PET market in Europe

Product developments in sparkling waters will direct bottle engineering projects towards barrier performance (CO2, O2, vitamins, natural flavourings) as opposed to light weighting initiatives, which will favour lighter weight monolayer solutions over heavier multilayer bottles.

In household chemicals the trends are about inter-material competition. HDPE is the dominant polymer within this market. However, with the substantial reduction in price differential between polyolefins and PET, PET bottles continue to grow their market penetration.

Colgate-Palmolive was the first to switch to PET and Procter & Gamble too has converted all dishwasher products (i.e. Fairy Liquid) and fabric conditioners to PET bottles in Europe, substituting HDPE. Other leading fillers in Germany have also converted.

Yet within companies such as Unilever, Procter & Gamble, and Colgate-Palmolive, the balance of polymers is still broadly 75:25 in favour of HDPE versus PET. This presents a significant substitution opportunity for PET in applications and bottle sizes that don’t require a handle or are not subject to tight cost constraints. While growth prospects in general may be promising, the business remains challenging for raw material suppliers and converters alike in Europe. The forward focus for fillers is resource-efficient supply, driving the market toward on-site manufacturing options be it HTW (hole-through-the-wall), self manufacture, or blow moulding of preforms. This is limiting the ability of traditional converters to add value, while for European resin suppliers this is mainly a commodity business increasingly threatened by cheaper Asian and Middle East imports.

The competitive nature of the business is driving consolidation throughout the supply chain and the top 10 moulders accounted for one-third of polymer conversion in Europe for blow moulded bottles in 2009.

Alpla is the clear market leader with a strong position as a supplier of blow moulded bottles, preforms, and HTW services. For 2010 it purchased in excess of half a million tonnes of polymer for its European operations and accounts for more than 10% of the market. The company has built its position through its investment in a network of in-plant blow moulding operations at its customers. Other major blow moulding groups which similarly operate a network of HTW or in-plant operations for the major food and drink companies include Logoplaste, Serioplast, Nampak Plastics Europe, and Graham Packaging. In PET preforms and bottles the leading company is Artentius PET Packaging, which acquired Amcor’s PET business in Europe in 2007.

Given the growth in blow moulded bottles, it is not surprising to see plastic closures as another area of strong growth within the rigid plastics packaging market. With output of more than 220 billion units/year, production had been growing at a rate of nearly 6% per year prior to the recession, with the use of HDPE one-piece closures growing at a rate three percentage points above this. It is estimated that plastic caps and closures now have a market penetration of over 50% of the total closures market in Europe, exceeding metal closures in terms of unit demand. Again, as in bottles, the drivers are cost reduction and light weighting, which is encouraging the use of one-piece closures in preference to two-piece closures.