Unlocking the future of moulded fibre packaging: opportunities and challenges in a rapidly evolving market

Written by Alexander Koukoulas, PhD, and Vincent Leon, AFRY Management Consulting

As sustainability pressures intensify and consumer preferences evolve, the packaging industry stands at a pivotal juncture. The moulded fibre packaging sector, a once-niche category, is emerging as a leader in the race to replace single-use plastics, driven by environmental regulations and brand owner commitments to circularity.

However, despite rapid demand growth and sustainability advantages, cost competitiveness remains a critical hurdle, particularly when balancing material costs, scalability, and supply security. Here’s what stakeholders across the packaging value chain need to know to navigate this rapidly transforming landscape.

A booming market fuelled by macro trends

The moulded fibre packaging market is benefiting from a confluence of powerful macro trends:

• Sustainability mandates: Major brand owners are actively setting carbon reduction targets, aligning with Science Based Targets initiatives (SBTi), and committing to recyclable, renewable or reusable packaging by 2030.
• Zero-waste initiatives: From quick-service restaurants to large sporting venues, organisations are reducing waste footprints, favouring fibre-based alternatives over EPS (expanded polystyrene) and plastics.
• Consumer demand for “green”: Health-conscious, eco-minded consumers favour fibre packaging, reinforcing brand messaging tied to wellness and sustainability.

In North America, moulded fibre, particularly Type III applications, has experienced nearly double-digit growth annually over the past five years. This momentum is underpinned by growing demand in foodservice, retail, and consumer goods sectors.

Yet, while demand is strong, moulded fibre faces a persistent challenge: cost parity with plastics. Brand owners want sustainable solutions at a competitive price — a benchmark moulded fibre producers must meet to unlock full market potential. Cost reduction is the key for domestic moulded fibre producers to replace the lower value imports from China and Vietnam, which are now facing prohibitive anti-dumping and countervailing duties in the US market.

The fibre cost imperative

As shown in Figure 1, fibre procurement is the single largest input cost in moulded fibre packaging, accounting for approximately 30–35% of total production costs. This surpasses labour (15–20%), energy and packaging (each ~15%), and barriers/tooling (~10% each). Depending on the application, the cost of achieving barrier performance can significantly increase unit costs. Nonetheless, managing fibre costs and securing a reliable supply are, therefore, paramount.

Encouragingly, the global pulp market is undergoing shifts that could benefit moulded fibre producers. New large-scale and low-cost pulp capacity expansions in Latin America, particularly Brazil and Chile, are set to alter the supply/demand balance and apply downward pressure on wood pulp prices globally. In parallel, China’s growing eucalyptus pulp integration could reduce its pulp import needs, further influencing global trade dynamics.

These developments suggest that wood pulp prices, long a challenge for moulded fibre producers, may moderate over the medium term. Still, producers must remain vigilant by optimising procurement strategies, securing long-term contracts, and exploring integration opportunities that could offer cost advantages.

Wood vs non-wood pulp: the scalability challenge

While non-wood pulps such as bagasse, bamboo, and straw are touted for their sustainability benefits and are widely used in Asia, their cost competitiveness relative to wood pulp is complex.

Non-wood pulps offer several advantages:

• Rapid crop growth and multiple harvests per year
• Simpler pulping processes with less refining and bleaching
• Comparable fibre quality for moulded fibre applications

However, they also face significant disadvantages:

• Seasonality and geographic concentration increase logistical challenges
• Small-scale mills lack the economies of scale of wood pulp producers
• Higher ash content, variability in quality, and higher processing liquid requirements impact production efficiency
• Handling costs rise due to low bulk density and high transport volumes

In markets like North America, where wood pulp is abundant and efficiently produced, non-wood pulps often struggle to match competitive price points. For example, Brazilian bleached hardwood kraft pulp (BHKP) imports, which create a pricing benchmark globally, hover around USD 800/metric ton in the US, a target difficult for non-wood pulps to consistently meet, especially at scale.

While non-wood pulp producers might command a premium based on sustainability attributes, this alone may not offset inherent cost disadvantages. As such, moulded fibre producers must carefully evaluate furnish mix strategies to balance cost, quality, and performance, and assess regional supply chain realities, especially in the face of uncertainties created by US tariffs policies.

Pathways to competitiveness: the next-generation moulded fibre plant

To remain competitive and capture more market share, moulded fibre producers must broaden their approach beyond simply managing fibre costs. Our analysis at AFRY highlights that the most successful next-generation moulded fibre plants will combine scale, integration, automation and innovation to improve both cost structures and value propositions.

Scaling up production capacity offers significant advantages. Larger plants benefit from economies of scale, which lower unit costs while improving output consistency and operational efficiency. Alongside scale, optimising fibre procurement — whether through long-term supply agreements or vertical integration into pulp production — can stabilise input costs and reduce exposure to price volatility in open markets.

Automation will also play a crucial role. Investments in more advanced, automated equipment can enhance machine speed, reduce labour requirements, and increase overall throughput. These improvements help cut operational costs and boost competitiveness in high-demand markets.

Beyond operational efficiencies, innovation in tooling design can yield further gains. By improving precision and reducing waste, smarter tooling solutions not only lower production costs but also enhance product performance and quality. For certain product categories, developing dry-forming processes presents another opportunity to reduce costs, particularly by cutting energy and water consumption.

Currently, many moulded fibre plants in North America operate at relatively small scales, procure fibre externally, and have limited automation. By embracing these next-generation strategies — scaling operations, optimising fibre supply, advancing automation, and innovating production processes — moulded fibre producers can significantly strengthen their competitive position and narrow the cost gap with plastics, unlocking greater potential in fast-growing sustainable packaging markets.

The road ahead

Moulded fibre packaging stands poised to capture significant growth amid shifting regulatory, consumer, and market dynamics. But to realise this potential, producers must proactively manage input costs, scale production intelligently, and continuously innovate to meet evolving customer expectations.