The Can Makers UK Market Report 2008
Introduction The 2008 edition of the Can Makers Report once again charts growth in the usage of drinks cans in the UK marketplace and dynamic performance across Europe. Indeed the total number of cans shipped for filling in Europe exceeded 50 billion for the first time last year. In the UK in 2007, we shipped 8.2 billion cans to fillers, an increase of 190 million cans and the ninth year of continuous growth. We were encouraged that 2007 was turnaround year for cans in the soft drinks sector after several years of slow and gradual decline. Beer and cider can shipments were up 1.8%, the continuation of a long term growth trend. Whilst both market sectors performed well, this was despite awful summer weather and a major sporting event, demonstrating the inherent strength of the markets The work of the Can Makers with the design community continues and in 2008 we are sponsoring both student and schools awards in the Starpack competition. In addition to market data, a report contains information from the recent consumer attitude research undertaken into drinks packaging and a summary of the environmental advantages of drinks cans. We hope that you find the report interesting and of value-please give us your feedback to; canmakers@gciuk.com
Market for drinks cans - UK Total UK shipments of empty cans in 2007 grew to 8,183 million which was growth of 2.4% on the previous year. The performance of the CSD sector was particularly encouraging last year, with growth of 3.1% 3,589 million. This was after years of slow and gradual decline. In the alcoholic drinks sector, the number of cans shipped was 4,594 million, an increase of 1.8% on 2006 and the continuation of a long term growth trend. Empty can shipments for alcoholic and soft drinks 2003-2007 (millions of cans) Year 2007 3589 4594 8183 2006 3481 4513 7994 2005 2004 2003 3545 4203 7748 3636 4146 7782 3760 4002 7762 0 2000 4000 6000 8000 source: Can Makers soft drinks alcoholic drinks
European can market The European can market in 2007 expanded to 50.2 billion cans, growth of 10.2% on 2006. The increase in shipments of 4.7 billion cans, made the historic breakthrough of the 50 billion level. There was accelerated growth in Eastern Europe, where shipments were up 21% on 2006, with particularly strong performance in Russia, Hungary and Poland- where there was an increase of 28%. Indeed Poland is now the fourth largest drinks can market in Europe, after UK, Spain, and Russia In Western Europe, markets such as Finland, Spain, Portugal and the Netherlands all performed strongly, particularly the Spanish beer market, where there was 16% growth. Total European can shipments 2003-2007 (billions of cans) Year 2007 23.8 26.4 50.2 2006 22.2 23.3 45.5 2005 20.6 20.7 41.3 2004 2003 19.8 20.2 40.0 18.8 19.3 38.1 0 10 20 30 40 50 source: BCME soft drinks alcoholic drinks
European can market - key national markets Carbonated soft drinks Shipments for CSD grew by 7% to 23.8 billion cans in 2007, an increase of 7.3% on 2006. Growth was particularly strong across the well established major markets of Western Europe. Alcoholic Drinks Cans delivered for alcoholic drinks, mainly beer, increased by 12.9% to 26.4 billion in 2007. In Western Europe the growth was 8% with particularly strong performance in Finland, Sweden, Spain, and Italy. In Eastern Europe, there was a strong performance across the region with Poland and Russia highlighted as cans become major players in the packaging mix of these fast growing take home markets. 2007 main national markets UK 8183 Spain 6932 soft drinks Russia 5036 Poland 4106 alcoholic drinks Netherlands 3505 France 3434
Alcoholic drinks market In 2007 the alcoholic drinks market sold through GB off licences, grew by 5% in value, with sales of 12.5 billion. Once again cider was an engine of growth, up 26% on 2006, followed by champagne and sparkling wine, + 9% and still wine + 6%. Sales of beer were +1%, with RTD s again loosing sales, almost certainly to cider. Alcoholic drinks - take-home sales, GB off licences MAT to end Dec 2007 - by value 2006 26.8% 4.3% 1.7% 36.9% 4.8% 2.5% 22.2% 0.8% 12,456m 0% 25% 50% 75% 100% source: Nielsen beer cider RTDs light wine champagne/sparkling fortified wines spirits other
