What accounts for 30 percent of the cost of a drink? Yes, packaging — but that word includes many aspects. For example, consider shape, the choice between bottle or can, the closures, labels and secondary packaging materials, as well as the “green” issue and sustainability concerns.

Beverage Industry’s Beverage Packaging Survey investigates why specific packages are popular and which materials complement certain drinks. The survey discusses what is important for packages at retail, as well as how and why beverage packaging materials will evolve during the next five years. This study shows the extent to which beverage processors are incorporating sustainability into their packaging. Also, the report’s analysis of motives and drivers for increasing use of certain packaging materials vs. others offers processors the opportunity to consider their direction in comparison to the industry’s general direction during the next five years.

It’s a slam-dunk for PET. Nine of 10 soft drink manufacturers, juice processors and water bottlers will increase the amount of PET they use during the next five years. It does not seem to matter that 75 percent experienced a price hike for PET this year compared to 2006. One of the main drivers for using more PET is consumer preference. PET is seen as a trendy alternative to aluminum cans. “The product volume growth will continue and PET is the package of choice,” verifies a juice processor.

“PET packaging is becoming more popular because of the ability to reseal,” says a marketer. The “potential cost savings for freight and convenience to consumers,” motivates a winery respondent to look at PET. We’re “moving out of cans in vending wherever possible — better economics,” explains a soft drink manufacturer.

Alcohol beverages seem to present best in glass, but PET is a strong alternative. Glass is used by almost all alcohol beverage manufacturers, and 61 percent plan to use more during the next five years in response to customer demand. Almost all wineries and distilleries have experienced a price increase for glass this year compared to last. But this is not the experience at breweries, where half report no such penalty.

In addition to sales, processors like the message glass gives to consumers. Glass has a “gourmet look, natural feeling and inspires quality,” explains a bottler of all-natural juices. “Glass bottles match our premium brand focus, while also matching a growing need among organics,” says a water bottler.

Currently, almost all soft drink manufacturers use aluminum cans, but more than half — 54 percent — are planning to cut back in the coming years in favor of PET bottles. The data suggest that soft drinks could retail in a variety of package materials during the next few years.

We are “declining our use of cans and increasing PET,” is the message from one global soft drink manufacturer. PET is the “preferred package by customer and cost,” explains another who anticipates changes ahead.

Most growth in HDPE will come from dairies where 90 percent will be increasing their usage through 2011, largely driven by sales and growth. This year, 78 percent of dairies paid more for HDPE.

Aseptic packages are used by 16 percent of beverage processors across all categories — but no category uses aseptic exclusively. While juice processors have the highest use of aseptic packaging, there is no consensus about what will happen during the next five years. Half will buy more; the other half expect to use the same or less from now to 2011. Most processors using aseptic packaging report prices holding steady this year.

Aseptic “takes the need for cold storage out of the distribution chain and also improves shelf life,” explains a juice processor. “We would like to enter the aseptic juice box market for foodservice and kids,” says another natural juice processor.

At this time, this study finds 3 percent of processors using PLA bottles. One processor would like “more PLA and at more economical pricing.”

Plastic screw-top is the most popular closure for soft drinks, juices, bottled water and dairy beverages; and metal crowns are preferred for energy drinks and beer. Wine — goes without saying really — is almost always cork.

Looking at all processors in all categories, pressure-sensitive labels are used by 57 percent. Cut-and-stack as well as shrinksleeve labels often are used by larger processors. Two of three use cut-and-stack and half use shrinksleeve. One processor responding to the survey uses “corn-based shrinksleeve labels.”

The two most popular secondary packaging materials are paperboard and shrinkwrap. Paperboard is pretty much ubiquitous, used by 86 percent of beverage processors, and used exclusively by 63 percent. Shrinkwrap is used by 61 percent, of which a quarter say shrinkwrap is their preferred choice.  

During the next five years, processors will increase their use of shrinkwrap and flexible packaging. On the other hand, use of paperboard and ring-top carriers will remain at current levels or decrease.

Overall, 41 percent of processors plan to increase their use of paperboard boxes through 2011, 36 percent plan to hold steady, and 18 percent will cut back. A small majority — 53 percent — paid more for paperboard this year compared to last.

An increased use of paperboard reflects sales and growth; but, compared to responses about shrinkwrap, this packaging is not necessarily preferred. Fifty-one percent of manufacturers with more than $100 million in annual revenue expect to keep their use of paperboard boxes at current levels through 2011. Twenty-seven percent will cut back on paperboard.

