How New Laws and Economic Pressures Reshape the Packaging Industry?

The packaging industry is at an important point due to new rules and growing economic challenges. As governments around the world set stricter standards and companies deal with unstable markets, the industry faces tough challenges but also unique chances for innovation.

Packaging Industry Transformation in 2025: Key Insights

The latest forecast from the Institute for Supply Management (ISM) highlights economic pressures such as tariffs and fluctuating revenues. The packaging sector must navigate these headwinds while adapting to rising compliance costs and shifting consumer expectations toward sustainability.

• Regulatory Acceleration and Complexity - the packaging industry is being reshaped by a wave of new regulations - particularly Extended Producer Responsibility (EPR) laws in the US.

  
  

• States like Washington, California, Colorado, Oregon, and Maine have enacted EPR laws, creating a patchwork of requirements and increasing compliance complexity for companies operating across multiple jurisdictions.

  
  

• Brands are under pressure to adopt holistic packaging strategies that address recyclability, compostability, and the entire lifecycle.

  
  

• Enhanced reporting and traceability are becoming essential for meeting both regulatory requirements and consumer expectations for sustainability.

Amid these changes, the sustainable packaging market is set to grow significantly. The report emphasizes that it is going to reach over $530 billion by 2035. grow significantly, reaching over $530 billion by 2035. The growth is fueled by regulatory mandates, consumer demand, and corporate sustainability goals.

To thrive in this new era, the industry must adopt holistic strategies that address recyclability, compostability, and the entire packaging lifecycle. Materials such as paper, board, and bio-based plastics are emerging as leaders, reflecting a broader commitment to environmental responsibility and innovation.

Market Analysis: US Packaging Industry

• The packaging industry in the US is a significant sector, encompassing packaging products for various consumer products (including food service packaging, food service ware, rigid plastics, and glass).

• Estimated to be worth over $180 billion annually, the US market is one of the largest globally, serving both developed regions and emerging markets via exports.

• Plastic packaging and paper packaging constitute the majority of market volume by material type, with demand driven by e-commerce, food, and beverage sectors.

Growing Adoption of EPR Laws

First, Washington State has signed a groundbreaking Extended Producer Responsibility (EPR) law, making producers responsible for managing the end-of-life of packaging materials. This law aims to shift the cost and logistics of recycling away from municipalities and onto the companies that put packaging into the market.

The goal: increase recycling rates, reduce packaging waste, and encourage innovation in sustainable materials and design.

👉 Read The Business Case for Green Chemistry

The rules call for companies to pay fees that fund recycling programs and infrastructure, and to reduce the amount of non-recyclable packaging in their products. For brands selling into Washington, this means immediate steps to redesign packaging, rethink procurement, and tighten compliance tracking. The law places Washington among a growing list of states leading the charge for greener packaging solutions.

What are packaging EPR laws, and how do they affect manufacturers?

Packaging Extended Producer Responsibility (EPR) laws require producers to take responsibility for the entire lifecycle of their packaging materials, including end-of-life management. These laws shift recycling and waste management costs from municipalities to producers, encouraging sustainable packaging design and higher recycling rates.

More States, More Complexity

EPR laws represent a growing trend. Companies now must assess their supply chains, rethink packaging designs, and bolster reporting capabilities to stay compliant—not just in Washington, but potentially across other states considering similar measures.

Extended Producer Responsibility (EPR) regulations are spreading across the U.S., with states like California, Colorado, Oregon, Maine, and now Washington passing laws that shift recycling and waste management costs to manufacturers and brands. Industry leaders expect more states to follow, leading to a patchwork of requirements that challenge cross-state compliance.

EU Regulatory Momentum

The European Union continues to strengthen its Packaging and Packaging Waste Directive (PPWD), with targets for recyclable, reusable, or compostable packaging by 2030. Stringent requirements include minimum recycled content for plastics and mandates to reduce unnecessary packaging volume and weight.

Pressure to Reduce Single-Use Plastics

Many regions are implementing bans or fees on single-use packaging (plastic bags, polystyrene, utensils), especially in Europe and North America.

