Bain & Company’s 2026 Paper & Packaging Report unveils how companies in the paper and packaging sector are responding to a challenging operating environment marked by structural overcapacity, volatile input costs, and soft demand. With a focus on artificial intelligence (AI), Bain identifies three imperatives shaping industrial performance: laser focus on capacity decisions, accelerated adoption of AI for efficiency improvements, and stronger commercial execution to protect margins.

Overcapacity Continues to Challenge the Industry

Overcapacity continues to be a persistent challenge for industrial producers, with many companies overinvesting based on unfounded demand assumptions, resulting in structural oversupply. Bain’s analysis reveals that most companies aim to grow their profits at four times the rate of the market, but only 7% of industrial companies achieve this goal. This highlights the significant impact that excess capacity has on margins. The research notes that companies must better understand their true relative cash cost per ton in comparison to competitors to make effective decisions. Bain emphasizes that companies relying on past demand assumptions are likely to continue facing pressure in a market that is unlikely to rebalance quickly.

AI-Enabled Maintenance Optimization

AI is emerging as a powerful operational lever for companies in the paper and packaging sector. Bain's research finds that AI is helping companies move toward predictive and prescriptive maintenance, leading to reduced failures, downtime, and labor costs. One of the most significant opportunities identified by Bain is the increase in tool-in-hand time by 15 percentage points and a reduction in maintenance cost per ton by 17–23%. AI tools such as asset strategy, work productivity improvements, and spare-parts optimization are central to achieving these savings. Bain highlights that spare-parts optimization alone can reduce inventory requirements by 20–40%, freeing up working capital and improving overall efficiency.

Commercial Excellence: Optimizing Pricing and Profitability

Commercial discipline is critical in protecting profitability, especially in a challenging market where margins are being squeezed. Many companies still lack a clear understanding of which customers, SKUs, or channels are actually profitable. Bain's research reveals significant revenue leakage in pricing, discounting, and cost-to-serve. To address this, AI-powered tools, including web scraping and geospatial analytics, are being used to identify new demand clusters and growth pockets, enabling companies to optimize pricing and increase profitability. Bain's analysis shows that companies focusing on commercial excellence can achieve 2–3x growth by rethinking their pricing architecture, eliminating unjustified discounts, and focusing on the most attractive profit pools.

Building a Data-Driven Approach to Capture More Value

Successful companies are increasingly adopting a data-driven approach, leveraging AI to better understand customer behavior, refine their pricing models, and capture more value in the market. By focusing on the most profitable sales opportunities, companies can identify areas where they can improve pricing performance and capture more value, ultimately enhancing their competitive position. AI's role in precision pricing and demand generation is becoming more crucial in industries where customer consolidation increases competitive pressure. Bain's research underscores that by focusing on the granular details of pricing, customer segmentation, and market dynamics, companies can position themselves for long-term success in a highly competitive landscape.

The Way Forward: Efficiency, AI, and Commercial Discipline

As paper and packaging companies continue to face challenging market conditions, Bain’s report emphasizes the importance of AI and disciplined decision-making in navigating the complexities of overcapacity, maintenance optimization, and commercial excellence. Companies that are able to leverage AI to improve operational efficiency, refine their commercial strategies, and optimize pricing will be better positioned to unlock value and maintain profitability in 2026 and beyond.

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