During our first session we talked in detail about recycling (see KHS competence 2.2013). Let’s now turn to the various business models. More and more bottlers are making their own preforms. What do you think the future looks like for converters? Do you think we could even see bottlers competing with converters for business?
Jülg: No, I can’t see bottlers vying with converters. We’re not competitors. What we do at the Brandenburger Urstromquelle mineral water bottling plant is make our own preforms in order to keep the entire bottle production chain under one roof and to optimize processes. We thus have complete control over the quality of the materials we use for our preforms, can be specific in our lightweighting and optimize the addition of substances such as AA blockers* according to our requirements. The use of as few additives as possible in particular also enables us to ensure that we have the recyclate quality we want, for instance.
Neugebauer: I also don’t feel that there’s any competition between converters and bottlers. I see the situation as follows. With a turnover of around 500 to 800 million PET bottles a year – depending on the product mix – cost-wise it’s not worthwhile for beverage companies to incorporate a preform production line into their operations. For companies who sell more than 800 million PET bottles a year, however, making their own preforms could indeed prove profitable.
Jülg: Above all, I think that the biggest advantage of in-house preform production is that preforms can be manufactured to an individual company’s exact specifications. A converter who supplies a great number of companies has to be much broader in its range of products and often can’t provide this kind of individuality.
Neugebauer: Another thing is that as converters we supply bottlers who utilize completely different generations and models of machinery. There’s a whole spectrum of stretch blow molders dating from 1990 to 2013. We have to design preforms to suit them all.
Gernhuber: New machines are in a completely different league when it comes to setting options and repeated accuracies compared to machines from 1990. On the latter heavier preforms have to be used, which in turn is detrimental to cost. I think that the subject of converters has many sides to it. Are we talking about an existing bottle, for example, which could become lighter through the improved repeatability of a new machine? Or are we dealing with a new bottle development, where factors governing its further processing on fillers, labelers, packers, etc., have to be taken into account and therefore also determined? Or is only the preform supplied? I’ve noticed that the beverage companies in Japan are increasingly investing in their own developments and not accepting the prefabricated results supplied by converters. This is to generate savings potentials on the one hand and because they often feel that they’re not being kept up to date by converters on the other.
Dr. Appel: Especially with beverage companies who have very high outputs, such as those who supply discounters and retailers, all steps in the process are very quality and cost oriented. It’s therefore perfectly understandable that with a growing cost squeeze along the entire PET value chain – from the preform to the delivery of the finished bottle – companies want to govern their own processes. However, I also ask myself how things will progress with the returnable PET bottle. Could this possibly be an area where converters could grow stronger?
Neugebauer: If companies can’t really exploit the cost reduction factor, then I’m convinced that the converter is here to stay, both for returnable and non-returnable PET. As a rule, high volumes in the returnable segment are no longer common. After all, there aren’t only beverage companies who supply discounters and retailers in large quantities. Incidentally, there’s a very different model, which could prove interesting for converters, namely in-house operations. We’re currently having excellent experience with in-house support along these lines.
“In my view, ways must be found to ensure a defined recyclate quality for all beverage and food bottling plants.”
Haesendonckx: I also think in-house blow molding will be a great opportunity for converters in the future. I believe all kinds of interesting synergy effects could be realized here.
Let’s now move to future visions for PET. Where do you personally think PET will be in the next 10 to 20 years? Where are we going here? Are there possibly any other types of plastic material, which could replace PET? Mr. Schönwald, to set the mood for this topic I’d like to ask you for your assessment of how the PET beverage bottle could develop further in the future in the various regions of the world.
Schönwald: Let’s begin with Asia, more specifically with Japan, a country that very clearly has a special status within Asia as a whole. Japan is a highly developed country. I don’t know anywhere else that makes such high demands of PET beverage packaging as Japan. The market will continue to develop here, although I only forecast low growth rates.
In the other countries of Asia, on the other hand, we must reckon on a high growth in PET beverage bottles, which could very well amount to between 6% and 8%. It’s estimated that in the next ten years there’ll be about 2.5 billion new consumers who will go from being poor to becoming middle class. The majority of them come from Asia and will then be able to afford beverages in plastic bottles for the first time in their lives. This of course will vastly enhance the aforementioned growth rates.
“All in all, I believe the premium PET bottle will be the new glass bottle.”
I think Africa is the continent, which is most neglected and I don’t dare to venture a specific prognosis here. In Latin America, however, I expect to see a further economic upswing and thus also a plus in PET bottles. All told, the growth rate here could easily be over 5% per year.
In Western Europe and North America we can assume that the annual increase will be roughly 4% maximum. The biggest issue in North America in my view is the low recycling rate. Here, almost 70% of PET bottles are still used as landfill*. The Americans are also used to cans and will probably continue to consider them the best for filling volumes of up to 0.5 liters versus other container types in the future, too.
In Western Europe PET has become a reputable packing material, even if not for all types of beverage. Beer and wine are still the exception, for example, and still popular in the glass bottle. Things could change here.
In Eastern Europe, on the other hand, beer in PET is an established concept and will undoubtedly continue to play a big role. However, consumer enjoyment of beer may be slightly spoiled by the barrier-free bottle materials frequently used here which affect the taste of the beverage considerably after just a short time. All in all, I see a yearly plus of about 5% in PET bottles for Eastern Europe.
Haesendonckx: I’m also convinced that PET has a future career on the world’s markets. This material will certainly continue to be used for plastic beverage bottles. In the past few years, people have tried to launch alternative materials for beverage bottle stretch blow molding to market, such as PP, HDPE, and PLA. Yet unlike PET they don’t have the higher stability needed in the stretch blow molding process. Also, compared to PET they’re less transparent and thus less suitable here right from the start.
