Trends in the European market for plastic closures

According to a new report just published by leading industry consultants, Applied Market Information Ltd (AMI), nearly 217 billion plastic caps and closures were produced in Europe last year in a business worth EUR 1.5 billion. While production has been growing at a rate of nearly 6% pa for the past 3 years, the use of HDPE one-piece closures has been growing at a rate of nearly 9% pa for the same period and these types now account for 64% of all standard beverage closures compared with 55% in 2004. The drive to one piece closures has been fuelled by cost reduction and light weighting initiatives. The move to one-piece closures within the beverage market will also help underpin forecast growth of 4% pa to 2012 with total plastic closure output reaching over 260 million units pa. Custom closures by contrast represent a greater opportunity for added value. They include products such as non-standard diameter flat caps, sports caps, carton mechanisms and pouch spouts. Growth in this sector of the market will be driven by strong demand for sports closures, but also the further development of 38 mm caps and carton mechanisms. AMI estimates that in unit terms 55% of production is for custom closures and 45% for standard closures. Beverages accounted for 64% of all closures produced in Europe last year. Production of beverage closures is expected to grow by over 4% pa to 2012 driven by developments in still drinks (e.g. sports drinks, juice-based drinks) and the growing penetration of one-way PET bottles replacing cans and cartons. Demand for plastic beer closures is also expected to develop in Europe, albeit from a low base, fuelled by growing demand in Eastern Europe and the advent of a plastic crown cork for glass bottles. Within non-beverage applications, liquid food is the largest sector of the plastic caps and closures market in Europe. In this segment demand will be driven by increased penetration of PET bottles in dairy applications, and by growing substitution of glass packaging by plastic containers in table top sauces, preserves, baby food, cooking sauces, dehydrated and snack products. The production of closures accounted for 770,000 tons of polymer resin for 2007 of which 55% was PP resins, with PE including EVA accounting for 44%. Other materials (PS, SAN, ABS, PC and POM) accounted for the remaining 1%. PE/EVA has gained 5% share points from PP since 2004 because of the growing demand for standard one-piece closures. PE is forecast to continue growing at +5% pa to 2012 largely driven by the continued move to standard one piece closures. Growth for PP resins in closure production will be at a slower rate of around 2% pa, fuelled by carton fitments and dispensing closures in non- beverage applications. AMI also predicts wider scale development of plastic caps and closures within food applications in Europe. The advent of heat stable PET, clarified PP and multilayer containers is opening new markets to plastic closures, such as juices, preserves, pickles, cooking sauces, soups, and baby food, which are traditionally packed in glass containers and sealed with steel vacuum closures. Further opportunities lie in cold fill applications such as honey. There will be an increasingly apparent geographical divergence in strategy in Europe. In Eastern Europe investment will focus on mass production of standard beverage closures to serve the global brands as they move eastwards, while market maturity will steer Western Europe towards de-standardisation through developments in custom 38mm closures, sports caps and high performance, light-weight caps for carbonated drinks. Innovation and a sustainable differential advantage will lie at the centre of strategies over the next five years, focused on improved functionality, convenience and modernity. The increasing investment in Eastern Europe will drive growth in production of closures in this region by 8% pa to 2012 compared with annual growth of 3% for Western Europe.