Take-home beer and cider - by type Once again cider is the bright light in the take home market and now accounts for 16% of sales by volume. Whilst the volume of lager sold in the take home market grew by1% (source Nielsen), the % share it holds of total sales, dropped back to 71%. This was under the impact of a 19% increase in the volume of cider sold in the take home sector. Sales of take-home beer and cider - by type 2007 Volume 71% 10% 16% 3% 0% 25% 50% 75% 100% source: Nielsen Lager Ale Cider Stout
Take-home beer - by pack type Cans continue as the main pack for take home beer and cider at 68% of the volume sold, with glass bottles 25% and PET bottles 7%. In the individual sectors of the market cans hold 73% of lager packs sales by volume, 72% of Ale and 41% of Cider (source Nielsen). 2007 take-home beer and cider by pack type % of volume sold Volume 68% 25% 7% 0% 25% 50% 75% 100% source: Nielsen cans glass bottles PET bottles
Multipacks Multipacks are the main means of merchandising and selling takehome beer. They combine the convenience of a multiple purchase, with ease of handling. They are also the main vehicle used for price offers, which are so much a feature of the take home beer market. In the case of cans, multipacks account for 95% of all the cans sold, contrasting with glass bottles where multipacks account for just 70% of the beer and cider packs sold. In 2007 can sales, there was a trend away from six packs, to eight packs. In the larger sizes, the moves were to 18 packs at the expense of other configurations, no doubt to meet particular price points. In the glass sector the emphasis is on single bottle sales and they increased by 20% in 2007. In multipacks of glass bottles, the growth was in eights, 12 s and 24 s. In the Impulse sector, four packs predominate, but in 2007 both 8 and 15 packs did well.
The Can Makers The Can Makers was formed in 1981 as the body representing the UK manufacturers of beer and carbonated soft drinks cans and their raw material suppliers. The organisation now consists of the three can manufacturers: Ball Packaging Europe, Crown Bevcan UK and REXAM who supply the UK market, together with their raw material suppliers: Alcan, Corus Packaging, Hydro Aluminium, Darex UK, ICI Packaging Coatings, and Valspar. AMG/Shardal Castings, the specialist detinning company, and the multipack supplier ITW Hi-Cone are also members. Members of The Can Makers work together to promote the benefits of drinks cans and to aid communication between the industry and its customers: the brewers and soft drinks manufacturers and the retailers, as well as the packaging industry, the media and consumers. Can Makers Information Service New Bridge Street House 30-34 New Bridge Street London EC4V 6BJ Telephone +44 (0) 20 7072 4083 Fax +44 (0) 20 7072 4010 e-mail canmakers@gciuk.com www.canmakers.co.uk
Soft drinks Soft drinks market share by type of beverage 200 200 15.2% 8.3% 8.3% 2.6% 3.9% 22.3% 7.2% 10.6% 1.8% 19.6% 0% 25% 50% 75% 100% source: Nielsen Fruit juice Fruit drinks Dilutables Mixers Energy/sports drinks Cola Lemonade Other fruit carbs Other carbonates Water
Pack shares The pack mix in the carbonated soft drinks market in 2007 was cans 21%, small PET bottles 14% and large PET bottles 65%. A feature of the market was the continued decline in the share of large PET bottles -1% and the growth in cans share of the pack mix plus1%. Carbonated soft drinks - share of market by pack type 2007 (volume) 2007 21% 14% 65% 0% 25% 50% 75% 100% cans PET bottles <599ml PET bottles >600ml source: Nielsen
Multipack shares One feature of the CSD market in 2007 was the growth in sales of single cans in multiple grocers, up14.5% on the 2006 sales level. Four packs continue to be a mainstay of the market, with significant growth in the sales of 10 packs, up 84% as alternatives to 12 and 24 size packs. Carbonated soft drinks - share of can sales by size of pack - % of units sold in multiple grocers 2007 2007 10% 54% 12% 13% 7% 4% 0% 25% 50% 75% 100% source: Nielsen Single cans 6-packs 10-packs 12-packs 24-packs other sizes