Dr. Appel: I also see no danger of PET being substituted in the future. I think that PET manufactured using conventional processes will still be available to us over the next few generations. It’s good that the new biopolyester made of renewable raw materials can also be processed on the same machinery.
Haesendonckx: In the meantime, I also see biopolyester primarily as a communication and marketing vehicle, which helps to sell a beverage or a company’s image better. Whether bottles made of renewable raw materials really do provide added value remains to be seen.
Schulte: I think that the plastic bottle’s image will become more positive in the future than it has been to date as we’re in for a generation change. Many young people have grown up with plastic bottles and see them as perfectly normal containers. They’ve cast off of their parents’ negative associations. New ways of life call for convenience and lifestyle, both of which plastic bottles have.
“Where the move from glass to plastic was once a vision, it’s now reality.”
On the other hand, I think that topics like sustainability and recycling definitely have to be communicated to a new generation hungry for information. All in all, I believe the premium PET bottle will be the new glass bottle.
Gernhuber: I agree. In the premium segment especially, where the margins are even greater, I’d also see the biggest future incentive in promoting communication with the consumer, persuading them that lightweighting not only means cutting costs but is also a feat of premium engineering, which protects our environment. After all, premium suppliers can establish a far more intensive contact with the consumer through marketing than discounters can.
For me, this is a vision, which will surely take time to realize. Nonetheless, in my view consumers can only be convinced that lightweight bottles are good, safe, and sustainable in this manner. I also believe that the specifications for PET applicable worldwide should be a thing of the past. We need country-specific specifications, which have been adjusted to suit the technical conditions and distribution chains available in that particular country.
Dr. Appel: I think lightweight bottles represent technological quality. Communicating – what is quality? – is a separate issue. As to my vision of PET for the future, I primarily see the entire value chain and the never-ending pressures of cost. For me, it’s just a question of time until the first big bottler also becomes a manufacturer of PET material after going through all stages in the process from glass to PET, from bottle buyer to bottle blower and from bottle blower to preform producer. With technologies like Direct To Preform the bottler would have control over the entire value chain.
Neugebauer: I’d like to add that in the future I also see a growing potential for beverages, which to date are very rarely bottled in PET. In Western Europe this includes beer, wine and, as previously mentioned, milk. I think that there’s plenty of opportunity here, especially in view of the dawn of the next generation.
Kempa: We’ve realized that people in developed countries in particular will watch out for even greater quality and sustainability in any form. Information patterns will change and people will question both the product and packaging in great detail. For me, this also means that brands will continue to gain in importance in the future, especially when discussing issues such as these, for a brand stands for a promise of quality and is naturally bound to keep this promise so as not to disappoint the consumer. I’m sure that the issues are very different in newly industrializing countries, where it’s not a question of water being nicely packaged, for instance, but whether there’s actually enough water of a suitable quality to go round.
“As long as there’s PET packaging, there’ll be attempts to optimize it further.”
Haesendonckx: Another point for the future I consider relevant is the development of a new distribution culture. Walmart, for example, is already putting up billboards in the subways of South Korea for products, which are printed with barcodes. With the help of my iPhone, I can then simply order the beverages shown, for instance, and have them delivered to my home. This could be a topic for the future, as could ordering beverages on the Internet.
Pack designs then have to be adapted to suit these new channels of distribution. For PET bottles this means technically optimizing the weight to ensure maximum product quality within the relevant distribution chain.
Neugebauer: I think that where the move from glass to plastic was once a vision, it’s now reality. Customer information is of course important. However, I consider that the work involved in helping PET become an accepted material is over, since PET for beverages is now normal. However, I also think that in the fields of injection molding, blow molding, filling, and aseptics there’s still a lot for the machine industry to do and that structures within the distribution system will change.
“The added value of the PET bottle can basically only be assessed on a product-to-product, region-to-region, and country-to-country basis.”
For instance, I’ve heard of an interesting new idea in the Czech Republic recently, where a non-alcoholic alternative to mulled wine is to be sold in PET bottles from vending machines in the winter. What’s special here is that the beverage is first heated to 37°C. I also still see huge areas of application for PET in the food industry. Pureed tomatoes, soups, sauces, etc. – in my opinion there’s still a vast potential especially in the food industry. This field will then make new demands of converters and the manufacturers of stretch blow molders. They should also supply machines with fewer cavities to food companies wanting to start production with PET bottles.
Thanks to you all for this fascinating discussion, your many new thoughts and ideas, interesting visions for the future and finally for something Mr. Schönwald said, which you’ve all confirmed and, which also seems relevant to the future: “PET – what else?"
The round table was chaired by Friederike Arndt, Frank Haesendonckx and Matthias Damm.
The trend interview
Talks with qualified experts are designed to provide an insight into future developments on our global markets and in the beverage, food, and non-food industries in particular. To date KHS competence has conducted interviews …
… with Professor Peter Wippermann, one of the guiding lights in trend-related market research, on the general tendencies in the beverage and food industries;
… with Fred Piercy, business director for wines and spirits at the largest global packaging company listed on the stock exchange, Amcor Rigid Plastics, on the trend towards wine in PET bottles;
… with Thomas Haensch, vice-president of Sales, Marketing & Innovation at Ball Packaging Europe, on the future of the can;
… and with Petra Westphal, project manager of the drinktec trade show, on global trends in the beverage and liquid food industries.