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What Packaging Really Costs: A Conversation with Bhavuk Chawla
Packaging often appears to be one of the more predictable costs in a supply chain. It is not. The paper, board, plastic resin, aluminum, films, adhesives, inks, and other materials used across consumer packaging can move in price with the volatility of commodities. Their costs are influenced by Crude ,Demand & supply , capacity, energy prices, recovered material availability, freight, tariffs, and changing regulatory requirements.
Even a modest movement in material costs can have a significant financial impact on a company purchasing packaging at scale. The challenge becomes more complicated when several formats are involved, from corrugated cases and folding cartons to flexible films, labels, closures, and rigid containers. A price change in one material may also shift demand toward another, creating cost pressure across the broader packaging portfolio.
Bhavuk Chawla has spent more than 13 years on the buying side of that problem. A procurement leader who began his career in packaging development and contract manufacturing within fast-moving consumer goods, he has negotiated large paper, board, and flexible-packaging contracts and rebuilt supply networks across North America. He is also a member of the Institute of Packaging Professionals.
His work sits at the point where movements in commodity prices, supplier capacity, and transportation costs become real numbers on a profit-and-loss statement.
We spoke with Bhavuk about why packaging costs are so difficult to pin down and what procurement teams can actually do about them.
Hi Bhavuk, thanks for joining us. Most people treat packaging as a fixed line item. Why is that misleading?
Hi, thanks for having me. I would say because almost nothing underneath packaging is truly fixed. Paper and board track pulp, recovered fiber, energy, and freight. Plastic resin follows oil prices, petrochemical markets, and production capacity. Aluminum is tied to global commodity markets. Even inks, adhesives, coatings, and labels are affected by their own material and energy inputs.
When any of these factors move, the cost of the finished package can move with them, sometimes within a single quarter. A company may also be buying many different formats, each with its own cost drivers and supplier dynamics.
What makes the situation harder is the timing. Material price increases can arrive quickly and be announced across the supplier market in waves, while negotiated savings may take months to implement. A packaging category can therefore look controlled on paper while still losing margin because input costs are repricing faster than contracts can be adjusted.
Treating packaging as a stable line item is how companies get surprised.
You have spent years negotiating these categories. What taught you where the real advantage lies?
The advantage comes from understanding cost better than the person selling to you.
Early in my career, I managed large flexible and paper-based packaging tenders where certain suppliers had held the business for years and priced it like a black box. Once you can model what a package should cost, including the substrate, conversion process, waste factor, tooling, overhead, and freight, the conversation changes.
You stop arguing about a percentage reduction from last year’s price and start discussing what the package should reasonably cost to produce.
That understanding also creates competition. When suppliers see that you understand their cost structure and have a credible alternative, incumbents tend to sharpen their pricing quickly. I have moved significant volumes between suppliers, not because supplier churn was the goal, but because the possibility of a genuine switch is often what resets the commercial relationship.
Comfortable suppliers rarely offer their most competitive position. Contested suppliers are more likely to do so.
How do you build an accurate cost picture across different packaging formats?
It begins with a should-cost model, which is a bottom-up estimate of what a package should cost to manufacture once you separate necessary production costs from supplier margin and inefficiency.
The model typically breaks the price into raw material, conversion, tooling, scrap, overhead, and logistics. Each component is then compared with public indices, historical purchasing data, supplier information, and operational benchmarks.
The objective is not to produce a flawless number. Packaging specifications, equipment, order quantities, and plant economics vary too much for that. The objective is to develop a defensible estimate that can be placed on the table during a negotiation.
When a supplier submits a quote, you can then identify which changes are supported by the market and which parts require further explanation.
The model also has to reflect the specific packaging format. A corrugated case is heavily influenced by containerboard and freight. Flexible packaging may depend on resin, film structure, printing complexity, lamination, and minimum production runs. Rigid packaging can be shaped by resin or metal prices, molds, line efficiency, and transportation density.
A single top-level inflation assumption does not capture these differences.
How important is the broader supply market to that analysis?
It is essential because the ground underneath the model is constantly moving.
On the fiber side, for example, nearly 10% of US containerboard capacity was permanently removed between early 2025 and early 2026 as mills chose to close rather than continue operating in a soft market. Reduced capacity can give producers more room to increase prices even when demand remains uneven.
Similar structural changes can occur elsewhere in packaging. Resin production interruptions can tighten film supply. Energy prices can raise the cost of glass and aluminum production. Transportation constraints may affect bulky or lightweight packaging disproportionately because companies are effectively paying to move volume rather than weight.
A cost model that ignores these structural developments may be mathematically sound but commercially outdated.
Where does the model become least reliable?
It becomes most difficult when the market moves faster than the contract.
You can negotiate a strong agreement and then watch the relevant material index move in the opposite direction a month later. Volatility works both ways, and procurement cannot negotiate its way out of a genuine supply shock.
For example, North American containerboard output fell around 8% year over year in early 2026. When production declines after capacity has already been removed, some price pressure stops being fully negotiable. The organization has to manage the exposure instead.
The same principle applies across other materials. If a plant closes, a feedstock becomes scarce, or a major transportation route is disrupted, the theoretical should-cost number may no longer reflect what suppliers can deliver in the short term.
