Comment - Soft Drinks & Water - Cans Fizz in Flat Europe
In his latest commentary, Richard Corbett considers the rise, fall and rise again of the drinks can. The format is in the midst of a renaissance, and Corbett thinks the economic plight has played an unexpected role in the success story.
In my youth, it was necessary to handle the beverage can with care. It was often an unpredictable way to access your refreshment; there was often a chance that it could detonate on opening, sending a jet of sugary bubbles into the air. Concentration was also required to prevent the razor sharp ring pull delivering a nasty flesh wound.
Those days are very much behind us now and the Beverage Can Makers of Europe results suggest that, in Europe, consumers are buying more of their soft drinks in cans. Last year, can production for soft drinks in the continent increased by between 6% and 7%.
The use of cans for soft drinks has come a long way since they first began to feature back in the mid-1950s. The breakthrough came when Coca-Cola opted to use cans, despite the misgivings of some. Business Week declared at the time: "You may be able to put Coke in a can, but what comes out isn’t Coca-Cola."
At this time, pockets of American serviceman dotted around the globe were missing the taste from home; the can offered a solution to storage and transportation, prompting Coca-Cola to put their concerns aside and send Coca-Cola in cans to US troops in the Pacific. The rest is history and, today, according to beverage research agency Canadean, one in every six litres of fizzy drinks in Europe is sold in can.
The arrival of PET bottles in the late 70’s, however, undoubtedly diluted the opportunities for soft drinks cans. In the on-the-go, convenience and impulse channels, cans suffered as retailers and vending machine suppliers switched to the half-litre bottles. They liked them because they could encourage drinkers to upgrade to bigger unit sizes, and they could charge more for them.
Drinkers quite liked that they could re-seal their beverages and quench their thirsts in instalments: 33cl was believed to be the optimum quantity that a consumer can drink in a short time.
It was not just PET that was a threat to the drinks can in Europe: Legislation has also impacted. The Danes even banned the can for 21 years until September 2002. Meanwhile, in 2003, Germany imposed a mandatory EUR0.25 (US$0.33) deposit on non-refillable beverage containers below 150cl. This triggered a plunge in can use in the country of around 70% over the next two years. Carbonates and particularly energy drinks sales slumped, forcing the closure of factories and, according to estimates at the time, a cost to the German economy at EUR1.2m.
Against this sombre backdrop, the beverage can has had to reinvent itself as a single serve refreshment. This has been achieved through the introduction of the multipack and a focus on fridge-friendly pack designs. The popularity of the can multipack has highlighted how much consumers like the single-serve format at home. They don’t always want to keep putting the bottle back in the fridge and, one could argue, with a PET bottle the quality of the product deteriorates every time you open it.
In Europe, then, the results would suggest that the strategy seems to be yielding dividends, despite the gloomy economic climate.
Indeed, the economic climate may even be helping. The uncertainty of the Euro Zone is continuing to encourage Europeans to shun the region’s restaurants and bars. The off-premise bias of cans is helping them steal share from the glass bottles and postmix which pre-dominate in the on-trade. Increasing can consumption may well be a good gauge of how depressed the on-premise has become during these dark days of austerity.
The healthy surge in soft drink can production in Europe can also be traced to another very influential factor; the flourishing energy drink category. Cans are now established as the standard packaging format for a category that seems to be immune to the insecurities of the downturn.
The canmakers of Europe are right to be smiling. The energy drink category looks like it has long legs and in the supermarkets the can multi-pack has won over many consumers. What will be particularly encouraging for the industry is that, as a rule, can multipacks are more expensive per litre than plastic bottles. This has obviously not been a deterrent and consumers have demonstrated that they are prepared to pay more to drink out of a can at home.
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