BOSTON—January 8, 2026—Bain & Company today released new research showing how paper and packaging companies are responding to a challenging operating environment marked by structural overcapacity, volatile input costs and soft demand across multiple sectors. Drawing on its 2026 Paper & Packaging Report, Bain identifies three imperatives shaping industrial performance: laser focus around capacity decisions, accelerated adoption of AI-enabled efficiency and effectiveness improvements, and stronger commercial execution to protect margins.

Overcapacity remains a chronic challenge for industrial producers. Executives routinely overinvest, assuming future growth that fails to materialize, and many underestimate the long-term cost of persistent oversupply. Bain’s analysis shows most companies aim to grow their profits at four times the rate of the market, but only 7% of industrial companies achieve this goal, underscoring how significantly excess capacity can erode margins. The research notes that overcapacity is structural, not temporary, and that companies must understand true relative cash cost per ton vs. competition – grade-by-grade and mill-by-mill – to make effective decisions.

“The industry is operating in a structurally oversupplied environment, and companies that rely on past demand assumptions will continue to face pressure,” said Ilkka Leppävuori, leader of Bain & Company’s global Packaging subsector. “Leaders are taking a more rigorous view of cost position, portfolio choices, as well as capacity decisions to stay competitive in a market that is unlikely to rebalance quickly.”

To overcome overcapacity, leading companies allocate more volume to the most profitable customers, products, and geographies. They consider M&A as an option to expand network coverage and improve the efficiency of their asset base. Additionally, they employ a laser-focused approach to mapping options for each production site, accounting for the system-wide implications of possible closures and conversions.

As companies search for efficiency in a capital-constrained environment, AI-enabled maintenance is emerging as a powerful operational lever. Bain finds that AI makes maintenance predictive and prescriptive, reducing failures, downtime and labor costs. Increasing tool-in-hand time by 15 percentage points and reducing maintenance cost per ton by 17–23% are among the most significant opportunities cited.

The research outlines three pillars of smart maintenance – asset strategy, work productivity and spare parts optimization – along with a four-stage transformation journey: diagnostic, development, ramp-up and scaling. Spare-parts optimization alone can reduce inventory requirements by 20–40%, freeing up working capital. In capital-intensive manufacturing environments, these gains also influence cost per ton.

Maintenance optimization can unlock substantial value, whether via increasing throughput or reducing opex, capex, and working capital. The upside is huge as solutions gain scale and cost drops, resulting in a high-return opportunity and a top priority for many paper and packaging executives. 

The report also highlights the growing importance of commercial discipline in protecting profitability. Many companies still lack a clear understanding of which customers, SKUs or channels actually make money. Economic margin at the most granular level reveals significant leakage in pricing, discounting and cost-to-serve. Bain’s research shows that commercial excellence can contribute 2–3x growth by enabling companies to rethink pricing architecture, remove unjustified discounts, tighten contract renewals and focus commercial efforts on the most attractive profit pools.

AI-powered tools, including web scraping and geospatial analytics, are increasingly being used to identify new demand clusters and growth pockets. This level of precision is becoming more important in sectors where customer consolidation increases competitive pressure.

Successful companies double down on the details - they understand where and what are the revenue generating areas down to the SKUs and they develop a data-driven approach to pursue profitable sales opportunities down to the customer level. Then, they identify opportunities to improve pricing performance and capture more value in the market.

The full 2026 Paper & Packaging Report also includes additional chapters exploring substrate shifts, sustainability expectations, consolidation trends and supply chain redesigns.

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Media contacts:

Dan Pinkney (Boston) — dan.pinkney@bain.com 

Gary Duncan (London) — gary.duncan@bain.com

Ann Lee (Singapore) — ann.lee@bain.com

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