Closure growth poised for 2010 recovery

Overall growth of 1.8% was down on 2008 and ran at half the average rates recorded since 2002. However, the positive growth in very difficult market conditions demonstrates the robustness of this market, achieved by the continued strong expansion in Asia (+7.1%), Latin America (+2.5%) and other emerging countries. China, India and Brazil were undoubtedly the star performing markets.

By way of contrast, demand in Eastern Europe fell by 5.5%. Smaller declines were also apparent in Western Europe and North America, though the rates of decline in these regions (0.2% and 1.7% respectively) were at a similar level to those in 2008, suggesting perhaps a bottoming out and potential for re-growth in 2010.

Asia remains the largest demand region overall accounting for 34.0% of overall beverage closure demand in 2009, followed by Western and Eastern Europe (25.2% combined), North America (24.1%) and Latin America (14.7%).

By category, the strongest areas of growth during 2009 were soymilk, still drinks, iced RTD tea and drinking yoghurts – again a reflection largely of sustained Asian and Latin American growth. Most other beverage categories also recorded positive growth, although the two previously strong performers of energy drinks and packaged water returned to more modest growth of 2.8% as cash-strapped consumers reduced their ‘on-the-go’ consumption and returned to tap water.

Three categories still account for nearly three-quarters of total beverage closure demand. Beer at 315.6bn units is the single largest segment with a 31.0% market share, followed by carbonates at 255.3bn units (25.1%) and packaged water at 161.4bn units (15.9%).

Standard plastic screw closures account for 35.7% of all beverage closure demand worldwide, followed by steel crown corks (25.4%) and aluminium can ring-pulls. Including the latter in the figures gives plastics a 44.3% share of the overall global beverage closure market in 2009, against 55.7% for metal-based closures. This scenario is reversed, however, if you exclude aluminium can-ends. That then gives plastics a 58.7% share, which continues to grow driven by growth in plastic (and especially PET) bottle use.

Technological advances that enable plastics closures to replace metal for glass containers together with consumer-led demands for more convenience, functionality and added value in their beverage packaging all tend to favour the generally more versatile polymer-based closures.

Sport cap demand has continued to grow strongly as the sports drinks market itself has grown and the adoption of these more sophisticated closure designs has become more widespread, especially in some of the more developed markets such as the US. Liquid carton closures also experienced continued relatively strong growth at a global level, as the share of cartons without closures continued to decline.

Standard ‘off-the shelf’ closures still represent about 60% of the market overall and are still prevalent in the carbonated drinks, packaged water and beer sectors. However, the trend of recent years has been towards customised closures often involving bottle neck as well as closure design to maximise appearance, functionality and performance.

In spite of the continued positive growth at a global level, there is no doubt that the biggest impact on beverage closure demand over the last two years has been the global economic recession, which has reduced consumer spending and caused a slowdown from previous rapid rates of growth.

This has been most noticeable in the developed markets, where demand for value-added and unnecessary products has been hit and price sensitivity has increased, putting pressure on prices throughout the supply chain. This, coupled with rising environmental awareness, has shifted the focus towards closure light-weighting and materials reduction to save cost. This is most evident in the expansion of PCO1881 closure usage. These savings have had to be achieved without loss of performance, however, which has posed some major challenges to suppliers.

In emerging markets the underlying trend from informal unpackaged to packaged beverage consumption., together with the steady expansion of western-style retailing and out of home consumption, have helped support beverage and closure demand in otherwise difficult times. As more and more people have come into the workplace and working hours have become more flexible, this has also increased demand for convenience, on-the-go and smaller (single portion) pack sizes, which itself boosts pack and closure demand.

Safety and integrity of packaging continues to be an important functional aspect of closures. Tamper evidence satisfy the need for consumer confidence that products have not been tampered with.

The global beverage closure industry is led by a handful of large international players, whose R&D departments tend to be at the forefront of most new developments. Over the past two years, the focus of development has remained firmly upon cost reduction and environmental impact reduction through faster processing, light-weighting, and reduced energy consumption.

Cost reduction and environmental considerations are the key drivers for the growing use of the lightweight PCO1881 closures, and this is reflected in some of the more recent product developments by the major players. Bericap, for example, has been actively developing and promoting lightweight closures for both still and sparkling water applications. The company has also introduced this SuperShorty concept in two-piece lined versions and in sports cap variants.

Other light weight alternatives include Closure Systems International's short-height, one-piece Omni-Lok mini closures and Aqua-Lok mini 26mm closures, which are claimed to yield resin savings of up to 40% over existing 1844 26mm standard finishes. And Corvaglia has developed a single piece HDPE 38mm closure for hot fill applications, providing an alternative to PP with liners to provide a cost saving to fillers of up to 30%.

Sports caps have, meanwhile, taken advantage of developments in valve technology to provide improved ease of use and better filling line performance. Recent push-pull cap developments include Bericap’s Next Generation caps, which are suitable for aseptic filling using wet and dry sterilising methods without the need for irradiation

The Flex line of sports closures from SmartSeal of Norway incorporates a valve to provide anti-spill control and single-handed operation for still drinks. Icelandic firm Glacial Water recently introduced the Flex design on its LazyTown Go Water range, while SmartSeal demonstrated its Fizz version for CSDs at last year’s Drintktec fair.

Adding value through functionality to closures has resulted in the development of several dosing caps, which enable delivery of ingredients into the bottle prior to consumption. Dosing caps are generating interest for high value products such as the US Activate range of functional beverages in 16oz PET bottles, which use a custom cap containing vitamins and other ingredients which are dispensed by rotating the cap to pierce a plastic membrane.

Meanwhile, in the carton industry the latest closure designs have tended to aim at improved openability. Tetra Pak introduced the SimplyTwist 34mm diameter screw cap for its Tetra Brik Edge with a non-slip grip to provide a low opening force, while SIG Combibloc’s combiSmart screw cap closures have been modified to incorporate ‘wings’ on the sides of the screw cap to improve openability.

Aside from lightweighting, environmental attention has also focused on improving recyclability of closures, especially for valve type designs where the silicone valve elements have long presented an environmental concern due to their similar density to PET. A new lightweight silicone swimming valve has now been developed for Seaquist which floats in the separation tanks used to recover PET, enabling safer separation.

And Tetra Pak has agreed to carry out limited trials using Brazilian produced HDPE made from renewable sugar cane feedstock. The polymer is to be used to make plastic closures for cartons in 2011 and resin producer Braskem is to start supplying Tetra Pak with an annual volume of 5,000 tonnes of its bio-based HDPE. That’s equivalent to around 5% of TetraPak’s total HDPE demand, but less than 1% of its total plastics purchases.

This technology-led activity, combined with growth in packaged beverage consumption in many Asian countries and emergence from recession in developed regions is likely to see closure demand growth strengthen in 2010. And in most application sectors, it will be plastics-based designs that will lead the way.

Dominic Cakebread is Director of Packaging Services at analysis group Canadean, publisher of “Global Trends in Beverage Closures” and developer of the global beverage closure database, www.canadean.com.