Capital goods winners study: Packaging and process equipment
Conditions looking up in 2025, but volume growth remains a challenge
Performance
Strained consumer affordability and growing uncertainty in 2024 put pressure on the industry’s rebound from post-COVID destocking, with the medical and health sectors particularly affected by delays in destocking. In packaging machinery, the normalization of supply chains has cooled order intake, while higher CAPEX costs due to continued high interest rates led to investment pressure.
"Recovery is on the horizon, but winning in packaging means balancing innovation, cost, and agility."
Trends & challenges
Consumer economic pressures and uncertainty will continue in 2025, with the trend towards lower-cost alternatives growing. But overall performance is expected to be better than in 2024.
The now-maturing shift towards sustainability will remain highly relevant. Strategies are expected to become more focused as priorities change and regulations bite. With consumers still unwilling to absorb the higher costs of sustainable alternatives, “at-or-better-than-current-cost” business cases are becoming a priority when changing material/packaging. More widely, the industry will continue to consolidate, with big players aiming to focus their portfolios.
Key challenges for 2025 and beyond include volume growth (due to lower consumer demand), maintaining post-COVID price increases, CAPEX decisions due to high interest rates and potential tariffs on raw material (steel, aluminum, etc.).
CEO action plan
- Maintain strategic ambitions and seek competitive advantages as the market recovers, but retain a flexible operating model to navigate the economic climate
- Consider M&As, for example to create synergies or reorient portfolios away from businesses/regions that don’t maximize value
- If in challenged position, focus on optimizing business fundamentals to increase value
- Equipment players should explore alternative sources of revenue, or work to ensure customer stickiness is high
