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Is the refillable bottle the next Dodo?
The global soft drinks market is served by a rich profusion of packaging choices to satisfy a broad range of both producer and consumer needs. Cartons are relatively cheap, glass presents an image of quality, metal is robust whilst plastic provides versatility, particularly in the case of PET (polyethylene terephthalate). It is not the selection of packaging materials that is extensive but also the range of shapes and sizes from the petite 100ml bottle, as employed by energy shots, through to the ten and twelve litre tanks used for packaging water.
Yet, in an era of growing environmental concerns, more and more of these packages are becoming non-refillable throwaways. For some pack options, such as cartons and cans, disposal after a single use is the only real solution. Reusable cartons do exist i.e. the ‘Juice in a Box’ concept, the result of a collaboration between designer Leo Corrales and Precidio Design Inc. But these containers are plastic based, not board, and are really designed for the lunch box market, being refilled from home. As far as I am aware no one has gotten round to producing refillable cans yet, apart from the high volume drums which contain the syrups for fountain dispensing of soft drinks. There are bio-degradable eco-cans but these are not cheap and therefore not yet viable for mainstream usage.
Then we come to glass. Glass bottles can, of course, be refillable. In the USA, before World War II, nearly all soft drinks were sold in refillable glass bottles and used as many as fifty times. But, according to the environmental group the Green Roots Recycling Network, the US market share for soft drinks in refillable glass bottles declined from 100% in 1947 to less than 1% in 2000 to be replaced, initially, by aluminium cans and disposable glass and later plastics. There are a number of reasons for this development including the economic cost of setting up and maintaining refillable systems and retailer reluctance in supporting the concept. Then there is the potential problem of high level contamination due to consumer misuse, brand image issues through scuffing, blemishes and general wear and tear plus the fact that one way bottles present greater flexibility in respect of changing a pack design.
Refillable glass is still in wide usage elsewhere in the world but total volumes are not increasing whilst the post recessionary soft drinks market is expanding at around 4-5% per annum. As a result, the importance of refillable glass is flagging.
Much of the trend away from refillable glass and, indeed refillable containers in general, has to do with the rise of the PET bottle, patented in the 1970s. In the four subsequent decades the plastic has succeeded in reshaping the entire soft drinks landscape. It is greatly favoured by soft drink producers especially in respect of carbonated soft drinks (CSDs) and bottled water which, when combined, represent the mainstay of the global soft drinks market. It is versatile, resilient, offers good product clarity, provides consumer convenience, good potential for brand differentiation and has allowed for the creation of larger sized units. PET is available in both non-refillable and refillable formats but the latter face the same problems as refillable glass and similarly have been overtaken by single use options. Drinksinfo Ltd estimates that today non-refillable PET bottles outsell reusable ones by a factor of more than 9:1.
Refillable PET bottles are still available but their application is somewhat limited geographically. In many countries non-refillable PET bottles do not even exist but they do have a high occurrence in Central America, for example, primarily thanks to their application in the Mexican CSD category but refillables still outsell their one-way counterparts here and are growing at a faster pace. Western Europe remains as another refillable stronghold, although under pressure. A number of countries in the region, including Denmark, Germany and Norway, give incentives to encourage one way packaging, a reflection of strong environmental policies region. But this approach has been challenged as favouring local industry and restricting international trade.
Despite the encouragement given towards refillable packaging, to my knowledge, Norway is the only country where refillable PET actually has a stronger position than non-refillable. However, in September last year, Coca-Cola Enterprises Norway produced its last 500ml refillable PET bottle in favour of the new Plantbottle, made from up to 22.5% plant-based material and 25% recycled material. Coke estimates that by moving to recyclable non-refillable bottles from refillables, it will reduce the amount of carbon used in production and transport in Norway by up to 34%. The amount of energy and water currently used to transport, receive, wash and sanitise the refillable bottles will also be reduced. As Coca-Cola controls half the country’s CSD market this should have a rapid and significant effect on the balance between refillable and non-refillable PET, to the benefit of the latter. The race is now on to commercialise a 100% biodegradable bottle.
