The insolvencies of 2025 are not a one-off slip, but rather the expression of a “silent crisis in the packaging world”: major food and consumer goods corporations are consolidating their purchasing volumes through mergers, while small and medium-sized packaging companies are being squeezed between energy, raw material and personnel costs as well as increasingly stringent environmental requirements.
Casimir Kast in Gernsbach is a prime example of medium-sized companies of this scale and even made the front page of BILD: the 475-year-old packaging manufacturer, which invested heavily in technology and energy supply in 2022, filed for insolvency in September. Despite modernization, weak economic conditions, declining demand and high costs are enough to destabilize the business model. The fact that trade media such as Neue Verpackung now report on a “well-functioning” investor process with realistic chances of restructuring makes Kast a symbol of an industry oscillating between structural crisis and hopes of a comeback.
Environmental Targets: Climate Policy Becomes an Investment Obligation
With the Packaging and Packaging Waste Regulation (PPWR), the EU fundamentally reassessed the regulatory framework for packaging in 2025: the goals are less packaging waste, higher recycled content, strict recyclability and ambitious reuse quotas in almost all segments. The regulation formally entered into force in February 2025, with the main obligations taking effect after a transition period starting in 2026 — yet the real work should have taken place in 2025: companies must review their entire portfolios and prepare for a medium-term transition to PPWR compliance.
Germany is following suit with a new Packaging Implementation Act (VerpackDG), the draft of which the Federal Environment Ministry has presented since November. The law is intended to replace the current VerpackG and anchor the European requirements with higher recycling quotas, expanded system participation obligations and stricter producer responsibility. Chambers of industry and commerce as well as consulting firms now speak openly of significant investments in material changes, sorting and recycling capabilities, as well as documentation and reporting structures — creating a difficult balancing act for SMEs between climate targets, compliance costs and margin pressure. “Strictly speaking, we’d have to set up a new department for this — but we simply can’t afford it,” emphasized Caroline Knapp, managing partner of the eponymous carton finishing company, at the P360° conference in Hamburg a few weeks ago.
Merger Wave Among Customers: Fewer Buyers, More Power
On the customer side, the food industry is reorganizing — with immediate consequences for the packaging sector. Analysts such as professor Carsten Kortum from the Baden-Württemberg Cooperative State University describe 2025 as a year of “merger fever” in the food industry: corporations are joining forces, the product variety on shelves remains visible, but the number of purchasing organizations is shrinking. For the packaging industry, this means fewer but significantly more powerful customers who dictate standards, prices and the pace of PPWR implementation — and who can shift orders around the globe without hesitation.
A packaging consultant who wishes to remain anonymous confirms the trend: “Major brand manufacturers are entirely focused on cost savings. Jobs are being cut, especially those held by knowledge carriers — weakening packaging innovation.” Benefiting from this is the co-packing sector, which continues to grow. “Brand owners are currently reducing their own production and outsourcing more work to co-packers,” confirms Ton Knipscheer of the Co-Packers Association. The contract packing market is expanding as brand owners focus on brand building while everything below that level is subject to cost-cutting.
One of the most notable deals is the takeover of Mestemacher’s operating companies by the RUF Group and its shareholders: a specialist in baking ingredients and a pioneer in whole-grain bread are merging to create an expanded baked-goods and baking-mix cluster with consolidated purchasing and sales power in retail and foodservice. For packaging manufacturers, this means more volume in fewer hands, standardized packaging formats for bread, toast and baking mixes — and tougher terms when it comes to price increases or investment surcharges for more sustainable materials.
The scale is even larger in snacks and breakfast foods: with the approved acquisition of Kellanova by Mars, the group brings brands such as Pringles and Kellogg’s under one roof, spanning everything from chocolate bars to chips and cereals. Media and consumer portals are debating whether this market power will lead to higher prices and stricter assortment policies. For the packaging industry, it is clear that metal, carton and plastic packaging for snacks, cereals and bars will be bundled in even bigger global volumes and will be pushed towards more standardized, PPWR-compliant platforms.
The German Monopoly Commission presented its report at the end of November. Its chairman, Tomaso Duso, summed it up at the press conference: “The German food retail sector is extremely concentrated. Four large chains — Edeka, Rewe, Lidl, Aldi — almost completely dominate the market,” he said. Competition formally exists, but in practice is limited. Retailers are no longer merely retailers but “food corporations.” They run their own meat-processing plants, push private labels to market shares above 50 percent in some cases, and, through vertical integration, move ever closer to agriculture. What is true for farmers also applies to the packaging industry. Not a promising outlook—especially for small and medium-sized enterprises.
Is There Still Growth Possible?
Despite crisis, insolvencies and cost pressure, there are segments in the value chain that continue to grow — especially where consumption and population are increasing, or where regulatory pressure forces investment. Circular-economy analyses indicate that high-quality recycling and sorting technologies for plastics and paper will be in strong demand in the medium to long term, even though some pioneers stumbled in 2025. At the same time, emerging markets are becoming increasingly important for machinery and plant engineering; German exports of machinery to regions such as the Middle East, Southeast Asia, Latin America and Africa increased significantly in 2025 — and this also applies to food and packaging machinery.
The main drivers of growth are three trends: rising out-of-home consumption and convenience in urban areas, the rise of local brands in emerging markets, and the massive need for modernization regarding energy efficiency and water consumption in beverage and food production.
VDMA: Machine Engineering Under Pressure – Packaging as an Exception?
Mechanical engineering also faced headwinds in 2025: the VDMA expects a production decline of around 5 percent for the year and points to international trade conflicts, high energy prices, bureaucracy and sluggish investment. Even the robotics and automation sectors within the association expect a double-digit drop in revenue; demand for automated solutions is stagnating, despite the fact that they are crucial for PPWR-compliant and efficient packaging processes.
At the same time, VDMA-aligned analyses for the food and packaging machinery sector show that this segment is more robust than the average: around half of the production value comes from packaging machinery, and here stable or growing export markets support business. The challenges lie less in demand itself and more in the framework conditions: geopolitical risks, weak markets in the EU and China, high bureaucracy costs and uncertainty in trade agreements are weighing on customers’ investment decisions — and thus on companies’ planning security.
Conclusion: An Industry Between Contraction and Investment Pressure
The packaging industry emerges from 2025 having experienced movement along several tectonic plates at once: a merger wave among customers, an insolvency wave among SMEs, climate policy turning packaging into a political battleground — and mechanical engineering caught between global opportunities and domestic risks. To survive, companies must both invest and consolidate: in recyclable materials and more efficient lines, in internationalization and in the ability to negotiate with fewer but more powerful customers.
2025 was the year in which the packaging industry finally had to understand that it is the stage for a power struggle over resources, climate and margins. The real decisions about who will set the rules in the future are already being made by global brand and retail corporations.
Author: Matthias Mahr, Member of the Editorial Board, Lebensmittel Praxis
