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Plastic and paperboard big winners in China beverage packing growth

By Rory Harrington , 19-Jun-2009

Rising income levels in China will fuel a robust growth in demand for beverage containers in the country over the next three years, a recent report has said.

Demand for beverage containers is forecast to climb by 8.2 percent per annum to reach 298bn units by 2012, according to a study by the US-based Freedonia Group called ‘Beverage Containers in China”. This increase will, however, be outstripped in value terms as average unit prices rise - with demand set to pass 9.5 percent annually to reach 173bn Yuan by 2012.

 

Plastic dominance

 

Plastic containers, which accounted for 42 percent of demand in 2007, will maintain their dominant position. While its market share is estimated to plateau at 42.8 percent, unit numbers are set to rise from 84.5bn to 127.4bn. Plastic will also capture market share from traditional metal and glass containers. Advances will be boosted by the material’s widespread use in almost all market segments, said the report.

 

Plastics will also benefit from the rising popularity of smaller plastic bottles – such as single-serving PET bottles. Other factors that will support gains will be improvements in plastic barriers and advances in hot and cold-fill processing techniques. Other technological developments will broaden the applications for plastic containers in beverages.

 

The largest market for small plastic pouches and single-serving bottles will continue to be milk, although bottled water and fruit beverages are also predicted to see healthy growth.

 

Glass, with a 24 per cent market share of units, will maintain its number two position in the beverage container market. Increasing beer consumption will offer the best prospect for glass bottles, along with expanding use of non-returnable glass containers. China’s burgeoning middle classes will also fuel growth among beverages such as wine and fruit drinks which are traditionally packaged in glass.

 

Strongest growth in paperboard

 

Paperboard is projected to enjoy the fastest growth amongst all beverage containers, with demand forecast to soar by 2012. In 2002, the material accounted for just 5.7bn units but enjoyed growth reaching 46 percent in the following five years to top 37bn units by 2007. By 2012, it will account for some 64bn units, just 8bn units fewer than glass.

 

“Gains will track the favourable production outlook for milk, fruit beverages and non-alcoholic beverages, benefiting from robust gains in consumer spending and sustained consumer interest in the health benefits of these beverages,” said a Freedonia statement on paperboard’s continuing growth.

 

The outlook for metal can demand is mixed as expansion is set to be modest until 2012. Gains on the back of growth for beer and non-carbonated soft drinks will be partially offset as the medium continues to lose ground to single serve PET bottles.

 

Milk containers will account for a third of all China’s beverage containers by 2012, followed by beer at 19 percent. A greater consumer focus on health will lift fruit juice consumption into third position. Preference towards special purpose drinks will support container demand in smaller volume, said the report.

 

Rate of growth falls sharply

 

The rate of growth across all container types will slow over the review period compared to the five years up to 2007, said the study. Expansion in plastics is predicted to more than half from 19 percent to 8.6 percent; glass from 15 percent annual growth to 6.7 percent, and metal dropping from 11 percent to 5.5 percent.

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