Changing Tide in Beverage Packaging

Several trends in the US beverage market, such as fast-growing beverage alcohol segments and reduced growth in bottled water, continue to benefit aluminum cans and are expected to persist.

While plastic bottles’ status as the leading beverage packaging type by number of units looks secure, aluminum cans appear likely to be the fastest-growing packaging material and are poised to gain more market share going forward. The other two major packaging types — glass and paper — have been declining and almost certainly will continue to do so during the next several years, according to forecasts from Beverage Marketing Corp. (BMC).

Among the 12 principal ready-to-drink (RTD) beverage types — bottled water, carbonated soft drinks (CSDs), beer, distilled spirits, energy drinks, fruit beverages, milk, RTD coffee and tea, sport drinks, value-added water, and wine — plastic accounts for the most individual packages largely because it is the preferred package for the largest single beverage type by volume, bottled water.

Bottled water volume slows.

In 2017, plastic was the sole package type with more than 100 billion units at 120 billion. By 2022, units had climbed to more than 135 billion units. BMC expects plastic unit volume to move roughly in line with the overall beverage packaging market and plastic’s share to remain steady into 2027, largely as bottled water volume growth slows.

Aluminum cans, in contrast, handily outperformed the major beverage package types from 2017 to 2022 and are projected to grow a bit more quickly than the other types in the five-year period from 2022 to 2027. Cans’ unit volume advanced by a compound annual growth rate (CAGR) of 3.6% from 91.5 billion in 2017 to nearly 110 billion in 2022. A projected five-year CAGR of 0.7% would boost unit volume to 113.4 billion in 2027, which would add half a point to its market share.

Though glass and paper will likely see the number of units continue to decline over the short term, losses should moderate. Major users of paperboard cartons like perpetually declining fruit beverage and milk are largely responsible for the material’s fate, while shifts in packaging mixes are contributing to declines in glass’ unit volume.

Distilled spirits, wine adopt beverage cans.

Beverage categories that traditionally used other package types such as wine and distilled spirits are increasingly adding cans to their packaging mix. In addition to their adoption by hot sub-segments like wine- and distilled spirits-based RTD cocktails, cans have benefits like light weight and recyclability that make them increasingly attractive to both beverage manufacturers and consumers, all of which will factor in the package type’s future performance. Further, cans are more approachable for younger consumers who might be put off by conventional wine packaging and who may have never used a corkscrew.

CSDs shift from plastic bottles to aluminum cans.

The packaged CSD market is comprised of two main packaging types, plastic bottles and aluminum cans (although glass bottles still have a presence in the premium segment). Recently, plastic has enjoyed an edge over cans, but the gap between the two in terms of CSD volume has shrank considerably and their rankings are set to reverse by 2027.

The pandemic provided a fulcrum in the CSD market. In 2020, packaged CSD volume grew forcefully, which was in stark contrast to the preceding 15 years of declines. Of course, the reason for the spike was a sourcing of CSD volume away from fountain with restaurants and other on-premise outlets being temporarily shuttered. Plastic was the main beneficiary that year. Cans also grew in volume in 2020, but likely would have grown much faster except for supply shortages.

In 2021, as fountain began to source back some of its lost volume, the packaged CSD market declined again. However, plastic bore most of the brunt. Cans grew, regaining share it lost in 2020 and then some, and began to tighten the gap between metal and plastic. The trend continued in 2022, with CSD volume in cans increasing and plastic declining.

Into 2027, when packaged CSD volume is expected to decline modestly, cans are anticipated to increase at a CAGR of 0.5%. As a result, cans’ share of packaged CSD volume would rise from 48.5% to 51.6%. Conversely, plastic is expected to decrease at a 1.8% compounded annual clip, which would result in its share falling from 51.0% in 2022 to 48.2% in 2027.

Portion size influences carbonated beverages.

Several factors may be at play here. While larger plastic bottles are more economical on a per-ounce basis, cans — usually in 12-ounce — provide a better portion size, particularly for a product that needs to be consumed before it goes flat. Of course, 20- and 16.9-ounce plastic bottles fit the immediate consumption needs of some consumers and marketers are introducing more 1.25-liter bottles that meet the needs of smaller families than the traditional 2-liter.

Forecasts may change as times unfold. For instance, high prices could prod consumers to ditch multipacks for more economical larger bottles. Wine- and spirits-based RTD cocktails could fade as some other new segment becomes the next big thing. But, for now, cans should continue their march to number one in terms of packaged CSD volume and hold onto their newly attained prominence in other beverage categories.