Niche future for pouches

Is the pouch a promising packaging format for alcoholic drinks? Is it realistic to expect any dramatic growth for pouches in the sector between now and 2017?

Karine Dussimon Euromonitor International

One might say no, it is not. In 2013, pouches played only a minor role in the global alcoholic drinks packaging market and one can hardly imagine the format’s volumes coming even remotely close to those of glass bottles or metal beverage cans. Despite this, and admittedly starting from a low unit volume base, the pouch format has proved over late 2012 and early 2013 that it can carve itself a niche in certain growth areas in what is a rather conservative industry, with the US leading the way. Aside from the weak progress made in wine, pouches have soared in the US as a convenient packaging solution for RTDs, while the format has also made a similar appearance in the UK. But exactly how promising is its growth performance?

Volume gains restricted to RTDs in the US

In 2013, pouches had limited application within the global retail alcoholic drinks market. The challenges for the pouch in this industry are manifold, primarily encompassing consumer quality expectations and etiquette in wine, technical compatibility with product content (for example in beer) and even in some cases government policy being against economy products and packaging in an effort to reduce alcohol consumption, such as in Turkey.

The US held almost all of the pouch’s volume demand in 2012, holding a 96% share of global retail consumption. In the US, the pouch has managed to carve itself a space in the RTDs category, which accounts for 85% of US pouch volumes. Frozen cocktails, such as margaritas and daiquiris, offered by brands such as Daily’s and Cordina in 187ml and 296ml pouches, experienced sharp growth. In this category, the pouch essentially turns a frozen beverage into an instantly ready-to-drink product; a concept which appeals to young adults not only due to the hot climate in certain regions of the US but also because of American’s predisposition to accepting products and packaging perhaps deemed unorthodox.

Ability to appeal elsewhere

Over 2012-2017, the bulk of unit volume gains will therefore likely be realised in the US, and very much so in RTDs. But that is not to say that pouches cannot make noticeable progress in another category or another country or region. In the case of RTDs for example, the recent concept of the single serve, RTD frozen cocktail is marked in 2013 in the UK by the brand launch of Parrot Bay releasing a new range of flavours in a 250ml “freeze and squeeze” pouches. This launch is clearly seasonal in the UK and corresponds with summer’s hotter temperatures; yet also shows that the pouch RTD can expand its presence beyond the US.

Even if from a low unit volume base, one must also not ignore the role of the larger, 1.5 litre pouch which mainly features in still light grape wine. It often enables a producer to compete against the glass bottle on the economy price platform, and even against the bag in box as a less bulky pack solution to carry and to store. Such pouches will likely continue to make inroads in the US and in France by leveraging these benefits. The 1.5 litre pouch may even have a future in Spain, where consumers are very familiar with economy RTD-type beverages such as sangria, tinto de verano and shandy sold in bigger sizes and in non-glass packaging, predominantly liquid cartons. Last year, MTC Bebidas selected the 1.5-litre pouch for its Lafiesta sangria.

It would be unrealistic to expect any dramatic growth for pouches in alcoholic drinks to 2017. The format can, however, be expected to still find niches in which it can enable a product to be consumed differently and, as in the case of RTDs, generate value growth.

6 November 2013