Beverage Packaging Market Drivers, Restraints, Opportunities & Challenges

The beverage packaging market is estimated at USD 148.1 billion in 2021; it is projected to grow at a CAGR of 5.0% to reach USD 189.0 billion by 2026. The rise in demand for sustainable products and awareness regarding the environment coupled with increasing demand for convenient packaging will drive the market demand and growth of beverage packaging globally.

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Driver: Rising beverage consumption in emerging economies

The increasing global population and rising disposable income in developing economies are creating new avenues for packaged beverages. According to the Brewers Association, the total value of the beer market was USD 94.1 billion in 2020, whereas the total craft beer market was estimated at USD 22.2 billion. The alcohol per capita (15+) consumption (in liters) was recorded at 8.6 liters in 2010, which increased to 8.8 liters in 2016, according to the WHO. The increasing urban population, coupled with the changing lifestyle, has led to an increase in total packaged beverage consumption in emerging economies such as India. The data provided by the World Bank shows that around 30.58% of the total population of India resided in urban areas in 2009, which increased to 34.47% in 2019. According to a study published in the Lancet journal, alcohol consumption in India increased by 38% from 4.3 to 5.9 liters per capita during 2010 - 2017. The large population in emerging economies such as India and China is expected to drive the beverage packaging market.

The increasing health awareness among youths has increased the demand for packaged juices, energy drinks, and health drinks, providing immense opportunities for manufacturers to increase their sales. Furthermore, the increase in tourism, easy availability of bottled water, and preference for a healthy lifestyle on-the-go have also increased the demand for bottled water and flavored water infused with vitamins, natural flavors, or nature-identical flavoring substances such as basil, lemon, mint, orange, hibiscus, and fruits.

Restraint: Stringent environmental legislations

Packaging waste harms the ecosystem as it takes decades to decompose. Governments across the globe are addressing this issue by imposing strict laws that the beverage packaging industry is subjected to follow. For instance, governments in Europe take various steps to deal with packaging waste and recycling issues. One such legislation of the European Commission is ‘European Parliament and Council Directive 94/62/EC of 20 December 1994 on Packaging and Packaging Waste.’ This directive provides measures aimed at limiting the production of packaging waste and promoting recycling, re-use, and other forms of waste recovery.

Opportunity: Increasing use of biodegradable and renewable raw materials

The increasing awareness of environmental safety among consumers and the rising adoption of eco-friendly products provide manufacturers of beverage packing products with immense opportunities. According to a study conducted by National Retail Federation, 69% of participants in North America are ready to pay a premium price for recycled products, while 80% of participants want to know the origin of products they buy. Bioplastics are polymers obtained from renewable sources, such as corn starch, woodchips, vegetables, and fatty oils.

Bacardi Limited, in 2020, announced that it would be using 100% biodegradable plastic packaging made with plant-based oils for all its brands by 2023. Thus, the shift of beverage brands to bioplastic bottles from conventional materials for packaging their beverages provides new opportunities for players in the market.

Challenge: High cost of sustainable packaging

Consumers demand sustainable solutions for beverage packaging, keeping in view health and environmental issues linked with the use of synthetic polymers. Beverage packaging companies try to ensure the quality and safety of products with their available resources, but the sustainability factor increases the overall cost of production and thus, affects the overall profitability. The increasing cost of final packaging might affect sales. Therefore, this two-way challenge pressurizes companies to find a middle path that balances various dimensions of sustainability and cost management.

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Key players providing packaging formats to the beverage industry include include major players such as Amcor Group GmbH (Switzerland), O-I Glass, Inc. (US), Crown Holdings, Inc (US), Ardagh Group S.A. (Ireland), Verallia SA (France), Tetra Pak Group (Switzerland), Ball Corporation (US), Vidrala S.A. (Spain), Toyo Seikan Group Holdings, Ltd. (Japan), and CPMC Holdings Limited (China). These major players in this market are focusing on increasing their presence through expansions & investments, mergers & acquisitions, partnerships, joint ventures, and agreements. These companies have a strong presence in North America, Asia Pacific and Europe. They also have manufacturing facilities along with strong distribution networks across these regions.

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