The data suggest that shrinkwrap is the growth trend in secondary packaging materials for drinks — even though more processors currently use paperboard. Two-thirds of processors use shrink-wrap, and a quarter use it most often. Moreover, 68 percent of manufacturers using shrinkwrap plan to increase the amount they use during the next five years. This compares to 41 percent increasing their use of paperboard.

While growth and sales drive usage most of the time, shrinkwrap is preferred by 37 percent of respondents. Processors say shrinkwrap costs less, looks great, is easy to use and is the next generation of packaging. A few indicated they use shrinkwrap because it means using less corrugated.

Shrinkwrap is an “inexpensive solution to bundling requirements. New printing technologies allow a custom appearance,” explains one processor. “The shrinkwrap packages give the consumer a better look,” says another. “It’s cheaper and displays the product better,” adds another.

However, the enthusiasm for shinkwrap could shrivel slightly with consistent price hikes. Two-thirds of manufacturers experienced a cost increase for shrinkwrap this year compared to 2006.

Other secondary packaging materials are less popular at this time compared to paperboard and shrinkwrap. Overall, 33 percent of processors use ring-top carriers and 23 percent use flexible packaging.

Most processors plan to keep ring-top carrier usage at current levels during the next five years. Flexible packaging, however, can anticipate greater growth, with 57 percent of processors planning to use more through 2011. Flexible packaging is admired because it stands out, has variety and is convenient. Plus, most processors have not experienced a price increase with flexible in the past 12 months.

“Volume is increasing steadily on all SKUs that use flexible packaging,” says a global manufacturer.

Ninety percent of processors have multiple package sizes for their most popular beverage. Having more package sizes represents the past, current and future trends in beverage packaging.

Almost all processors have multiple package sizes, and 40 percent report an increase in the variety of package sizes in the past 12 months. This trend will continue as 44 percent plan to add new sizes in 2007. The data show that a higher variety of package sizes correlates positively to processors with more than $100 million in annual revenue. It also is interesting to note that aluminum cans and PET are most often associated with packaging variety; glass typically has two iterations.

Processors consider package variety an important investment for success, and the survey asked them to explain why this was so. Fifty-three percent mentioned customer demand and sales as the driver. Also, 26 percent have a marketing reason that includes attracting new customers, expanding a brand and product differentiation. In addition, 18 percent mentioned that variety creates options and “occasions” for more use. A new package also is a way to re-launch a best-selling beverage to a new set of consumers.

A juice processor reports “increasing demand for small-sized packaging as orange juice pricing has increased.” A company that offers drinks in various sizes of aluminum cans wants to “meet consumer expectations and keep consumers within our brand’s family of products” by offering a re-sealable can product. A water bottler finds “new equipment has allowed us broader ranges of bottling.”

This study suggests that offering beverages in various package sizes is an asset. A processor, who has the capability to create various sizes and is not doing so should consider that ability an underexploited asset at this time.

What’s important for a package at retail? In two words: presentation and preference. These two considerations are slightly more important than cost. At least 90 percent of processors agree that presentation, consumer preference and cost are very important at retail.

Other package issues have less impact on retail at this time. However, given the current desire for invisible carbon footprints, efficiencies and sustainability are likely to become more important in the near future. Currently, distribution efficiencies are considered very important by 53 percent of processors and somewhat important by 44 percent — a few consider this not important.

Not everyone is “green” at this time but many exciting projects are in the pipeline for beverage processors to consider in the coming years as consumers begin to demand more sustainable options. Currently, 39 percent of all beverage processors have incorporated sustainability into their packaging. But this percentage will balloon during the next five years as all manufacturers responding to the survey plan to become more “green.”

Eighty percent of “green” processors and 61 percent of processors with “green” plans believe that sustainability will result in cost savings in the long term. In other words, manufacturers who have already incorporated sustainability into beverage packaging project cost savings, so the view from the environmentally friendly is “money saved.”

In fact, the potential for cost savings exceeds any pressure from consumers at this time. Eighty percent of processors expect cost savings from sustainability. This compares to 60 percent anticipating that consumers will demand sustainability.

It is important to note that a “green” attitude at beverage companies is driven from the top. Upper management leads the way in mandating packaging sustainability.

But if not upper management, then Wal-Mart. This study finds that about half of all processors have been “inspired” by Wal-Mart’s sustainability scorecard. Among larger processors, those with annual revenue more than $100 million, 62 percent will be making changes due to Wal-Mart’s scorecard.

