Freedonia noted in its new report, ‘Beverage Containers in China to 2015’, that the country was now the world’s second-largest packaging market, worth an estimated $76bn (€58.3bn) in 2011, having grown around 7.2 per cent from 2010.
China had overtaken Japan in terms of market size and was expected to eclipse the US by 2020, Freedonia said, with the authors anticipating a compound annual growth rate (CAGR) of around 8 per cent to 2016 ($110bn).
According to the company, paper and board packaging accounted for the largest share overall in the Chinese packaging industry ($33.91bn in 2011), although polyethylene terephthalate (PET) accounted for the largest share of China’s non-alcoholic beverage market.
Upscale, premium image
But Freedonia analyst Nicole Ju said that glass had real potential for growth within premium beverages, and cited current examples of glass Evian water bottles sold in high-end restaurants and hotels, and the packaging for high-end apple Chinese brand Huiyuan Juice.
She told BeverageDaily.com: “The ability of glass to convey a more upscale, premium image than containers like plastic bottles and metal cans is particularly crucial in marketing high-end water, specialty or ‘new age’ soft drinks and single-serving juice, coffee and tea products, where a prestigious image can be a considerable marketing advantage.
However, premium appeal was not wholly confined to glass, Ju said: “For certain beverages, metal cans also provide a degree of product differentiation and convey a relatively premium image.”
In the Chinese RTD tea market, Ju said, most beverages were packaged in plastic bottles. “However, the largest RTD herbal tea producer in China, JDB Group, famous for its ‘RED CAN WANGLAOJI’ herbal tea, uses metal cans to differentiate their products in a crowded marketplace and sell them at a higher price than other products,” she said.
A trend towards on-the-go consumption was also driving growth in single-serve plastic containers, according to Ju: “Compared with single-serving metal cans and paperboard cartons, single-serving plastic bottles offer the advantage of resealability, making them more amenable to on-the-go consumption.”
Asked what beverage packaging attributes Chinese consumers were most interested in – for instance, smart packaging, safety, aesthetics, functionality, Ju said: “Functionality is the most important concern for Chinese consumers. When functionality is satisfied, value also plays a role in consumers’ decision where the same product offers different packaging (generally low-end items).”
Ju said she didn’t believe that packaging safety was of great concern to consumers, since recent safety scares related to food and drink quality.
She added: “Innovations that have improved the aesthetics of containers are becoming increasing popular with consumers. For example, attractive stand-up plastic pouches, cans with smaller necks and bases, and cans featuring advanced graphics provide greater product differentiation.”
Quizzed as to how important sustainability was for Chinese consumers, the analyst said that beverage container recycling had become a large part of the industry, due to both environmental awareness and people making money by selling used containers.
“Glass, plastic, metal, and paper containers are all recycled in China to varying degrees. It is estimated that the PET bottle recycling rate is over 60 percent in China,” Ju said.
Freedonia said that major players in the beverage container market included Tetra Laval International, Ball Packaging and Reynolds Group Holdings, along with Chinese firms Zhuhai Zhongfu, the Pacific Can Company and Shanghai Zijiang.
These top six supplied 17 per cent of the Chinese beverage container market in value terms in 2010, Ju said, with the industry highly consolidated in plastic, metal and paperboard products, and “somewhat less so in the glass segment”.