Innovation in Drinks

Packaging: A Global Insight Dominic Cakebread

Director of Packaging Services

7 April 2011, The Royal Statistical Society, London

DRINKSPACK’11

1. About Canadean

2. Global Beverage Packaging Market Overview

3. Current Drivers of Beverage Packaging Innovation

4. Examples of Beverage Packaging Innovation

AGENDA

1. ABOUT CANADEAN

The Leading Global Beverage Research Company

More than 130 Staff & Consultants Worldwide

Founded 1973, dedicated to Beverage & Allied Industries

In September 2010 joined Progressive Digital Media Group

BACKGROUND

SOFT DRINKS

BEVERAGE

PACKAGING

ALCOHOLIC

DRINKS

DAIRY DRINKS

LIQUID

FOOD

PACKAGING

LIQUID FOODS

REPORTS & PUBLICATIONS

WISDOM DATABASE

CONSULTING

FOCUS & SERVICES

SPECIAL REPORTS

• Innovation in Beverage Packaging, October 2010

• Innovation in Beverage Closures, February 2011 .

GLOBAL BEVERAGE PACKAGING DATABASE

All Market data is derived from our „Global Beverage Packaging

Database‟, which is updated every year and analyses soft drink, beer,

dairy drinks demand in 50 countries worldwide

KEY INFORMATION SOURCES

2. GLOBAL BEVERAGE PACKAGING

MARKET OVERVIEW

ECONOMIC TRENDS

• Fluctuating economic, demographic and consumer trends are the primary drivers of

underlying beverage and hence beverage packaging trends

Over the longer term rising real incomes have fuelled increased demand for all

beverages, beverage packaging and a widening array of products & brands

DEMOGRAPHIC TRENDS

At a global level the key demographic trends driving long-term change in packaging

design are:

Changing life, work and consumption patterns

Ageing population in developed countries

Increased share of smaller and single-person households

Faster growing, younger populations in many developing countries

MACRO-ECONOMIC INFLUENCES

CONSUMER TRENDS

• Both economic and demographic trends influence on consumer trends by increasing

demand for more product choice, convenience and packaging

• The key long-term drivers influencing global beverage packaging in this respect are:

• Growth in „grey‟ purchasing power

• Burgeoning middle class in developing countries (especially China)

• Changing work and lifestyle patterns, fragmenting meals and fuelling demand for

more convenience and „on-the-go‟ packaging

• Changing beverage distribution patterns driving demand for more one-stop

impulse shopping and vending with direct implications for pack types and sizes

• The poorer economic conditions over the last few years have slowed or reversed

many such trends with consumers worldwide cutting back and trading down

• So what impact has this had on beverage packaging demand in 2010?

MACRO-ECONOMIC INFLUENCES

After almost universally difficult market conditions in 2008-2009, there was a

resumption of stronger growth in some key global drinks markets such as China,

Brazil, Russia in 2010.

Growth in developed markets – West Europe and North America - remained flat

or falling overall though there a pick up in some European markets toward the end

of 2010.

Rapidly rising ingredient, energy and packaging materials costs over the last

few months have begun to impact the industry in many countries

Several of the major global beverage players have already issued commodity

cost warnings

These price rises are ultimately likely to being passed on to consumers, which

may slow down the rate of recovery in 2011

GLOBAL BEVERAGE MARKET TRENDS, 2010

Like 2009 was 2010 was another challenging year

for the European beverage industry, provisionally:

West Europe down (-0.4%) by volume

East Europe positive again (+1.4%) with notable

upturn in Russia

Within West Europe pronounced differences

between countries at forefront & back of recovery

Key factors; consumer disposable income levels

under intense pressure with rising taxes and

inflation and low pay settlements

2011 – Outlook uncertain, more tough challenges

as austerity measures & inflation impact demand

EUROPEAN BEVERAGE MARKET TRENDS, 2010

WEST EUROPE COMMERCIAL BEVERAGES:

% CHG 2009-2010P

Year

Region/Major Markets 2009-10P

(16 Countries) % Chg

Total West Europe -0.4%

France +1.1%

Germany +0.2%

Italy -2.7%

Spain -1.3%

UK +0.1%

SOURCE : Canadean

EAST EUROPE COMMERCIAL BEVERAGES:

% CHG 2009-2010P

Year

Region/Major Markets 2009-10P

(18 Countries) % Chg

Total East Europe +1.4%

Poland +3.1%

Romania -6.7%

Russia +2.0%

Turkey +4.1%

Ukraine +1.2%

SOURCE : Canadean QBT

Drop in all packaging in 2010

PET still main pack type used –

transportability, light weight and

convenience coupled with flexibility in

shape and design are critical to this

Cans been flat in recent years,

stronger in carbonates and „on-the-go‟

consumption in North America and

Asia (Japan especially).