The arrival of the biodegradable bottle provides exciting opportunities for future packaging development but they are still only for one time use whereas, when all is said and done, a single bottle that is filled, say, fifteen times eliminates the need for making fourteen more bottles, avoiding the environmental effects of materials extraction, processing, manufacturing, and recycling or disposal of those fourteen bottles.
Pitfalls of DIY Market Research
In these uncertain times companies on a tight budget are apt to consider undertaking market research internally. Think again. Desk research is not as clear cut as it may at first seem. Take published production statistics. These do not necessarily cover a total market or category. In the case of beer such statistics may well exclude boutique and craft breweries due to the limited size of their output. But added together they may well represent a sizable chunk of production. Industry associations may provide both production and consumption statistics (e.g. the Verband der Brauereien Osterreichs in Austria). However, such data will, in all probability, only record member input and often there is no compulsion for all brewers, soft drink/spirit producers or wineries to sign up. Even where association members provide a pretty full coverage of branded production, as in the case of bottled water in Belgium (via FIEB) private label volumes are generally excluded and these can make a sizeable contribution to category volume. If retail audit data is affordable this is not necessarily representative of the total market, only the specific channels it covers.
A brief word on internet trawling. Often you will come across snippets of data that, on the face of it, seem to provide good insight into market size and trend, but what does it really mean?
- When a company claims a specific market share what market /category, or time period is it actually referring to?
- Is it a national share or regional?
- In respect of category share is it including private label or just brands?
- Does it relate to production or consumption (which may be calculated as ex factory shipments or merely production +imports – exports)
- Is market data based on published industry statistics, association members, retail audit data or scan data?
- Is market share a volume share, a unit share or a value share?
- When yearly performance is referred to is it really annual, 48 weeks, YTD, MAT or a financial year?
- When a category is referred to who is defining the category. For example, does bottled water cover sweetened products (e.g. Glaceau from Coca-Cola) or are such products actually seen as part of the still drink market?
- Are syrup volumes reported in concentrate form or diluted (and if the latter, at what concentrate to water ratio?)
- Does the beer market include non-alcoholic beer and all other beer types (domestic and imported)?
- Is a case 9 litres, 8.4 litres, 5.678 litres (24 servings of 8 U.S. ounces) or actual?
And another thing. Don’t assume that where you can afford to hire an external research company that the more they charge the better will be the quality of the research. A few years ago a company I was working for bid for a major beverage project. For one reason or another we did not have sufficient “street cred” for the client despite being a specialist in our field. The project was subsequently given to a more globally recognised, but broader based, organisation. This said organisation subsequently sub-contracted to the company I was working for and took a major cut of the project fee for no more input than client liaison. Be warned.
On a related subject and for further reference take a look at “How to lie with statistics” by Darrel Huff. It may be dated but it’s a good bath time read.
SDI 2012 Seminar
On 17/18th May 2012 Soft Drinks International, the independent global beverage magazine, is holding its inaugural seminar in the heart of the historic City of London. This two day hotel based event not only marks the 125th year that the publication has been in circulation but, more importantly, it provides the ideal opportunity for all companies and organisations involved, directly or indirectly, in the soft drinks arena to meet together under one roof to debate the issues affecting the future of our industry. The topics to be discussed by our selected guest speakers have been chosen to appeal to a multi-disciplinary audience of middle to senior management, from beverage producers, wholesalers and retailers to packaging and ingredients providers through to trade organisations and third party agencies plus other interested parties.
After an introductory address the event takes the form of a number of short related presentations, followed by question and answer sessions. During beverage and lunch breaks delegates will have ample opportunity either to network or visit a number of company table top displays. During the evening of the first day there will be a complementary boat cruise on the river Thames followed by a gala dinner. The second day will finish in good time to miss the traffic out of the city.
Further details, including seminar costs, hotel bookings, sponsorship and display opportunities, can be obtained by ringing Ray on +44(0)1638 717 362 or visit www.softdrinksinternational.com. Thanks for your time and hope to see you next May.
