Stumbling blocks

High energy costs, a loss of key sales markets in Eastern non-EU countries, and general economic headwinds have been undermining the investment appeal of the metal packaging industry in Eastern Europe over the last six years. Market players acknowledge that the region can no longer be perceived as a low-cost production destination – meaning that a factor that has driven industry development for the past few decades is no longer in play.

The last several years have been highly challenging for Eastern Europe’s aluminium industry, including the packaging segment, Andy Doran, director of packaging at European Aluminium, told CanTech International. “Energy costs surged after Russia’s invasion of Ukraine, and in countries in Eastern Europe, the shock has been particularly severe,” Doran admitted.

In recent years, the metal packaging industry in the region has been riding a rollercoaster ride, agreed Knuts Bude, technical director with Gamma-A, a Latvian steel can manufacturer. During the Covid-19 pandemic, the industry experienced a disruption in the supply of tinplate from China, and when the war in Ukraine broke out, energy costs skyrocketed, Bude recalled.

The impact of the European energy crisis was particularly severe in the Eastern part of the continent, as local economies traditionally relied heavily on Russian energy imports. In 2021, Latvia sourced 92% of its natural gas supplies from Russia, Serbia -89%, Bulgaria – 79%, Slovakia 68%, Hungary – 61%, Slovenia 60% and Poland 50%. “At the peak of the crisis, we had to recalculate our operational costs every week,” Bude said. “The impact was very strong.”

The crisis has shaken Eastern Europe’s status as a low-cost destination. Energy prices, while down from 2022 highs, remain above pre-crisis averages, Ismail Sutaria, packaging market researcher at Future Market Insights, told CanTech International. “In the first quarter of 2024, European gas averaged 55% higher than the 2016–2020 baseline,” Sutaria said, adding that the energy crisis has coincided with a fundamental transformation of the local labour market, as a result of which the gap in labour costs with Western European countries traditionally high has been seen narrowing.

“Labour costs are rising sharply, and wages increased more than 10% year-on year in Poland and Hungary in early 2025. Yet the absolute labour cost in Central and Eastern Europe (CEE) remains well below the EU average of €33.5 per hour,” Sutaria added.

Refocusing foreign trade

Not all metal packagers in Eastern Europe have been impacted to the same extent, Bude said. “The scale of impact depends on who you ask. The companies primarily focusing on meeting demand in the local market see their order book diminishing, and have to downsize their operations,” Bude said.

Gamma-A, which was largely focused on manufacturing tin cans for the fish industry, has also had to scale down its business in recent years. In the Baltic countries and Poland, steel can manufacturers have also seen their business hampered by a fish industry crisis, as the population of commercial fish species in the Baltic Sea has been seen dwindling in recent years.

During the communist era, Baltic countries supplied fish cans to the entire Soviet Union. This trade continued to exist even during the period of independence, but came to a halt a few years ago due to environmental reasons. Additionally, companies that previously exported their products to Russia, Belarus and Kazakhstan were also severely impacted. Russia “was a big market, and then one moment it was all gone,” Bude admitted.

On the flip side, metal packagers that have been focusing on exporting their products to other parts of the world are doing quite well, Bude stated.

Credit: Gamma-A

While metal packagers in EU countries operate on a single market, significant regional differences between Eastern and Western Europe persist, as evidenced by local players. As Bude explained, most of the existing metal packaging facilities in the region are relatively new, since they were launched in the decades following the collapse of the Communist camp.

“Differences [with Western Europe] are visible in plant profile, consumer behaviour and policy timing. Eastern Europe hosts newer, larger, export-oriented facilities, Ball’s Pilsen plant and Canpack’s Bydgoszcz expansion are prime examples, while Western Europe has a denser but older network clustered near major brand owners,” Sutaria said.

In the steel can manufacturing segment, the situation is slightly different, as Bude revealed. Most of the existing plants are new, but they are smaller compared to those in Western Europe. “Market habits also diverge: cans have penetrated beer consumption more deeply in parts of CEE, with Poland crossing the 55% can share threshold in 2024, and energy drinks driving further growth,” Sutaria added.

