Packaging producers are seeing change come at them from different directions this year. Sustainable materials and smart technologies are finally scaling up. At the same time, new EU regulations are making eco-design mandatory rather than optional. And plastics recycling, despite being subject to much attention, still faces a massive challenge around volumes.
These three forces, innovation, regulation and practical limits, will go a long way to deciding what activity is undertaken in 2026.
Sustainable packaging keeps moving
Polylactic acid (PLA) from corn starch, packaging grown from mushroom mycelium. These were not realistic options a few years back. Now they're in regular production, breaking down in months under industrial composting instead of sitting around for centuries.
The access point has shifted too. Small and medium-sized businesses can get bio-based packaging from specialised suppliers now, not just the brands with big R&D budgets.
Lightweighting is another area where the gains add up: less material, same durability, and lower shipping costs and emissions.
Circular models are picking up speed as well. Deposit-return schemes used to be limited to drinks bottles, now they cover a range of other categories such as cosmetics and household products. The incentive works commercially for brands: people who bring packaging back tend to buy again.
Smart packaging adds another dimension. QR codes and NFC tags are offering more by leading consumers to specific disposal instructions for their area. E-commerce returns have gotten simpler as well, with customers able to send items back by scanning a code instead of printing labels at home or work.
Regulation makes sustainability mandatory
Alongside technical innovations, the EU's Packaging and Packaging Waste Regulation (PPWR)[1], which entered into force in February 2025, starts applying from 12 August 2026[2]. Unlike the previous directive, this is a regulation, meaning it applies directly across all 27 EU member states.
Extended Producer Responsibility (EPR) rules are now standardised across Europe. Companies must register with national EPR schemes, cover the costs of collecting, sorting and recycling their packaging waste, and report packaging data annually. EPR fees will be modulated based on performance; less wasteful, more recyclable packaging costs less.
By 2030, recyclability performance grades become enforceable and packaging must meet minimum recycled content requirements. Design requirements mandate that packaging minimises weight and volume while maintaining functionality, and marketing considerations don't justify additional material. By 2030, grouped, transport and e-commerce packaging must not exceed 50% empty space.
Adapting quickly to these requirements is becoming a competitive differentiator for businesses operating across borders.
Plastics recycling faces persistent challenges
Sustainable breeds of plastics continue to gain traction. The market for recycled plastics is growing strongly, from $55.46 billion in 2024 to a projected $107.13 billion by 2032[3]. This represents an annual growth of 8.6%, which is faster than the overall plastics market.
But context matters. Even by 2034, recycled plastics will account for roughly 7.5% of the broader market, which is projected to reach $832.62 billion[4], while the OECD reports[5] that less than 10% of plastic gets recycled globally.
Recycling plastic at scale faces stubborn problems. Different polymer types can't be mixed; PET, HDPE, PP and others need separate processing. Contamination from food residue, labels or mixed materials makes recycling difficult or impossible to make viable. Colour sorting adds complexity, and multi-layer packaging, which provides excellent barrier properties for food, is notoriously hard to separate and recycle.
This creates a conundrum for packaging producers. On one side, brands want sustainable packaging and regulations keep getting tighter. On the other, the infrastructure to recycle plastic at scale can't handle the volume coming through.
So, what are producers doing? Chemical recycling is receiving investment, processes that break plastics back down to raw materials instead of just mechanically reprocessing them. Mono-material solutions are another route, giving up some of the performance benefits of multi-layer packaging to make recycling more viable. Bio-based plastics offer a third path, though they come with their own end-of-life questions.
Nobody is expecting the gap between recycling targets and reality to close quickly. But it's at least forcing the conversation away from aspirational claims and towards solutions that have a chance of achieving scale.
What this means for packaging strategy
These three trends will continue to influence each other. Regulatory pressure is speeding up the adoption of sustainable materials. The limitations of plastics recycling are driving innovation in alternative materials and circular models. Smart packaging is making EPR compliance easier while improving the customer experience.
Companies treating these as connected challenges, not separate developments, will be better positioned for what comes next.
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