Glass losing ground and increasingly

premium-positioned

Cartons – mainly for juices, but

benefited from growth in Iced tea –

high usage in Europe, low in NA

GLOBAL SOFT DRINKS PACKAGING

0

100000

200000

300000

400000

500000

2003 2004 2005 2006 2007 2008 2009 2010

Mill

Lit

res

Global Trends in Packaging for Soft Drinks, 2003-2010M Litres

PET Bottles m/s PET Bottles s/s Cans Glass Bottles

Carton Other Packaging Unpackaged

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PET Bottles Cans Glass Bottles

Cartons Other Packaging

Unpackaged

Global Soft Drinks Packaging by Pack Type & Region, 2010% Share by Volume

West Europe

North America

Latin America

East Europe

Asia*

Africa

0

50000

100000

150000

200000

2003 2004 2005 2006 2007 2008 2009 2010

Mill

Lit

res

Global Trends in Packaging for Beer, 2003-2010M Litres

Glass Cans Plastic Bottles Unpckd/Keg

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Glass Can Plastic Bottles Unpckd/Keg

Global Beer Packaging by Region, 2010% Share by Volume

West Europe

North America

Latin America

East Europe

Asia*

GLOBAL BEER PACKAGING

Slowdown all packaging in 2010

Still dominated by glass bottles (64%

of total global consumption in 2010)

Glass remains very popular for

premium beers in Europe, Asia and

Latin America

Cans are second most important

packaging type – especially in North

America where they outperform glass

Cans have gained share in more

developed markets, where demand for

convenience of consumption is high

PET has failed to make significant

inroads except in C&E Europe

GLOBAL DAIRY DRINKS PACKAGING

0

50000

100000

150000

200000

250000

300000

2003 2004 2005 2006 2007 2008 2009 2010

Mill

Lit

res

Global Trends in Packaging for Dairy, 2003-2010

Glass Bottles HDPE Bottles Other Plastic Bottles Carton

Sachet Tub Other Packaging Unpackaged

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Africa Asia* East Europe

Latin America

MENA North America

West Europe

Grand Total

Global Dairy Packaging by Region, 2010% Share by Volume

Unpackaged

Other Packaging

Tub

Sachet

Carton

Other Plastic Bottles

HDPE Bottles

Glass Bottles

Growth more sustained in 2010

Dominated by cartons and plastic

bottles (more than 75% of total)

Key aspect of growth is the relatively

large share of unpackaged (informal)

milk and the conversion thereof to

packaged format

HDPE (not PET) most prominent

polymer - used in fresh milk markets

Pouch used primarily focused on

developing regions on Asia, East Europe

and Latin America

Cup use even more focused on Asia

(nearly 75% of total in 2010)

3. RECENT DRIVERS OF BEVERAGE

PACKAGING INNOVATION

Against the backdrop of the global economic downturn & growing environmental

awareness, the recent focus of innovation in beverage packaging has been upon:

Cost Reduction

Light-weighting & Environmental Issues (more efficient use of resources)

Improvements in the above have enabled packaging suppliers to:

maintain prices for their customers as consumer spending power has fallen

maintain their own margins by improving yields

meet increasingly stringent environmental needs and requirements

This does not mean that underlying trends to more convenient, high performance,

innovative designs, materials & printing / decoration techniques have discontinued..

Instead it is just that the cost reductions, light-weighting and stricter environmental

considerations now need to be achieved without loss of performance: „more for less‟.

RECENT DRIVERS OF BEVPACK INNOVATION

Light-weighting & Cost Reduction:

PET bottles – materials savings of 25%+ achieved through reengineering bottle

necks and movement to light-weight PCO1881 closures

Glass – regional and smaller brewers following their larger competitors by

looking to introduce lighter wine and beer bottles

Beverage Cans– emphasis on lighter ends

Bottles cans – move to DWI technology to reduce pack and materials weight

Materials Developments

Testing of bio-degradable plastics by major companies e.g. “PlantBottle”

RPET increasingly used despite concerns over availability, cost & quality of

recovered feedstock

Widespread growth of pouches with better pack: bottle weight ratio

RECENT DRIVERS OF BEVPACK INNOVATION

4. SOME EXAMPLES OF RECENT BEVERAGE

PACKAGING INNOVATION

GLASS BOTTLES

UK brewer Hall &

Woodhouse introduced a

new shape and lighter

weight bottle for its

Badger ales portfolio.

