The prototype is made by a Danish company from an extra-strong paper shell that still contains a thin plastic liner.
But the goal is to create a 100% recyclable, plastic-free bottle capable of preventing gas escaping from carbonated drinks.
The barrier must also ensure no fibres flake off into the liquid.
That would pose a risk of altering the taste of the drink - or potentially fall foul of health and safety checks.
But industry giants are backing the plan. Coca-Cola, for example, has set a goal of producing zero waste by 2030.
Coca-Cola was ranked the world's number one plastic polluter by charity group Break Free From Plastic last year, closely followed by other drink-producers Pepsi and Nestle.
The Paper Bottle Company, or Paboco, is the Danish firm behind development of the paper-based container.
Part of the challenge has been to create a structure capable of withstanding the forces exerted by fizzy drinks - such as cola and beer - which are bottled under pressure.
On top of that, the paper needs to be mouldable, to create distinct bottle shapes and sizes for different brands, and take ink for printing their labels.
After more than seven years of lab work, the firm is now ready to host a trial in Hungary this summer of Coca-Cola's fruit drink Adez. Initially, this will involve 2,000 bottles distributed via a local retail chain.
But it is also working with others.
Absolut, the vodka-maker, is due to test 2,000 paper bottles of its own in the UK and Sweden of its pre-mixed, carbonated raspberry drink.
And beer company Carlsberg is also building prototypes of a paper beer bottle.