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SPECIAL REPORT: Metal packaging

New applications hold the key to putting the excitement back into metal packaging, says James Maddock packaging analyst at Euromonitor International.

Despite trailing only glass in popularity, metal packaging in alcoholic drinks is dependent on the global performance of beer. Approximately 95% of  global metal alcoholic drinks units contain beer, and the good news is that, according to new data published  by Euromonitor International on 10 November, metal packaging for the product is expected to grow at a CAGR of 2.2% over 2014-2019, a faster rate than was seen over the 6-year period up to, and including, 2014.

Metal rumbles on unchanged

The projected CAGR for metal packaging in alcoholic drinks as a whole is also 2.2%, matching the performance of glass, but representing something of a lager-laced stumble when compared to the faster-growing materials like paper-based containers and liquid cartons. Furthermore, a lack of dynamism across all metal pack types means that metal will remain reliant on cans for over 99% of its total units. Metal may be due to deliver steady growth, but just like the inebriate with a predilection for the sound of his own voice, the story stays the same. This article will lay out the forecast performance of metal while focusing on the ways in which tradition and preference can be the catalyst for growth.

Euromonitor International expects the year-on-year performance over 2014-2019 to translate into an additional 12 billion metal units across alcoholic drinks. Unsurprisingly, all four of the BRIC nations will be among the biggest contributors, while Latin America’s increasing thirst for beer sees the smaller nations of Peru and Colombia also adding a good number of units. China and Brazil will account for around a quarter of global growth each, with the traditional strengths of metal being supplemented by social preference.

Local preferences drive global performance

In Brazil, the smaller 350ml can is king, perhaps helped by its suitability to warm climates. However, metal manufacturers have profited from the rise of the 473ml size, a better fit with the Brazilian desire to open, decant and share beer among companions. This is evidenced by the fact that the 600ml bottle is the most popular glass option in the country, due to its ability to provide for three or four drinkers. By offering consumers the opportunity to take advantage of the lightweight metal can without compromising their social preferences too greatly, metal cans are expected to strengthen their grip on the valuable Brazilian beer market.

Conversely, a move away from beer sharing to more isolated consumption is powering metal can growth in China. In a country where per capita consumption lags far behind that in Europe and the Americas, Chinese individuals are displaying a preference for the 330ml can. Brand owners may wish to transfer purchasers to the larger cans more commonly seen in Europe, but, at present, the 330ml size is striking a chord in a nation that doesn’t have quite the beer tradition some others do. As these two emerging markets see impressive growth, the US will be the biggest casualty, with declining beer volumes forcing down the number of packaging units. As ever, packagers cannot escape the effects of product performance – demand for metal units is expected to contract by nearly half a billion.

Distinguishing between premium and economy

If we move away from the geographical opportunities and look at the fortunes of metal packaging at product level, the dichotomy between cans and bottles – both of which traditionally compete with the glass bottle – becomes clear. Typically, metal bottles are used to promote a premium or luxury image, while the can is favoured for its economy in both weight and size, although there will always be instances where alcoholic beverages may be packaged in a way that seems counter-intuitive. For example, the premium, lovingly-made craft beer and the unfussy metal beverage can may seem an odd marriage, but, through careful size differentiation and strong communication of brand message, cans have been adopted by craft beers. This strategy helps producers to retail their goods at prices that aren’t as dizzyingly high as their alcohol content can often be.

In light of this distinction, wine will be an interesting category to watch. New product launches in 2014 have seen brand owners move into both cans and bottles, with differing aims for each. For example, Wine Not is a new Polish brand introduced in 200ml cans, targeted at a younger demographic, who may be more open to the idea of purchasing wine in smaller, single-serve doses. The product resembles many of the spirit-based RTDs that have been so successful with drinkers seeking an easy, single-serve beverage, and this may be an advantage in trying to attract this consumer base. Away from cans, metal bottles are the other viable option for wine, although alternatives to glass that have seen the greatest success are those that provide greater sizes or economy in exchange for a move away from the traditional format. Wine’s relationship with metal is not a simple case of premium or economy image, but rather one of altering both purchasing and drinking habits. If customers can be successfully moved onto smaller retail sizes, the opportunities for metal grow significantly.

Outperforming beer should be the target

The bottom line is that, presently, demand for metal packaging hinges on the demand for beer, and an evaluation of performance must consider this. As beer is expected to grow at, or slightly above, the rate of both wine and RTDs, metal manufacturers needn’t worry about a sharp decline in global usage. However, local culture and a move away from beer in the developed regions of North America and Western Europe will see a geographical diversification of the need for metal. In order to outperform both the forecast and the performance of beer, metal packagers need to grow their presence in alternative products. Embracing and encouraging new patterns of consumption in areas such as wine could be an effective way to grow presence, although the remoulding of cultural practices is no easy task. To a degree, seeking expansion in this way will also allow manufacturers to circumvent long-established rhetoric over the value of metal bottles and cans versus glass alternatives.

17 November 2014 - James Maddock Euromonitor International, packaging analyst