Brands are responding by investing in alternative materials such as paper, compostables, and reusable packaging. This shift is driven not only by regulatory mandates but also by growing consumer awareness about plastic pollution and its environmental impact. For example, California's Plastic Pollution Prevention and Packaging Producer Responsibility Act has set ambitious targets to reduce single-use plastics and increase the use of recyclable materials. Similarly, the European Commission continues to advance packaging legislation aimed at minimizing plastic waste and promoting circular economy principles.

Additionally, extended producer responsibility (EPR) legislation is prompting companies to rethink their entire lifecycle approach to packaging products. Producers are now more accountable for the environmental footprint of their packaging, encouraging innovation in design and materials that are easier to recycle or compost. This has led to increased collaboration with producer responsibility organizations and recycling partnerships to develop effective EPR programs.

The pressure to reduce plastic straws and other problematic single-use plastic items has also resulted in widespread changes in food service packaging and food service ware. Many businesses are adopting biodegradable products and instituting certified alternatives to meet new regulations and consumer expectations.

Overall, the packaging industry is undergoing a significant transformation, balancing the need for functional packaging with environmental responsibility. As new regulations emerge and consumer demand for sustainable options grows, companies that proactively adapt their packaging strategies will gain a competitive advantage in this evolving market.

💡 2025 Sustainable Packaging Trends Report highlights four key trends:

• innovation in refillable and reusable packaging,

• material-specific sustainability goals,

• increasing focus on material health, and the rise of specialized recyclers.

  
  

The report underscores the impact of EPR laws and the redefinition of “recyclable” by state and federal policies, pushing brands toward more sustainable packaging solutions.

Increased Demand for Recycled Packaging Materials

New rules in both the U.S. (California’s recycled content laws) and the EU mandate minimum percentages of post-consumer recycled (PCR) content in packaging.

This has driven up demand and prices for high-quality recycled materials, driving innovation in recycling processes. These regulations are part of broader packaging EPR legislation efforts aimed at reducing plastic pollution and promoting a circular economy. By requiring packaging producers to incorporate a certain amount of recycled content, the laws encourage the use of recyclable materials and discourage the reliance on virgin plastics, particularly rigid plastics commonly used in packaging.

The increased focus on PCR content has also influenced supply chains, pushing manufacturers and suppliers to source sustainable materials and improve transparency in their operations. This shift aligns with consumer demand for eco-friendly products and stricter packaging policy frameworks enforced by regulatory bodies such as the Federal Trade Commission.

Moreover, these mandates come with reporting deadlines and compliance requirements, compelling companies to enhance their data collection and reporting capabilities. Producer responsibility organizations and recycling partnerships play a crucial role in helping businesses navigate these complex regulations and meet recycling rate targets.

In addition to environmental benefits, incorporating PCR content can offer economic advantages by stabilizing packaging materials' costs and reducing exposure to volatile raw material markets. However, challenges remain, including ensuring the availability of quality recycled materials and addressing potential trade-offs in packaging performance.

Shifting Brand Strategies

Major consumer brands are rolling out global commitments (e.g., “100% recyclable packaging by 2025”) in anticipation of tougher regulations. Companies like Unilever and Nestlé are piloting reusable systems and introducing material transparency into their supply chains.

How sustainable packaging design improves efficiency and user experience.

Regulations are pushing brands to prioritize lifecycle analysis, carbon footprint disclosures, and eco-labeling. It brings innovation in materials, design, and recycling infrastructure, while fostering collaboration across the entire supply chain to meet sustainability goals.

Sustainability as a Market Driver

"Eco-friendly” packaging has become a market necessity for consumer-facing brands to stay competitive.

This shift is driven by increasing consumer demand for transparency and accountability, as well as tighter packaging EPR laws that require transparent reporting on environmental impacts. Companies are now conducting detailed lifecycle assessments to understand the full environmental footprint of their packaging materials—from sourcing natural resources to end-of-life disposal.

Carbon footprint disclosures are becoming standard practice, helping brands communicate their sustainability efforts and meet the expectations of regulators and customers alike. Eco-labeling initiatives provide consumers with trustworthy information about the recyclability and compostability of packaging products, fostering informed purchasing decisions and encouraging responsible consumption.