Opportunities remain

In spite of the turbulence of the last several years, Eastern Europe offers a narrower but still material cost advantage compared to Western Europe,
Sutaria said. In particular, this is seen by several new projects kicked off in the aluminium packaging segment.

Eastern Europe has attracted fresh capacity: Ball opened a high-volume can plant in Pilsen in the Czech Republic in 2023; Canpack approved a PLN 440 million ($120 million) investment in Bydgoszcz, Poland, in 2025 to add more than one billion cans annually; and Ball’s Lublin can-end facility remains among the largest globally. Crown’s Slovakian hub continues to serve strong regional demand, Sutaria noted.

Canpack is currently expanding its aluminium can factory in Bydgoszcz, which has been operating since 2001. The output will increase by 50% to one billion cans per year.

However, the turbulence of the last several years has also taken a toll on Canpack’s investment plans. Before the energy crisis unfolded, Canpack considered building a plant that would process aluminium from used cans – melting it into scrap, removing exterior and interior paint, Małgorzata Podrecka, vice president of Canpack, revealed in an interview with local publication, XYZ.

“At the time, the cost was at least $1 billion, possibly more. I wondered if Poland could be an interesting location for such an investment,” said Podrecka. “This was before the outbreak of the war in Ukraine. Russia restricted aluminium
exports at the time, claiming it had to satisfy the domestic market. This was before the introduction of the carbon tax, which was intended to protect the European market from external competition, as it was subject to less stringent regulations on limiting carbon dioxide emissions.”

It could be a perfect moment to invest and reap the benefits, Podrecka said, admitting that the factor of soaring energy costs comes into play. “Unfortunately, such a project would require access to energy at reasonable prices. This is a problem in Poland, and it remains unresolved. Because of this, Poland may be losing out in the race for new strategic investments,” Podrecka said, adding that this is a problem that requires broader discussions.

Level playing field

However, when it comes to maintaining competitiveness, metal packaging manufacturers and Eastern and Western Europe are on the same boat, European Aluminium’s Doran said.

The real challenge is that Europe’s competitive strengths are being undermined by structural disadvantages that companies cannot solve alone. “What’s needed now is a level playing field. At the EU level, that means tackling carbon leakage and unfair trade practices, and stopping the record outflow of scrap that our recyclers depend on with an erga omnes export measure,” Doran noted.

National governments, including in Eastern Europe, in their turn, need to ensure affordable energy and support investments in circularity, Doran continued.

The agenda in the metal packaging industry is being set by three structural forces: circularity mandates, carbon pricing and targeted capacity expansion, Sutaria pointed out.

“The EU Packaging & Packaging Waste Regulation (PPWR), effective from August 2026, mandates outcomes such as 90% separate collection of single-use beverage containers by 2029. This favours metals, which already have high
recycling rates and established infrastructure,” Sutaria said.

In addition, CBAM will start charging in 2026, impacting aluminium and steel imports and nudging buyers toward lower-emissions EU and Central and
Eastern Europe suppliers. “The investment profile will be selective new high-speed beverage-can lines near growth markets, combined with consolidation in closures and food cans. In parallel, deposit-return schemes going live across the region will improve scrap flows and reinforce the “circular can” narrative,” Sutaria said.

According to Sutaria, demand will continue to be anchored by beer but increasingly supplemented by energy drinks and ready-to-drink beverages.
No other region comes close to EU recycling performance – with beverage can recycling rates above 75% and growing, including in Eastern Europe – or to the investments the EU are making in decarbonisation.

“These are competitive advantages that are only becoming more important as brand owners and consumers demand truly sustainable packaging,” Doran added. “Companies themselves are already investing heavily in decarbonisation and innovation, but to do so at scale, they need the right
policy framework and investor confidence.”

“Overall, Eastern Europe is transitioning from being viewed primarily as ‘cheap capacity’ to being recognised as a modern, compliant and strategically aligned production hub for the EU market,” Sutaria concluded.