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TOP NEWS

The Rs 125 b beverage packaging market in India
Monday, 03 August, 2015, 08 : 00 AM [IST]
T Niveditha Reddy
Increasing consumption of beverages coupled with rising need for convenience are the two factors driving the market for beverage packaging in India. The Indian beverage packaging market is exhibiting robust growth with sustainable packaging being the need of the hour.

Beverages accounted for 21% of the total consumer packaging market in 2014 and was valued at around Rs 125 billion, according to an estimate by MCG. Demand for consumer packaging from the beverage sector is expected to grow marginally ahead of other user sectors at around 12% till 2017. Main contributors to this growth include bottled water, fruit-based beverages and Carbonated Soft Drinks (CSD).

Beverage packaging sector uses all material substrates and combinations thereof such as rigid plastics, glass, paper and metal.


Beverages: Key Packaging Types
Packaging type
Key beverage categories
Rigid Plastics

Paperboard Packaging

Metal Cans

Glass Packaging

Caps & Closures

  • PET (bottles & jars)
  • Other polymers (bottles & jars)
  • Printed folding cartons  
  • Liquid packaging  
  • Composite containers
•OTS cans, 3-piece general line cans
•2- piece beverage cans
•Glass bottles & jars

•Crown closures
•ROPP (Roll-on pilfer proof) caps
•Plastic caps & closures
•Metal Lug caps
•CSD
•Bottled water
•Fruit beverage – fruit juice & fruit drink, nectar, squash
•Alcoholic beverage – liquor [IMFL, IMIL (country liquor)], beer
•Others – energy drink
•Alcoholic beverage – Wine& Spirits
•Fruit beverage- fruit drinks & juice
•Dairy products – Milk, flavoured milk, soy milk, buttermilk
•Others - Energy drinks, coconut water, Ice tea, etc
•CSD
•Beer
•Energy drinks
•Fruit juice
•Alcoholic beverages
•CSD
•Fruit beverages
•Flavoured milk

Beverage packaging: break up by type, 2014

Source: MCG estimate

Rigid plastics and glass are the major materials used for packaging beverages, accounting for 70% of the market. Demand for liquid packaging cartons is expected to increase in the coming years backed by advantages such as longer shelf life and ease of transport. Increased consumer acceptance and willingness to pay a premium are set to drive the market for beverage can in the coming years.

Rigid plastic packaging
Rigid plastic packaging market for beverage sector was valued at Rs 45 billion in 2014 and constituted around 29% of the overall market for rigid packaging for consumer products.   PET is the major rigid plastic packaging substrate used to pack a wide range of beverages including CSD, fruit-based beverages, and bottled water.

Beverages: common sizes of PET bottles used

Segment

Pack size

CSD

500 ml, 1 litre, 1.5 litre, 2 litre

Fruit-based beverages

250 ml to 2 litre

Bottled water

250 ml, 500 ml, 1litre, 2 litre, 5 litre

Alcoholic beverage

60 ml, 180 ml, 375 ml and 750 ml



Increase in demand from the on-the-go and take-home segments is driving demand for PET bottles in the beverage sector.  PET bottles are the most widely used packaging formats for fruit drinks. Commonly used pack sizes range from 250 ml to 2 litre PET bottles.

PET is also the most commonly used material for packaging water in India. An estimated 55% of the packaged water market is accounted by bottles while the rest by bulk packaging and pouches. Increased business travel, concern for hygiene, growth in tourism, and the acceptance (of bottled water) by the middle-class are some of the key drivers for packaged drinking water. Over the years, the segment has been witnessing growth due to increasing concern over the safety of tap drinking water.

Liquor market is witnessing a gradual shift towards PET bottles in recent years. Light-weight, lesser damages during transit and lower cost are some of the reasons for this shift. PET bottles are used for packaging of both IMFL and country liquor. Currently, travel packs and 60 ml miniature IMFL packs are in PET bottles. Country liquor is packaged in 180, 375 and 750 ml sizes and a large percentage is packaged in PET bottles. SABMiller was the first company to introduce beer in PET bottles.

Paperboard packaging
Paperboard packaging market for beverages was valued at around Rs 15 billion during 2014. Growth in the usage of liquid packaging cartons in India can be attributed to various factors such as product safety, longer shelf life, increased consumer awareness, logistics, cost efficiency, printability, environment friendly, retail evolution, convenient usage and storage. Though primarily used to pack liquid milk and fruit juices & drinks, liquid cartons are now used to pack a range of products such as milk-based beverages, buttermilk, energy drinks and recently even coconut water, alcoholic beverages and so on. Liquid cartons are emerging as a cheaper alternative to metal cans and are easier to transport than glass bottles. The major consumer of liquid packaging cartons is the fruit juice sector accounting for around 70%, followed by the dairy sector at about 20%.