Some Interesting Facts and Myth Breakers
- A litre of bottled water in the UK can cost nearly as much as a litre of petrol, yet no one quibbles over its price
- A pint of beer cost just 14 pence in 1972 (McEwan’s, Reading University bar)
- Baitz cream liqueur preceded Baileys Irish Cream
- Brazil consumes more fruit powder drinks than any other country
- Coca-Cola allegedly once contained cocaine
- Cowboys are more likely to have drunk brandy rather than whiskey
- Czech Republic has the highest per capita consumption of beer
- Dogs milk is the longest lasting milk, because “no bugger’ll drink it” (Courtesy of Red Dwarf, 1988. Sorry I had to get that one in)
- Fosters is not Australia’s favourite beer. It is not even in the top ten brands. Victoria Bitter is the top selling brand but it is not a bitter!
- Guinness brewed in Ireland has been officially recognised as tasting the best
- Indian whisky is made from molasses and has no closer similarity to Scotch other than the name “whisky”
- Instant coffee was invented in 1901
- Irn Bru is not made from girders
- Jack Daniels is not bourbon
- More tea is consumed around the globe than coffee
- One in every four litres of carbonated soft drinks consumed in the world is drunk in the USA. To put it another way, on average each American drinks more than 3 litres of soft drinks every week.
- Putting a teaspoon in an opened sparkling wine bottle keeps it fizzy for longer (Controversial but it works for me)
- Red Bull, from Austria, was inspired by Krating Daeng in Thailand
- Saucer shaped champagne glasses are said to be modelled on the breasts of Marie Antoinette
- Scots reportedly drink 25% more alcohol per head of population than individuals south of the border (Courtesy of BBC News)
- Sunny Delight once reportedly turned a boy yellow (Courtesy of BBC News Wales, 1999)
- The first traced “alcopop”/FAB/RTD was bottled Campari and Soda
- Vodka can be distilled from virtually any fermentable ingredient
- Whiskey originates from Ireland. Whisky originates from Scotland
- 30% of all Benedictine liqueur drunk in Britain is consumed in the Burnley, Accrington and Nelson area of Lancashire (Courtesy of The Independent on Sunday 1994)
What’s in a Name?
Some of the name tags given to beverage products strike me as incredible. Do the marketers just go along the alphabetical list of available names and say “yes, that one will do”. Of is it a finger in the air job? Or is it just to be a bit cheeky like Two Dogs alcoholic lemonade from Down Under. Remember Two Dogs? That was a great brand. The name was based on a great classic joke too. But this is not the place, nor the time.
But let’s move a bit more up-to-date and take Pussy Natural energy drink. What’s its relevance? Is the name really there just to shock? If so, who is it shocking? It has a potential shock value for the adult inhabitants of our tiny “Sceptred Isle” certainly, but what about the 300 million inhabitants of the US. Doesn’t it kind of lose its market impact and potential amongst these beaver lovers? I wonder what its penetration rate would be in America…
Now Red Bull, that speaks volumes. That speaks of power that speaks of virility. I remember a conference a few years back where Harry Drnec, the Red Bull UK managing director, was speaking. Companies like Coke and PepsiCo had brought along complementary fridges filled with their products. These soon emptied whilst the mini Red Bull fridge was hardly touched. That was before Harry’s talk. The twist he put into his banter, hinting at the virility aspects of his brand, had an immediate impact. By the end of the next tea break the Red Bull fridge was bare!
To me Mother carries similar credentials as Red Bull. It’s big and beefy and exudes images of rough, tough can chewing biker gangs. You don’t know Mother? It’s a big hit in Oz. A pioneer of the 500ml energy drink can. Coca-Cola (it’s a Coke run brand) might not admit it, they don’t openly admit that Coca-Cola contained an opium derivative either, but to me Mother is missing a second half to its name (beginning with a capital F). So what, it works.
So what is the winning formula? Is it luck, is it symbolism, is it advertising, is it distribution muscle or is it actually that the product tastes good (hmm perhaps not), that is the 2 million dollar question. Oh and talking of money (and I know it was a long time ago but it still bugs me) , did it really cost £100,000 to come up with the name tag of Diageo, linking Guinness plc and Grand Metropolitan plc in 1997? Really guys, what were you thinking?