The light-weighting

exercise reduced overall

glass content by 27%

AE Chapman & Son

introduced a new light-

weight glass beer bottle for

the small

independent/micro brewery

sector, working with its

glassmaking partner O-I . It

retains the shape and

dimensions of its popular

400g bottle, but reduces

the weight by 17.5% (to

330g).

PLASTIC BOTTLES

Tenaya‟s MADE

aseptic barrier

PET bottle - first

high acid, shelf-

stable aseptically

PET bottle in

North America.

Uses Plasmax

barrier coating

Healthy Shot 2.5oz

Hot-fill PET container

for high protein

beverage, Uses

Amcor‟s 2.5oz hot-fill

container. The main

issue was adapting

the hot-fill technology

to provide heat set

properties in such a

small container

US water company

Keystone‟s premium

spring water re:newal

is one of the first in the

world to be packed in a

bottle made entirely

from PLA and fully

compostable and will

break down within 90

days.

Naya spring

water‟s 100%

RPET bottle, :

Canadian

company Naya

Spring Water

claimed to be the

first bottled water

company to use

100% recycled

PET in its

containers

Light-weight PET :

“Active hinge”

technology from

Amcor Rigid Plastics

was adopted by

Spartan Beverages

for its all-natural

protein waters. The

16 oz PET bottle

uses 40% less

material and is 20%

cheaper than

competing materials.

METAL CANS

Ball Packaging Europe –

re-sealable can end

Crown Holdings

SabMiller Full Aperture

Event Can

Exal Corp/Alcoa C2C bottle

can uses 65% recycled alu &

40% less weight

Rexam 360° embossed can

for Norrrlans Guld beer

“Cool meter” on all 33cl

Grolsch cans

reformulated

thermochromic ink

DRINKS CARTONS

SIG Combibloc‟s new

EcoPlus aseptic carton for

milk and dairy is claimed to

cut carbon dioxide by 28%

compared to its standard 1

litre carton

Plant It Water is one of the first

companies in the US to offer

natural spring water in a

recyclable carton. The Tetra

Pak carton contains over 60%

renewable materials.

Tetra Pak „s Tetra Brik Edge carton

incorporates a SimplyTwist screw

cap that requires a low opening

force, a large 34mm diameter for

smooth pouring of thicker dairy

products and the angled top makes

for an easier grip. Winner of the

„Package of the Year‟ from the

Swedish Rheumatic Association

and the „Packaging of the Year,

2010‟ award from the German

Museum for Packaging.

POUCHES

Sainsbury‟s began selling milk

bags in February 2010 to help

meet its target to reduce

packaging by a third by 2010.

The system uses milk bags

inside RPC‟s re-usable Jugit

rigid plastic jug, which is fitted

with a spike to pierce the bag

and enable pouring but also

create a no-leak seal.

UK soft drinks brand

Vimto launched a re-

sealable pouch for its 25cl

juice. The pack is re-

sealable, with a twist cap.

It claims to use less

packaging than

conventional packs and is

cheaper to transport.

CLOSURES

CSI Aqua-lok Mini

Closure: The 28mm

closure designed for

Nestlé Waters‟ Poland

Springs is around half the

height of a standard

water bottle and delivers

a 40% reduction in

weight between the

combined finish and

closure.

Japan Ito En Oishi

Ocha Omatcha,

Fresh Green tea in a

27.5cl PET bottle with

a unique closure that

when tunrned

counter-clockwise

releases the powder

into mineral water

below and the bottle

can be shaken to mix

thoroughly

Bericap Scavenging

Closure for Chinese

beer Martens,. The

Supershorty Crown

O2 scavenger

closure features an

in-shell oxygen

scavenging liner to

absorb oxygen and

prevent

contamination

combiCAP, this is a

new lightweight

(1.85g) closure

launched by SIG

Combibloc in

January 2011,

which incorporates

a new single twist

closure

mechanism.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Dominic Cakebread, Director of Packaging Services

Canadean Limited

12 Faraday Court

Rankine Road, Daneshill

Basingstoke RG24 8PF

United Kingdom

Tel: +44 1256 394269

Email: dominic.cakebread@canadean.com

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