The model is still useful, but it must be combined with market intelligence, supplier capacity information, and risk planning.
What is the biggest contracting mistake companies make during a favorable market?
They chase the lowest immediate number without considering whether the agreement can survive the next cycle.
I have seen, and made, the mistake of locking in an attractive price during a soft market without enough protection for what happens when conditions turn. A price that looks excellent at the bottom of a cycle can become a liability at the top if the agreement has no index mechanism, no risk-sharing structure, and no practical exit or renegotiation path.
The harder discipline is leaving a negotiation with a commercial structure that can withstand volatility. That might include clearly defined index adjustments, review periods, price caps or floors, transparent material pass-throughs, dual sourcing, or volume commitments linked to performance.
Those provisions may be less exciting than presenting a large headline saving for the current quarter. Over the life of the agreement, however, they are often far more valuable.
Does packaging design itself affect procurement’s ability to control costs?
Absolutely. A large portion of packaging cost is determined before procurement begins negotiating.
Material selection, dimensions, printing requirements, barrier properties, decoration, production tolerances, and pack-out configuration all influence the supplier’s cost. If those decisions have already been finalized, procurement may only be able to negotiate within a narrow range.
That is why procurement needs to participate earlier in packaging development. The best cost opportunity may not come from asking a supplier to lower its margin. It may come from reducing material weight, simplifying the structure, improving pallet utilization, standardizing specifications, or removing a feature that adds complexity without adding meaningful value.
This does not mean lowering quality. It means understanding which features are essential to product protection and customer experience, and which ones are simply inherited from previous designs.
You also judge industry awards outside your primary role. Does evaluating other people’s work change how you approach procurement?
It does, more than I expected.
I judge for the Globee Awards, which involves reviewing submissions where teams explain what they achieved and how they achieved it. You quickly learn to distinguish a measurable result from a well-written story about one.
The strongest entries show their work. They identify the baseline, explain the method, provide the result, and support it with evidence. Weaker entries tend to rely on adjectives.
That habit carries directly into procurement. When a supplier or internal team presents a claim, I ask the same questions a judge would ask: What was the starting point? What exactly changed? How was the result calculated? How do we know the outcome came from that intervention?
Most cost debates become difficult because the parties never agreed on the baseline. Judging trained me to insist on that before evaluating the claim itself.
You bring a research-minded posture to procurement. Where does that come from?
It is partly temperament and partly training. I am a member of Sigma Xi, the scientific research honor society, and that mindset influences how I approach a category.
You form a hypothesis about where the cost and risk actually sit, and then test it against evidence rather than assumption. Procurement contains a great deal of received wisdom. One supplier is assumed to be the cheapest. One region is considered unreliable. One material is believed to be more sustainable or cost-effective.
Many of those assumptions do not survive contact with current data.
The field is beginning to recognize this. Packaging was traditionally considered near the end of the process, after many product and operational decisions had already been finalized. It is now moving earlier because material selection affects cost, product protection, carbon impact, manufacturability, logistics, and supply risk simultaneously.
Those decisions should be tested with evidence rather than repeated out of habit. Buyers who treat their categories as continuing research problems are less likely to be surprised by their own cost base.
Where is packaging procurement heading, and what should companies prepare for?
It is partly temperament and partly training. I am a member of Sigma Xi, the scientific research honor society, and that mindset influences how I approach a category.
You form a hypothesis about where the cost and risk actually sit, and then test it against evidence rather than assumption. Procurement contains a great deal of received wisdom. One supplier is assumed to be the cheapest. One region is considered unreliable. One material is believed to be more sustainable or cost-effective.
Many of those assumptions do not survive contact with current data.
The field is beginning to recognize this. Packaging was traditionally considered near the end of the process, after many product and operational decisions had already been finalized. It is now moving earlier because material selection affects cost, product protection, carbon impact, manufacturability, logistics, and supply risk simultaneously.
Those decisions should be tested with evidence rather than repeated out of habit. Buyers who treat their categories as continuing research problems are less likely to be surprised by their own cost base.
Where is packaging procurement heading, and what should companies prepare for?
Companies should prepare for more volatility, more complexity, and greater scrutiny of every packaging input.
The global packaging market is projected to approach $1.75 trillion by 2035. A growing share of that spending will also be influenced by sustainability and regulatory requirements that were previously voluntary or limited to certain markets.
Recycled-content requirements, recyclability expectations, restrictions on certain materials, extended producer responsibility programs, and deforestation rules affecting fiber can all create new cost variables. They can also limit where, how, and from whom companies buy.
The old model of selecting the cheapest quote and solving the remaining issues later is no longer sufficient.
The role of procurement is shifting from negotiating an individual price to engineering a cost position that remains resilient. That means owning the should-cost picture, participating earlier in packaging design, building index mechanisms and risk-sharing provisions into contracts, and maintaining enough supplier competition to avoid becoming captive.
The goal is not to eliminate volatility because that is impossible. The goal is to prevent it from catching the organization unprepared.
If I can see the potential movement, understand its effect across the packaging portfolio, and build contracts and supplier options that can absorb it, then a changing price is simply part of the market. It becomes a crisis only when the organization was not ready for it.
