Single-serve society to drive dairy packaging demand in 2005

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The recent unparalleled consumer trend for dairy-based beverages
and probiotic drinks, together with the emergence of a so-called
single-serve society, are two factors that are continuing to buoy
polyethylene terephthalate (PET) packaging demand. But as
competition in these sectors increases, some smaller packaging
manufacturers will inevitably be priced out of the market, Tom
Armitage reports.

According to David Jago, director of Mintel's Global New Products Database (GNPD), rising affluence among European consumers has led to the evolution of a single-serve society, with an increasing number of consumers prepared to pay a premium for individually packaged products.

"Smaller, individual packaging formats have a number of advantages over their conventional, larger alternatives - mainly portability, convenience and an ability to keep dairy products, particularly those with a limited shelf-life, fresh,"​ Jago told​.

Japanese firm Yakult first pioneered the 100ml single serve PET bottle over ten years ago, with the introduction of its seven-serve probiotic drink pack (one to be consumed for each day), however, the subsequent introduction of rival product offerings from Nestlé and Danone has gradually diminished its share in a market now worth a reported €1.5 billion.

A number of dairy manufacturers have since tried to emulate the success of the daily dose format by launching a number of alternative functional dairy products, each of which makes similar health-enhancing assertions.

Finnish dairy firm Valio, for instance, has recently extended the manufacturing licence of its Evolus brand (which it claims lowers blood pressure), to allow a rollout across Spain and Portugal.

But the rising popularity of functional dairy-based beverages is not necessarily going to benefit dairy packaging manufacturers in the long-term - particularly those of small to medium size.

"Although sales volumes of dairy-based beverages will continue to gather momentum over the next few years, the sector will inevitably become more competitive and smaller dairy manufacturers will be priced out of the market,"​ Jago suggested.

This situation will ultimately have a knock-on effect on the dairy packaging sector, as dairy companies seek to bolster their margins by selecting packaging suppliers that can not only offer cost savings, but which are also able to meet sizeable market demand - something which may leave smaller packaging companies at a competitive disadvantage.

The heightened demand for PET packaging has also had an adverse effect on the popularity of glass and cardboard packaging in the dairy sector, although both categories have managed to find profitability through tapping into burgeoning niche markets.

Glass, for instance, is still being used by a number of upmarket UK multiple retailers to package premium, functional drinks for the affluent, adult market, while the number of NPDs using paperboard packaging in 2004 has doubled - driven mainly by an increased demand for products such as drinking yoghurt and functional juice-based drinks.

Related topics Markets Smart Packaging