The environment and recycling Protecting the environment is now a major concern of the general public, retailers, and policy makers in the UK and throughout Europe. Consumers are making product buying decisions based on environmental credentials which retailers are reacting to and Governments are legislating for. The EU and UK Government s short term target for recycling of all metals was to reach 50% by 2008; DEFRA reported that this target was exceeded for metals in 2006, with 54% of all metals recycled. Here s why the drinks can s inherent properties make it ideal for recycling: All drinks cans are recyclable both aluminium and steel. Both materials can be recycled an infinite number of times without loss of their essential properties. The recycled metal from drinks cans is a truly renewable material, retaining the same characteristics as the original material. Encouraging consumers to recycle more is the main barrier to the uptake and roll out of green packaging solutions. Schemes run by industry and WRAP (Waste & Resources Action Programme) are promoting consumer recycling in different ways, both at a national and international level. There are logistical problems in collecting materials for recycling caused by the lack of any uniform system and more consist-ency is required with kerb side collection in particular. Beyond collection it is very easy to recycle drinks cans. The metals industry has the capacity to take back all the cans that are collected. The different processes for recycling steel and aluminium are outlined below.
The environment and recycling Steel Steel is 100% recyclable; items made of steel can be recycled time and time again to make new steel products, as the quality of steel does not deteriorate through the recycling process. This is due to a refining process, which results in the quality of the recycled steel being as high as that of the original product. It s inherent magnetic properties, also means that steel is easy to segregate from the waste stream. Another steel-led initiative is the Corus CanRoute centres, providing a secure end-market for recycled steel. Firstly the steel is made at four Corus steel plants, incorporating scrap of various grades; the steel is used for a variety of different purposes. Tin plated steel goes to the can makers to be made into cans and then on to be filled before being distributed to retailers. When the can is then recovered from the domestic waste stream, it could be taken to one of Corus 14 CanRoute centres to be reprocessed and returned to the steel plant to be made into new steel.
The environment and recycling Aluminium Recycling aluminium is considered part of the natural life-cycle of this metal. Aluminium and its alloys can be melted and re-cast time and again, producing metal with the same properties as primary aluminium. This is why recycled aluminium retains a high scrap value, which drives collection for further recycling. Novelis Recycling operates a dedicated aluminium can recycling plant at Warrington, Cheshire where used beverage cans collected via seven aggregation centres across the UK are smelted to produce ingots, which are rolled into sheet at another mill, and then supplied to can manufacturers to be made into cans again. The Warrington plant employs the latest remelt technology to maximise yield and energy efficiency in the production of quality ingots which are nine metres long, weigh 27 tonnes and contain 1.6m recycled aluminium drinks cans. The arguments for using cans in drinks packaging are overwhelming and with the inherent benefits outlined here and such a strong environmental heritage, the future looks promising.
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Outlook The strong performance of drinks cans in both the take home beer market and the CSD market in 2007, gives us confidence for the future. Combinations of the right sort of products, the result of innovation particularly in the CSD and Cider markets and competitive retail prices have fuelled growth and we believe will continue to do so. The take home beer market continues to expand and grow, as a consequence of comparatively high beer prices in the on trade compared with the off trade. In the last year this trend has increased as a result of the smoking ban, with many beer drinkers deserting pubs in order to drink and smoke at home. One cause for some uncertainty about the stability of the take home market is the possibility that the government will seek to push retailers to raise retail prices of beer, cider and spirits, in an effort to discourage under age and excessive drinking particularly amongst young adults. The Can Makers themselves are continuing to invest in new technology to ensure that drinks cans keep up with customers expectations and in the last few months we have seen the introduction of very high quality printing, new bottle cans and resealable ends. Finally the Can Makers are committed to promoting the recycling of all drinks cans and their environmental credentials. Indeed in the coming months we will be publishing some exciting new research in this area.