Plastic Containers in US Projected Increase 4 Percent Annually
to 13 Billion Pounds in 2004 

Beverage Industry 1apr01

[ Statistic ]

As plastic containers continue to pick up speed in new categories, such as beer and alternative beverages, glass and metal packages keep in stride. In beer and assorted fruit juice packaging, plastic is slowly chipping market share from glass and metal, while it snaps up significant percentages from glass packaging of soft drinks, according to data provided by Salomon Smith Barney Research and the company's industry sources. And with demand for once glass- or metal-packaged products, such as beer, in outside venues, parks, concerts and events -- where glass packaging is often prohibited -- the ongoing developments in the plastic category have put new-to- plastic beverages in PET bottles. PET bottles join a lineup of glass and metal packages already in the coolers and beverage shelves, though glass and metal remain right there beside them.

Pouring into plastic

Overall, plastic container demand in the United States is projected to increase more than 4 percent annually to about 13 billion pounds in 2004, according to a report by The Freedonia Group Inc., Cleveland, Ohio. While these figures include various industries that show plastic penetrating applications in which glass, paperboard and metal are often used, the study reports that the popularity of smaller-sized bottles in markets such as soft drinks will significantly fuel unit gains. Plastic bottles are expected to log the most substantial growth, according to the study, accounting for 75 percent of all plastic containers by weight.

PET, still exhibiting the fastest growth, will continue to displace aluminum cans in the soft drink market, Freedonia reports, because of PET bottles' clarity, high-barrier properties, flexibility, competitive pricing and ability to be resealed. More opportunities are expected to appear on the horizon for larger, single-serve beverage and hot-fill food and beverage applications, as well as for areas such as milk and juice bottles in smaller sizes.

A study from Packaging Strategies and Business Development Associates called Aseptic vs. Hot-fill for PET shows aseptic filling in PET packaging making strides in production of juice and juice drinks, isotonic beverages, ready-to-drink teas and dairy-based beverages. The research shows that aseptic filling in PET could grow from the current 6 percent market share in specialty beverages to nearly 30 percent in 2004. Shifts in technology and differing consumer demands and expectations from PET packages will Likely have an impact and cause these estimations to rise.

By segment, PET bottles are making a statement across multiple beverage categories. PET has matured quickly in carbonated soft drinks, though the easy channel-filling days in convenience stores have ended, according to industry sources at Salomon Smith Barney.

Since PET bottles for beer first entered the market within the past two years, beer products have popped up in new venues and will likely continue to do so as consumer demand increases. Though not expected to significantly affect other packaging options, the traditional PET package extends its reach to provide oxygen barriers and heat stability for hot filling and/or pasteurization. And these bottles are only expected to be an introduction for consumers to the concept of beer in PET, as the technology progresses to create the perfect -- though not breakable -- bottle for beer.

According to Salomon Smith Barney 150 million units of beer were packaged in PET in 2000. While three times the figure reported in 1999, the segment was entirely new and now has the potential to take leaps and bounds as bottle-making procedures develop. The data forecasts 300 million units in 2001, but is still not enough to grab any market share from traditional beer industry package materials of glass and metal.

And while PET is growing overall -- in soft drinks and single-serve juices, in particular -- the beer segment is showing growth, but from a low absolute level. According to Salomon Smith Barney, estimates for total units of beer in PET are a challenging proposition. Category research shows a rough estimation of several hundred million PET containers being produced for beer bottling.

Metal contenders

Though PET has made inroads into new categories, metal has held tight to its reliable reputation in the eyes of manufacturers and consumers. In soft drink packaging, PET has made a real presence, but metal, too, has shown increasing rates of usage. Salomon Smith Barney data show an increase of 10 billion soft drink units produced in metal from 1992 to 2000. Having grown from 57.4 billion units to 67.4 billion units in eight years, analysts estimate 68.1 billion units in 2001.

However, since 1998 when metal packaging for soft drinks peaked at 69.4 billion units, almost 5 billion more than the year before, shipment figures show a slight decline for the following two years. But, metal still grabs the largest chunk of soft drink packaging, representing 74 percent market share, only 3 percent less than 1992 when metal grabbed 77 percent. These figures illustrate that while PET has taken share, it hasn't affected the demand for metal cans overall.

Industry sources from Salomon Smith Barney attribute the expected 1 percent growth in metal cans shipped for soft drinks to somewhat higher carbonated soft drink prices, though they foresee price increases leveling off soon.

For beer packaging, metal has declined, though only in the single digits. While 38.2 billion units of beer were shipped in metal in 1992, only 32.9 billion units were shipped in 2000. But in this category, too, analysts foresee a small growth for 2001, predicting 33.2 billion metal units. However, this growth, albeit a small one, is not expected to take share as glass figures increase as well, likely connected to growth overall in the beer category.

As for the size of the aluminum cans in demand, the standard 12-ounce beer can represents the majority of can sales. Of the total 33.4 billion units sold in 1999, 29 billion units of them were 12-ounce cans, according to data compiled by the Can Manufacturers Institute, U.S. Department of Commerce, and Business Trend Analysts.

While at one point, cans larger than 12 ounces were popular -- 6.1 billion units were sold in 1993 -- the over-sized cans have seen steadily declining sales, with only about 3 million units sold in 1999.

