The Lund packaging factory will be absorbed by other factories in Europe.
"We've seen a drop in consumption of milk and juice, resulting in a significant drop in the need for packaging products," factory head Jerry Bengtson said, reported the TT news agency.
Most of the customers that the company provides for are in Europe, and not in Sweden.
As a result, production will shift to France, Spain, or Italy.
"Lund really pulled the shortest straw in this one, we have factories around Europe that serve our customers better," Bengtsson added.
The head of Tetra Pak's global packaging production, Lars Wennberg, said the move was "a difficult decision".
"It weighs even heavier when you think it all more or less started in Lund," he said.
It remains unclear what will happen to the 250 employees at the factory, however the jobs of the other 3,500 people employed by Tetra Pak in the area are not at risk.
Tetra Pak is a Swedish company founded in 1951. The heirs to the Rausing family fortune live in the UK, and consistently feature in lists ranking the world's wealthiest people.