With rising costs, shifting regulations and growing sustainability demands, packaging is becoming a key area of focus for European brands. In this video, L.E.K. Partner Karin von Kienlin shares insights from our latest survey and explores how companies are adapting their strategies.
Watch the full video to find out what’s changing — and what it means for your business.
Looking for more detail? Read the first article in our 2025 European Brand Owner Survey series here.
Packaging is under pressure from all sides.
Brand owners across Europe are concerned about rising packaging costs. Now a recent survey, seventy percent of the brand owners expect cost to increase this year, and many believe those increases will be significant.
The biggest drivers are material prices, supply chain disruption, ongoing inflation, but sustainability targets are adding price pressure too. Many companies want to switch to lower emission or recycled materials, but say the incremental costs are hard to absorb or pass on to consumers.
In our brand owner survey, which we do annually, this year's study included responses from about six hundred and forty five brand owners, and it spanned a range of sectors from food and beverage to health care, beauty, and consumer electronic, as well as pharma and wellness.
One of the results we found is that the role of packaging is subtly changing. In times of quite a lot of volatility, there was focus on the basics, but more than eighty percent of brand owners now plan to invest more in SKU innovation over the next few years.
They're looking at ecommerce ready formats, packaging that improves supply chain visibility, and features like tamper proofing and QR codes to support customer engagement. So it's again more about differentiation.
The beauty and health care pharma sectors in particular have seen the greatest increase in SKU innovation spend since twenty twenty. These shifts aren't just about functionality. They're also about brand experience, traceability, and and adapting to new channels.
Spending on sustainable packaging is expected to grow from about forty two percent of packaging budgets today to over sixty percent by twenty twenty eight. But companies face barriers in implementing this. So cost is the most common, followed by slow regulatory progress and supply constraints. There are differences across sectors too. So for instance, in pharma, the brand owners did not see cost as the barrier. It was much more about regulation, the timing, the extent, the pressure to do things in the short term, and cost was more of an afterthought. So many are starting to invest in their own recycling or collection infrastructure to work around issues around material availability.
Our research now shows clear regional differences in how brands are responding to cost and sustainability pressures. European companies are focused on design optimization, supplier sustainability, and switching to lower emission materials. By contrast, the US brands are more likely to absorb costs or pass on costs and invest in marketing led changes like seasonal formats and bundling. Sustainability priorities also differ. Europe leans towards supplier credentials and carbon impact, while the US puts more emphasis on recyclability and biodegradability.
The US also cite the desire to use more sustainable materials as their top reason for changes of the packaging materials over the last four years, whereas material cost savings have been driving change in Europe. Sustainability was also on the top of the list in Europe, like in the US, but has since been displaced by concerns around cost.
We work with companies to understand what's really driving their packaging spend and where changes will deliver the greatest return, whether that's switching materials, simplifying formats, rethinking supplier models. In many cases, cost savings and sustainability improvements can go hand in hand, but it takes the right data and a clear view of priorities. Secondly, building practical sustainable strategies. We have clients define what sustainability should look like for their packaging given their customer base, product set, and supply chain, but also the sustainability commitments made by management.
And navigating regional complexity is important as well. So what works in one market might not work in another. We have clients adjust their packaging approaches across regions aligning with the regulatory requirements and local supply realities while staying consistent with their broader brand and sustainability goals. Our support goes beyond just strategy.
We work with clients to prioritize these changes, build business cases, define operational steps needed to make packaging improvements stick. Whether the challenge is cost, compliance, or customer experience, we help packaging teams make confident data driven decisions.