In a way, processors who already incorporate sustainability into their packages point the way for those in the planning stage and those who have not yet considered sustainability. The most notable instruction, then, is for “green” planners to understand that the environmental effort needs to be driven from the top — even if the top is Wal-Mart.

This study shows that sustainability activity in beverage packaging during the next five years will boom. Processors who already are green will become greener and processors in the planning stage will catch-up to the greens. In other words, processors currently in the planning stage will be busier because they have more to do. By 2011, the data suggest that 90 percent of processors will implement light-weighting, use more eco-friendly materials/inks and reduce secondary packaging materials.

Processors were asked to identify green initiatives in their manufacturing processes. Recycling is at the top of the list with 64 percent of the vote. The way processors describe recycling shows that cardboard, paperboard, glass, PET, cans, HDPE and shrinkwrap are understood to be recyclable materials.

“95 percent of our waste materials are recovered or recycled largely through our returnable bottle or distribution system,” explains a brewery. “All recyclable materials are collected and recycled within the plant/offices. Consumer packaging materials that are recyclable have consumer labeling that indicates such on the package,” is the view from a global food and beverage manufacturer.

A dairy processor respondent considers “glass as the perfect recyclable material. We use labeling that is more easily recyclable, and have reduced board materials in cases.”

“Recyclable packaging has been at the forefront of what we have done since inception,” says another dairy beverage-maker. Adding, “That is why we use reusable glass bottles. We estimate more than 700 tons of waste savings since we began bottling in glass.”

“We use 100 percent recycled paperboard in our cardboard six-pack, 12-pack and case cartons. We recycle all the shrinkwrap and plastic used in the facility. We have won the Waste Reduction Award Program (WRAP) award seven years in a row,” indicated a brewery respondent.

One co-packer reports “transfer of temperatures, water reclaiming, organic materials, grinding of PET, recycling of glass, and recycling of cardboard,” in his list of green initiatives. A brewery lists “reduced energy use, reduced emissions, reduced effluent, reduced material usage, potential alternate materials and CSR tracking” as green initiatives. “Recycling water, energy conservation and reuse of recycled material in primary packages,” are the efforts of a soft drink manufacturer to reduce its environmental footprints.

“Microbrew in a can to prevent glass breakage by consumers, spent grain waste goes to animal feed, looking at CO2 recapture in brew process and looking at wind for electrical generation,” captures activities at another brewery, which is looking beyond packaging to further reduce its environmental impact.

Overall, 52 percent of respondents say they are vertically integrated. The data show an effort among these processors to move packaging manufacturing in house. Currently, 40 percent meet their packaging needs in house, but in the near future this will climb to 50 percent.

Almost all processors say that packaging decisions include senior management. This recalls the fact that green attitudes, initiatives and implementation are all driven by senior management. Seventy-five percent of processors include production, sales and marketing in their decisions, and 53 percent include purchasing. Quality control is included 43 percent of the time, R&D is involved 39 percent and design/engineering assist with 35 percent of packaging decisions.

Processors were asked what packaging innovations would help them in their business, and one-third mentioned something related to sustainability. This includes eco-friendly packaging, easy-to-recycle materials, lighter weight materials and biodegradable plastic. A quarter mentioned innovation that would give them more options and designs. Others wanted various types of containers, and packaging that catches the eye.

We need “biodegradable food- quality packaging that is made from GMO-free plant material,” said one respondent with a tall-order. “Further light-weighting of HDPE bottles,” would help another. “PET bottles without ridges or ribbing for wraparound labels,” is a suggestion from another respondent. “Aluminum bottles with a closure that does not require expensive equipment to apply,” would also be appreciated. “Cheaper bottles — oil-dependent products are going to be even more expensive in the future,” sums up the need for options from another respondent.

Beverage Industry’s 2007 Beverage Packaging Survey has a 95 percent confident level with a ±6 confidence interval. Senior management accounts for 44 percent of the respondents, and sales and marketing is 27 percent. Production is 8 percent of the sample, R&D is 8 percent, purchasing is 5 percent, and quality control is 5 percent.

In terms of revenue, 38 percent of the sample includes facilities where the company’s annual revenue is more than $100 million, 35 percent report revenue from $5 million to $100 million, and 27 percent have revenue less than $5 million.

22%
of dairy drink makers bottle
with HDPE.

25%
of all respondents cap
with sports caps.

32%
of all respondents
secure with metal crowns.

32%
of all respondents
close with metal screw-tops.

48%
of soft drink manufacturers
use aluminum cans.

60%
of alcohol beverage manufacturers process with glass.

63%
of bottled water and juice
processors employ PET.