Australia’s packaging sector is facing a perfect storm. The cost of materials, compliance, and consumer expectations are all rising at once, and the data shows that most businesses are not yet prepared for the regulatory changes coming into force. According to the Australian Packaging Covenant Organisation (APCO), as of 2023-24, only 86% of packaging is reusable, recyclable, or compostable, falling short of the 100% target set back in 2018. That gap matters because new mandatory standards are now on the horizon, and the cost of inaction is likely to be higher than the cost of compliance. Here’s what you actually need to know.
If you run a business that sources, designs, or packs products, these figures aren’t abstract. They represent a shift in how packaging will be regulated, priced, and perceived over the next few years. The rising overheads already straining small businesses are about to include a packaging line item that demands attention.
What the National Packaging Targets Actually Mean for Your Business
The National Packaging Targets were set in 2018 with ambitious goals for 2025. The 2023-24 data shows the industry is falling short across the board. The 70% target for plastic packaging recycling sits at just 20%. The 50% recycled content target is at 44%. These aren’t just policy failures — they’re operational risks for any business using packaging.
What I tend to notice is that businesses often treat these targets as someone else’s problem — something for the packaging supplier or the waste management company to solve. But the proposed mandatory Extended Producer Responsibility scheme would make the cost of packaging disposal a direct line item on your balance sheet. Modelling by MRA Consulting Group for APCO suggests a national scheme covering all materials could add between 0.5 and 1 cent to the cost of a product. That’s not huge, but it’s real, and it changes the economics of cheap, non-recyclable packaging.
For a deeper look at how compliance costs are reshaping business operations, the piece on understanding the costs of compliance for Aussie businesses covers the broader picture.
Why Packaging Costs Are Rising and What’s Driving the Shift
The cost pressure isn’t coming from one direction. It’s a convergence of regulatory change, consumer behaviour, and material economics. Inflation in Australia has stayed above the Reserve Bank’s 2–3% target range, keeping consumer confidence low and forcing brands to justify every dollar spent. Rather than raising prices, many are shrinking pack sizes — coffee dropping from 1 kg to 700 g, for example — to keep the price point accessible. Others are adding 10–15% extra volume to signal value.
At the same time, the regulatory environment is hardening. The collapse of the REDcycle soft plastics recycling scheme three years ago left a gap that is only now being filled, with Australia’s first large-scale soft plastics recycling facility opening in NSW in 2025. But the new mandatory packaging standards will require brands to use minimum recycled content and provide clear recycling instructions on labels. Most brands are waiting until the legal obligations kick in around FY27 before making changes, according to Daniel Malki, General Manager at Jet Technologies, even where recyclable structures already offer comparable performance and cost.
There’s also a structural problem with plastic itself. Virgin plastic is extremely cheap due to a global fossil fuel glut, making recycled pellets uncompetitive. Of the 1.3 million tonnes of plastic packaging generated in Australia each year, over 1 million tonnes still ends up landfilled or littered. The economics of landfilling plastic are simply more rational for many businesses than recycling it, given low collection density and cheap landfill fees. That’s the tension that regulation is trying to resolve.
If you’re looking for a practical tool to help track and manage your packaging compliance requirements, a packaging compliance management system can help centralise documentation and deadlines.
Where Businesses Get Packaging Strategy Wrong
Treating Sustainability as a Marketing Exercise
Many brands have added green claims to packaging without changing the underlying material. The data shows this approach is failing. Only 20% of plastic packaging is recycled, and 99% of flexible plastic — shrink wrap, chip packets, pallet wrap — is still sourced from virgin oil or gas. Consumers are increasingly sceptical of claims that aren’t backed by structural change. A recyclable label on a multi-polymer pouch that can’t actually be processed in Australian facilities doesn’t help anyone.
Ignoring the Economics of Recycled Content
The 50% recycled content target is at 44%, which sounds close. But the gap is harder to close than it looks because virgin plastic is so cheap. Imported recycled pellets are often more price-competitive than domestic ones, but they don’t help build the local recycling infrastructure Australia needs. Businesses that wait for recycled content to become cheaper before switching may find themselves scrambling when mandatory minimums arrive.
Sticking with Long Print Runs for Short-Lived Products
The trend toward high-protein, wellness, and performance products means more SKUs with shorter shelf lives. Some products only stay on shelves for months. Traditional print methods require long runs to be cost-effective, which means either overproducing packaging that becomes obsolete or paying a premium for small batches. Digital print solves this, but many businesses haven’t adjusted their procurement strategy to match the new product cycle.
Underestimating the Timeline
Most brands are waiting until FY27 to act on recyclable structures. But the regulatory groundwork is being laid now. The mandatory recycling labelling requirements and minimum recycled content thresholds won’t appear overnight — they’ll be phased in, and early movers will have an advantage in supply chain relationships and consumer trust. Waiting until the deadline means competing for limited supplier capacity and paying a premium for rushed changes.
