Barrier-layer PET bottles are coming to the U.S. soft drink market, thanks to 12-ounce bottles - driven by the desire to get longer shelf life so consumers can stock up on 12 packs in plastic, instead of cans, a consultant said at Nova-Pack Europe.
Bob Falkenberg of Concept Catalysts said he has heard that both Coca-Cola Co. and PepsiCo are looking at barrier-layer technology.
Another Nova-Pack speaker, Paul Swenson of Kortec Inc., described his company's 144-cavity coinjection molding system for PET preforms. Swenson said Kortec would ship it to a U.S. customer making the 12-ounce preforms, but he declined to identify the customer.
The key issue with small 12-ounce bottles is how to extend the shelf life, a strong point for cans. He said some 12-ounce soda bottles are being test-marketed now in certain regions, but those are made from the same single-layer PET used to produce 20-ounce bottles - which means that, used in a 12-ounce, the bottle has very thick walls.
Swenson, Kortec's president and chief executive officer, said the multilayer bottles have a shelf life of longer than 16 weeks. A monolayer 12-ounce bottle has a shelf life of just eight weeks, he said.
Adding a barrier layer is the real key to longer shelf life for 12-ounce PET, said Falkenberg, president of Concept Catalysts of Alpharetta, Ga.
Much of his talk at Nova-Pack centered on the economics of various package sizes of PET and cans, and strategies that soft drink makers and bottlers try to get people to buy more soda. His background includes 25 years in the aluminum can business at Alcoa Inc. and six years at Coke working on packaging innovations and marketing.
U.S. soft drink consumption is suffering from health concerns that fuel a shift away from sugar-based soft drinks. Flagship brands are declining, while other beverages, such as water and juice, are growing.
``People just aren't buying soft drinks the way they used to,'' Falkenberg said.
Line extensions, such as Vanilla Coke, have helped, but often that strategy ends up cannibalizing existing brands and does not expand the overall market, he said. The challenge is to drive both new consumption and profitable growth - and that's where the 12-ounce bottles come into play.
The 20-ounce proved that consumers love a single-serve bottle with a screw-on cap. Falkenberg said soft drink makers are emphasizing new packaging to drive what he called ``occasion relevance,'' such as taking to a picnic or simply driving in the car.
Pricing strategy will be key for the 12-ounce bottles in 12 packs, according to Falkenberg. Soda makers like to drive volume with price-buster 12-packs stacked up high at the supermarket. Consumers grab three or four, put one in the refrigerator and store the rest in the garage.
``Get those big displays, move a lot of volume. That's what's going to get those bottlers excited about small bottles,'' Falkenberg said.
Consumers are likely to pay more for the convenience of 12-ounce PET than for cans. But how much more? That's the big unknown, Falkenberg said. It has to be low enough to drive that stock-up behavior.
Bottlers love the 20-ounce, which sells at gas stations for more than $1. ``What you can see is the 20-ounce PET is a highly profitable bottle'' for bottlers, Falkenberg said. On the other hand, he said, the 2-liter bottle is ``in the most dire straits,'' plagued by low retail prices and a razor-thin profit for bottlers.
To improve margins, Coke has introduced a 1.5 liter bottle in the New York market to get a higher per-ounce price than the 2-liter.
Also, Pepsi and Coke both have rolled out bottles under 20 ounces, with the goal to replace single-serve cans and get the price back under $1, Falkenberg said. Pepsi has a 14-ounce bottle and Coke has developed a bottle of 390 milliliters (13.02 ounces). But the consultant said the retailer gets less profit, as the bottles can take away higher-profit, 20-ounce business. Falkenberg expects retailers to resist those sizes.
Falkenberg said bottlers play a key role in new packaging. Under the current marketing approach, soft drink companies handle advertising and marketing. The bottler is in charge of in-store promotions, including displays and promotion pricing.
Kortec announced the 144-cavity coinjection system for PET preforms two weeks before Nova-Pack, at an open house at Kortec's headquarters in Ipswich, Mass. At Nova-Pack, Swenson focused on the company's laser optical inspection technology, called the Integrated Response Inspection System, which can inspect up to 52,000 preforms an hour.
Nova-Pack Europe 2004 was held Oct. 18-19 in Neuss, just before the K 2004 show. Schotland Business Research Inc. of Skillman, N.J., organized the conference.