As consumers more often purchase and consume products away from home, growth has been shown in single-serve beverages, most often aluminum cans or PET bottles. But with this growth comes container waste because recycling options are not as convenient, according to the Container Recycling Institute. Based on a six-year study, CRI reports that beverage container waste increased at twice the rate of container sales, with aluminum and plastic waste growing dramatically as people consume and toss beverage containers while away from homes and offices.

But while there is a lot of metal packaging being wasted each year, data from the National Soft Drink Association and Business Trend Analysts reports 43.6 billion units of aluminum cans recycled in 1998, up more than 10 billion units since 1991. States with deposit programs have consistently higher rates, two to three times higher according to CRI, though some of these recycling rates are slipping overall.

As PET has continued to grow in volume, recycle rates have grown proportionately. Nearly four times the 2.8 billion PET bottles recycled in 1991, 8.4 billion units were recycled in 1998.

The glass is greener on the beer side

As the beer category shows growth and many higher-end products are offered in glass bottles, glass packaging is holding its own, and even making some strides. In 1992, 12.8 billion units of beer were shipped in glass, according to Salomon Smith Barney, and by 2000 there were 18.4 billion units shipped. Analysts predict a small growth for 2001 of 18.8 billion glass units. And while metal takes the highest percentage of share in the beer category, glass represents 36 percent share and has grown while metal has declined during the past eight years.

In the soft drink category, the forecast for glass is not quite so crystal clear, and it certainly is not green. As PET has taken on single-serve soft drinks, as well as other packages, glass has experienced large dips and now only accounts for 1.4 billion units in 2000. Compared with the 7.8 billion units in 1992, glass packaging has fallen from 10 percent share to 2 percent share of soft drink shipments.

Overall packaging shipments for assorted liquid food, fruit and fruit juices has fallen, as well, with only 8.6 billion units reported in 2000 and 8.2 billion expected in 2001, according to Salomon Smith Barney. In this broad-reaching category, as well as soft drink shipments, PET's advancement is recognizably taking share from glass packaging.

Juices, for the most part, according to analysts, have been converted to PET and other plastics, which accounts for declining food glass container shipments.

But not all beverages lend themselves to PET packaging, so the future for glass cannot be considered shattered. Many alternative beverages and higher-end beers are still opting for glass packaging, creating an image based on the substance of the bottle.

So as the beverage industry continues to grow and new products make their way to shelves and coolers, the packaging race continues. New technology, spurred by consumer demand and new marketing niches, will continually evolve the packaging arena as glass, metal and plastic packaging continue to compete.

Statistics

                   Single-serve juice & juice drinks

                                 in PET

                       Projected Unit Volume (MM)

                               2000-2004

                       Total hot-fill and aseptic

                                16-ounce

2000    600

2001  1,200

2002  2,000

2003  2,700

2004  3,100

Source: Packaging Strategies,

Aseptic vs. Hot-fill for PET

Note: Table made from bar graph

         Soft drink  Soft drink

         share 1992  share 2000

Glass           10%          2%

 Plastic          13%         24%

Metal           77%         74%

Source: Salomon Smith Barney

Note: Table made from pie chart

                        U.S. packaging shipments

                            by material Beer

                            (billion units)

         1992  1994  1996  1998  1999  2000  2001(E)

Glass    12.8  15.1  16.7  17.7  18.2  18.4     18.8

Metal    38.2  36.8  34.6  33.4  33.4  32.9     33.2

 Plastic                           0.05  0.15     0.30

Total    51.0  51.9  51.3  51.1  51.6  51.4     52.3

Source: Salomon Smith Barney,

industry sources

                           Beer in metal cans

                     (unit sales in million units)

         less than                   more than

      12-ounce can  12-ounce can  12-ounce can   total

1991            NA        35,621            NA  38,830

1993           707        30,695         6,129  37,531

1995           761        31,456         3,270  35,487

1997           968        30,102         3,130  34,200

1999         1,360        29,012         2,979  33,352

Source: Can Manufacturers Institute;

U.S. Department of Commerce;

Business Trend Analysts

                  U.S. packaging shipments by material

                Assorted liquid food, fruit, fruit juice

                               packaging

                            (billion units)

               1992  1994  1996  1998  1999  2000  2001(E)

Glass [*]      14.2  16.1  13.2   9.0   9.2   8.6      8.2

Metal [**]     12.5  12.2  11.6  11.7  12.1  11.6     11.8

 Plastic  [***]  11.4  13.4  16.1  18.8  20.3  22.3     24.2

Total          38.1  41.7  40.9  39.5  41.6  42.5     44.2

Source:Salomon Smith Barney, industry sources

(*.)total food containers

(**.)fruit/fruit juice cans

(***.)includes water, isotonics, milk and other liquid foods

               U.S. packaging shipments by material Soft

                                 drinks

                            (billion units)

         1992  1994  1996  1998  1999  2000  2001(E)

Glass     7.8   4.5   1.6   1.4   1.4   1.4      1.4

Metal    57.4  66.3  64.5  69.4  68.9  67.4     68.1

 Plastic    9.8  13.3  16.8  20.6  21.4  22.0     22.5

Total    75.0  84.1  82.9  91.4  91.8  90.7     92.0

Source: Salomon Smith Barney, industry sources