Moreover, sustainability is influencing innovation in packaging design and materials. Brands are exploring alternatives to traditional plastic packaging, such as biodegradable products and fiber-based solutions, to reduce plastic pollution and improve recyclability. This transition also aligns with broader industry trends toward circular economy principles, where packaging is designed for reuse, recycling, or composting to minimize waste.

Public education campaigns and collaborations with producer responsibility organizations further support these efforts by raising awareness and promoting best practices across the supply chain. As a result, sustainability is no longer just a regulatory requirement but a key market driver that shapes brand reputation, customer loyalty, and long-term business success.

👉 Discover the key sustainability trends transforming businesses in 2025

Impacts on Supply Chain and Costs

Compliance with new regulations is increasing costs related to material sourcing, reporting, and redesign. Many companies are investing in data systems and consultants to monitor changing rules and automate compliance.

These shifts in the regulatory landscape are prompting supply chain managers to rethink their sourcing strategies. For example, securing materials that meet stricter recycled content requirements or are certified recyclable often comes at a premium, affecting overall production budgets. Additionally, the need for detailed reporting to meet extended producer responsibility (EPR) mandates requires sophisticated tracking systems and increased administrative resources.

Redesigning packaging to comply with bans on certain plastics or to improve recyclability involves upfront investment in research and development, testing, and supplier collaboration. Companies must balance these costs against long-term benefits, such as reduced environmental impact, improved brand reputation, and mitigation of compliance risks.

Furthermore, the complexity of navigating varying regulations across individual states adds layers of logistical challenges. Businesses selling products in multiple states must ensure that packaging meets the most stringent local requirements, which can complicate inventory management and increase production costs.

To address these challenges, many firms are partnering with Producer Responsibility Organizations (PROs) and leveraging recycling partnerships to share resources and expertise. These collaborations help streamline compliance efforts and promote innovation in sustainable packaging design.

Overall, while compliance-related costs are rising, proactive investment in sustainable supply chain practices positions companies to capitalize on emerging market opportunities and meet evolving consumer expectations.

How Is Technology Shaping Packaging Compliance?

Adoption of advanced materials, automation, digital printing, and closed-loop recycling systems is reshaping what packaging can offer. Brands are investing in digital product passports and end-to-end tracking technology to demonstrate regulatory compliance, map carbon footprints, and answer calls for data transparency from regulators and consumers.

Costs on the Rise

Compliance costs are increasing, and packaging manufacturers are restructuring contracts and raising prices to offset new fees and required reporting. Many are also spending more on R&D to develop eco-friendly alternatives.

Market Opportunity

As the research shows, global demand for sustainable packaging materials is forecasted to grow at over 7% CAGR through 2030 with the highest growth expected in Europe and North America due to regulatory pressure.

Growing consumer demand for environmentally friendly packaging and transparency (e.g., net quantity and value comparisons) is pushing brands towards sustainable and fair packaging.

Packaging’s Next Chapter: Sustainability, Agility, and Compliance

Success in today’s packaging industry demands more than just meeting minimum requirements—it requires a bold commitment to sustainability, innovation, and adaptability. With extended producer responsibility (EPR) regulations expanding and tariffs looming, companies must remain agile, ready to pivot strategies and embrace new solutions. This could mean integrating recycled materials, designing for reuse, or investing in robust data systems to ensure end-to-end compliance and transparency.

The “new normal” in packaging is defined by constant change and rising expectations from both regulators and consumers. Companies that proactively invest in sustainable materials, transparent data practices, and circular design principles will not only stay compliant, but also unlock new market opportunities and manage risk more effectively.

Looking ahead, the most successful packaging companies will be those that anticipate policy shifts and economic trends—turning regulatory challenges into competitive advantages. By leading on sustainability, traceability, and compliance, agile brands can capture market share and help shape the future of the industry.

As the packaging industry faces unprecedented regulatory changes and rising pressures around sustainability, agility, and compliance, staying ahead requires expert guidance and innovative solutions. If you’re looking to navigate evolving regulations, streamline compliance, or transform your risk management approach, the Parakeet Risk team is ready to help.