickly. As a result, tightening regulations disproportionately pressure smaller players and accelerate consolidation, further advantaging larger competitors.

What challenges do packaging companies face in achieving sustainability goals while maintaining profitability and a competitive advantage?

Translating sustainability initiatives into growth and profit is one of the key challenges for this industry in the coming years. Sustainability is not just about assets, products, collaboration, or compliance. It’s about creating real value, delivering measurable returns, and driving growth in an increasingly pressured market. 

Investments must generate positive returns to be viable. Companies today are increasingly using M&A to accelerate progress in packaging sustainability, whether by evaluating targets through criteria such as energy efficiency and decarbonization to ensure future readiness and cost optimization, or by acquiring footholds in markets where sustainability leadership is strongest. 

Many are leveraging this momentum, particularly in regions with advanced regulation and innovation, to access cutting-edge sustainable technologies and strengthen their competitive position.