The packaging sector’s universality and diverse cross-industry demand have long captured investor attention. And as the global economy continues to improve, there will be exciting investment opportunities for companies exposed to all parts of the packaging value chain.

“We’re optimistic about the packaging sector’s near- and long-term outlook,” says Tim Webb, a group head in our Industrials Group. “There are a variety of ways for investors to participate in packaging and add value throughout the ecosystem.”

Below, senior professionals in our Industrials Group share their takeaways from this year’s PACK EXPO, including the key themes driving growth and M&A opportunities throughout the space.

Breaking the Mold

Successful packaging companies must bring innovation to the table—from advanced packaging solutions to more efficient manufacturing processes and equipment. Providers that offer a broader suite of capabilities and technologies can generate more value for customers, create stickier relationships, and drive profitability.

Automation is one key focus area as more companies look to increase manufacturing productivity in an uncertain labor market. Advances in innovation and R&D have helped automation become more effective and broadly applicable to businesses of all sizes.

“Thanks to lower costs and improvements in mobile and collaborative robotics, a wider range of small and medium-sized businesses are discovering effective ways to incorporate automation solutions,” says Chuck Walter, a director. “This equipment helps them optimize their operations from start to finish, while enhancing employee safety and reducing labor challenges.”

The digitization of packaging is another facet of innovation that’s primed for growth. By infusing packaging with digital capabilities—like sensors and RFID technology—providers can generate more high-value data throughout their manufacturing and logistics workflows. At the same time, this is creating higher demand for expert professional services to help providers better understand, implement, and monetize that information.

“Digitized packaging ultimately improves communication between packaging providers, retailers, end customers, and other stakeholders in the value chain,” explains Walter. “All of this information can help packaging companies offer solutions that are more intelligent, interactive, and attractive to customers and end users.”

And with this ever-growing trove of data, adopting generative AI is rapidly becoming a greater opportunity. “The evolution of AI is making it easier to quickly synthesize large quantities of data into actionable insights,” adds Walter. “Integrating AI into packaging products, manufacturing facilities, and shipping logistics can drive smarter business decisions.”

Greener Pastures

Performance, functionality, and price are all critical for leading packaging products. And in recent years, sustainability has joined this list of packaging priorities.

With environmental awareness gaining significant importance, businesses and end consumers are demanding better environmental profiles out of their packaging providers and business partners. This includes their ecological footprints, manufacturing and labor efficiency, material inputs, recyclability, post-consumer recycled content, and more.

To help meet these demands while making a positive impact, more packaging companies are committing to eco-friendly practices and sustainability targets. However, some companies find it easier to reach packaging sustainability goals than others, depending on the materials they use and the recycling infrastructure they have in place.

“It can be difficult for companies to achieve sustainability improvements while maintaining top packaging performance and reasonable costs,” says Walter. “To win in packaging long term, striking the right balance between these variables and meaningful ESG initiatives is paramount.”

As packaging sustainability continues to grow in importance, innovative businesses that reduce waste and create efficiencies across the packaging value chain will be poised for expansion.

“Sustainability is a strong driver of packaging innovation in Europe,” notes Florian Ripperger, a director. “Both market participants and customers are looking for substrates that help reduce their overall environmental footprint. High-quality, paper-based packaging solutions, in particular, have been increasing their market share over recent years.”

“While packaging inputs and materials can have a powerful influence on sustainability, there’s also a rising focus on gaining efficiencies through automation and other processes to make products more holistically sustainable,” explains Walter. “Going forward, those packaging companies that get ahead of the sustainability curve stand to capture market share and investor attention.”

Diverse Potential

Packaging’s diversity and resiliency have long captured investor attention, and as the economy strengthens, we expect investment opportunities to expand across the sector. The proliferation of e-commerce is a particularly meaningful factor that’s expected to bolster packaging demand.

“An expanding market of direct-to-consumer businesses will continue to need packaging support, from consulting services to bespoke packaging products to more efficient and streamlined logistics solutions,” says Walter. “These emerging brands will create a long-term opportunity for leading packaging companies.”

To further discuss packaging M&A, please contact our senior professionals.