Alcoholic beverage market in India was estimated at around 850 million cases in 2014.  Printed folding cartons are used as secondary packaging for select brands of premium range whisky, vodka, brandy, etc. In India, whisky is the main IMFL beverage to be packaged with outer cartons. Printed folding cartons used in this segment are of high quality and finish, and are usually foil embossed and mostly laminated.

Glass packaging
The market for glass packaging in the beverage segment was valued at around Rs 40 billion in 2014. Wine and IMFL accounted for close to 60% of the demand for glass packaging in the beverage segment followed by beer at around 25%. Other major users of glass packaging include carbonated soft drinks.

Typical glass pack sizes used for beer packaging in the country are 330 ml and 650 ml. A small percent of the beer in India is packaged in (330 ml) aluminium cans. Carbonated soft drinks packed in glass are mainly in the returnable glass segment. CSD are typically packed in 200 ml, 300 ml and 330 ml glass bottles. CSD players are tapping hotel, restaurant and café channels as primary demand drivers of soft drinks in returnable glass bottles.
 
Glass packaging for fruit-based drink sector is forecast to grow with a CAGR of 6.0% from 2012-13 to 2017-18. Fruit-based drinks are packed in glass bottles of 200 ml. Parle Agro has launched its flagship brand Frooti in returnable glass bottles.

Metal packaging
The aluminium beverage can market in India stood at around 1.5 billion numbers in 2014. The market was valued around Rs 9 billion and is expected to reach around Rs 15 billion by 2017, witnessing a growth rate of 20-21% per annum. Low-installed capacity remained a key impediment for penetration of beverage cans in the domestic market for a considerable time. With high import duties, imported beverage cans remained a small market owing to the high price. However, with the recent investments in can lines by major players, the prices of cans have dropped and the market is witnessing double digit growth.

CSD is the leading end-user segment followed by beer. Energy drinks and cans for juice are a small market witnessing good growth rates. CSD market which accounted for just around 30% of the beverage can demand during 2008-09 has witnessed high growth, presently accounting for over 60% of the total demand.

Aluminium beverage cans of capacities 250 ml, 330 ml and 500 ml are commonly used. While 330 ml and 500 ml cans are used for packaging of beer, 250 ml cans are largely used for CSD packaging. Beverage cans are gaining from glass packaging in both beer and CSD segments. Aluminium beverage cans of capacity 250 ml are primarily used for packaging of energy drinks.

With the rising demand for aluminium beverage cans, many tinplate beverage can lines, around the world have been replaced with aluminium beverage can lines. Aluminium is infinitely recyclable; the used beverage cans is one of the packaging products that gets recycled to become a beverage can again.

Caps & closures
Beverage sector including bottled water, CSD, fruit drinks and flavoured milk is the largest user of caps and closures. The demand for caps & closures in the beverage sector stood at around Rs 12 billion during 2014. Beverage sector uses both metal and plastic caps & closures. Metal caps & closures include ROPP (Roll-on Pilfer-Proof) caps and crown closures.

ROPP caps are used for glass, plastic and metal containers.  Major user segments include alcoholic beverages accounting for over 50%. ROPP caps are multi-colour printed using offset process and are broadly categorised as printed caps, top embossed caps, knurl-embossed chamfered caps and side-embossed chamfered caps.

Crown closures are used by beverages that are packed in glass bottles. Leading user segments for crown closures include carbonated soft drinks (CSD), flavoured milk, fruit juices and beer. With shifts in packaging media from glass bottles to plastic bottles across various consumer products including CSD, fruit drinks, etc., demand for crown closures has been impacted.

The plastic closures market in India has undergone dramatic change over the last two decades, especially with the arrival of PET bottles, which have replaced glass bottles in many categories of consumer products. The demand for plastic closures has been driven by a number of factors such as shift in carbonated soft drinks segment from glass bottles to PET bottles and growth in the demand for bottled water.

The beverage sector will continue to grow as a key end-user segment for consumer packaging in India. Innovative, user-friendly and sustainable packaging technologies are expected to drive the demand. Some of the new packaging formats used elsewhere in the world but yet to be introduced in the Indian beverage market include aluminium bottles with decorative elements and screw caps and so on. Currently, flexible packaging has limited usage in organised beverage packaging market in India and is expected to grow in the coming years.

(The author is senior consultant, Madras Consultancy Group)
 
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