While the U.S. beverage market is beginning to show some signs of life after two years of weak sales, beverage packaging is facing a number of challenges and opportunities globally, experts said recently at The Packaging Conference.
Mark Redman, director of the American Beverage Association in Washington, said food- safety challenges from consumers and government regula- tory agencies are just part of a bigger picture.
Our biggest challenge is fairly obvious: It's taxes. These are very tough economic times for our cities and states. Financially strapped state and local governments have got to come up with ways to balance their budgets, he said in a Feb. 7 speech in Las Vegas to about 200 conference attendees.
According to Redman, Republican and Tea Party victories in November's midterm elections should give industry executives no particular cause for joy.
When you have a situation where the executive branch is held by one party and you have a split Congress you see the regulatory agencies start to increase their pressure, he said.
More Food and Drug Administration guidance documents are coming that will affect the beverage industry, as the Obama administration seeks to enact its health and safety goals in the face of legislative opposition, he said.
Redman also cited efforts in Europe and North America to regulate bisphenol A as proof of the devaluing of science that he said is occurring among governments, the news media and consumers.
He said BPA is being regulated despite the lack of conclusive proof that current exposure levels cause risk to humans. Redman added that a weakening of the peer-review process means errors in academic studies are not being caught, and some researchers and government officials appear to be motivated by anti-industry sentiment.
Despite the political challenges, 2010 was a rebound year for the U.S. beverage industry, said Gary Hemphill, managing director and chief operating officer of Beverage Marketing Corp.
Of the more than 40 billion gallons of alcoholic and non-alcoholic beverages U.S. consumers drank in 2010, soft drinks made up the largest share, about 23 percent, he said. Bottled water made up nearly 15 percent of the total, followed by milk and beer, each with about 11 percent.
Coffee drinkers accounted for about 10 percent of the total, with consumers of fruit juices bringing in about 6 percent of the overall volume, and tea drinkers consuming about 6 percent as well. The remaining 18 percent was divided among sports beverages, wine and spirits, energy drinks, vitamin-enriched water, tap water and other beverages.
It used to be that people would say that beverages are 'recession-proof,' but I think it's better to say that beverages are 'recession-resistant,' Hemphill said.
Two important trends New York-based BMC is following involve consumer polarization, he said. Households with incomes of more than $100,000 are doing more shopping than the other market segments, while at the same time unemployment numbers are higher among workers lacking college degrees. Therefore, a job-led economic recovery remains the beverage industry's best antidote for lagging sales, Hemphill said.
What this basically favors is niche products as opposed to big brands, he added.
Consumers' lives have become more complicated, therefore new product strategies must become more targeted, Hemphill said. BMC has identified several need states of mind, in which consumers select highly specialized beverages to fulfill individualized wants, niche occasions (snacking or entertaining) and very specific nutritional or energy goals.
Because traditional boundaries are being challenged, packaging must focus on the marketing value it brings to brand owners as much as for its use as a containment system, he said.
What we're going to see in the future is a marketplace characterized by low relative volume, but higher-value opportunities for products, Hemphill said.
The hybridized consumer of the future will seek packaging that is functional and conveys a positive product image, he said.
That's the kind of thinking behind what designers and engineers are doing at Amcor Rigid Plastics, Michael Hodges, vice president of marketing for the Ann Arbor, Mich.-based packaging firm, said in his presentation.
Packaging must be sustainable and on-brand to be successful, he said. Hodges several times used the term sustainnovation to describe Amcor's development process.
We don't really begin with design anymore. We begin at the end of the process, where we start to think about size and shape and space, and how those relate to carbon footprints, cost cuts and other factors, Hodges said.
As an example, he cited a PET bottle project that combined biomimicry (for example, designing a bottle so its shape mimics the cross-section of a bell pepper) and origami, the Japanese art of paper folding.
The result was a revolutionary heat-set technology that evolved into a 22-gram stock bottle with a bulbous top and five-sided bottom, as opposed to the previous eight-sided, 38-gram bottle.
The result was projected sales of about 2 billion units per year and savings of 38.8 tons of PET resin annually the equivalent of 351 rail cars of resin, or a freight train five miles long, he said.
While processors are focusing more on sustainable packaging, there remains a serious shortage of recycled PET in the U.S., said Dennis Sabourin, executive director of the National Association for PET Container Resources.
He cited NAPCOR statistics for U.S. PET bottle recycling between 2000 and 2009: In 2009, the gross recycling rate was 28 percent; in 2000, the rate was 22.3 percent.
More PET was collected, but almost all of it was exported to Asia, with the lion's share going to China, he said.
Sonoma, Calif.-based NAPCOR still opposes a national bottle deposit, but remains committed to finding industry-driven solutions to the problem of PET supply including increased recycling of thermoformed packaging, he said.
We need to get industry behind the public policy. For plastic packaging, there is no sustainability without recycling. So ... we've got to do something, or let sustainability go, he said.
Producer-responsibility plans have increased PET availability, he said. In the short term, NAPCOR has rejected biomaterials, degradables and resource recovery as unsustainable.
Unless we are willing to actively engage, Sabourin said, we must accept what we get.