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| Target | 2023-24 Result | Gap |
|---|---|---|
| 100% reusable, recyclable, or compostable | 86% | 14% |
| 70% plastic packaging recycled | 20% | 50% |
| 50% recycled content | 44% | 6% |
One of the most consequential mistakes I see is treating packaging as a fixed cost rather than a strategic variable. The businesses that will navigate this period best are the ones already experimenting with digital print, recyclable materials, and pack-size flexibility. A packaging design software tool can help you prototype new formats without committing to expensive print runs.
How to Prepare Your Business for the Packaging Transition
Heads up — some links on this page may earn me a small cut if you buy something. Doesn’t change the price for you, and I only link stuff that’s actually relevant.
Audit Your Current Packaging Against the New Standards
Start by mapping every packaging component you use against the three pillars of the new regulations: recyclability, recycled content, and labelling. The APCO data shows that 86% of packaging is already reusable, recyclable, or compostable, so you may be closer than you think. But the plastic component is where the gap lives. Identify which of your packs use multi-polymer laminates or composite materials that can’t be processed in Australian facilities. Those are the ones that need redesigning first.
Switch to Digital Print for Short-Run SKUs
If your product range includes limited-edition flavours, seasonal lines, or wellness variants that change frequently, digital print is worth a serious look. It allows you to scale production up or down without the cost burden of traditional print methods. You can update artwork, add QR codes for interactivity, and test new formats without committing to thousands of units. The upfront cost per unit is higher, but the total cost of waste and obsolescence is often lower.
Build Recycled Content Into Your Supply Contracts
The 50% recycled content target is achievable — the data shows the industry is at 44% — but it requires intentional sourcing. Start specifying minimum recycled content in your packaging procurement contracts now, even if the legal requirement is still a year or two away. This sends a demand signal to suppliers and gives you time to qualify new materials. It also positions you ahead of competitors who will be scrambling for the same limited supply of recycled feedstock when the mandate kicks in.
Prepare for the Cost of EPR
The modelling suggests a mandatory EPR scheme would add 0.5 to 1 cent per product. That’s manageable, but only if you’ve already optimised your packaging for recyclability. If your packaging is complex or non-recyclable, the cost under an EPR scheme will be higher because you’ll be paying for disposal rather than recovery. The ACOR and APCO report estimated the cost at 0.1% of the cost of sold packaged items — negligible for most businesses, but only if the packaging is designed for the system.
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1Audit your packaging against the three pillarsMap every component against recyclability, recycled content, and labelling requirements. Identify multi-polymer and composite materials that can’t be processed locally.
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2Switch short-run SKUs to digital printReduce waste and obsolescence by using digital print for products with short shelf lives or frequent artwork changes.
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3Specify recycled content in procurement contractsStart now to build demand signals and qualify new materials before the mandate arrives.
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4Model the cost of EPR for your product rangeCalculate the per-unit cost impact of a mandatory scheme and identify which products need redesigning to minimise that cost.
For businesses that need to track multiple compliance deadlines and material specifications, a compliance tracking software tool can help keep everything organised.
Frequently Asked Questions About Packaging Costs and Compliance
When do the new mandatory packaging standards take effect? ▾
Will a mandatory EPR scheme increase my product costs? ▾
What’s the difference between recyclable and recycled content? ▾
Can I still use soft plastics in my packaging? ▾
How do I know if my packaging is compliant now? ▾
What happens if I don’t meet the targets? ▾
The Packaging Transition Is Already Underway — Don’t Wait for the Deadline
The data is clear: the voluntary approach hasn’t worked. Only 20% of plastic packaging is recycled, and over a million tonnes goes to landfill every year. The mandatory standards coming in FY27 will change the economics of packaging for every Australian business. The businesses that start auditing their materials, switching to digital print, and specifying recycled content now will have a clear advantage over those that wait until the legal obligations arrive. The cost of acting early is manageable. The cost of waiting is a scramble for limited supply and a higher bill under EPR.
If this was useful, you might also want to read navigating Australia’s business challenges amid global market volatility.
Sources and Further Reading
Rising overheads strain small businesses across Australia — A broader look at how cost pressures are affecting Australian businesses beyond packaging.
Understanding the costs of compliance for Aussie businesses — Explores the regulatory landscape and what compliance really costs.
APCO (2025). Australian Packaging Consumption and Recovery Data 2023-24. 🔗
ACOR and APCO (2025). Securing Australia’s Plastic Recycling Future. 🔗
Food Processing Australia (2026). What’s on trend for the packaging sector in 2026. 🔗
Inside Waste (2026). The case for packaging reform in 2026. 🔗
