Packaging dilemma in Indian beer industry
More often than not, beer packaging is one of the most challenging arenas for beer producers across the globe. By its nature, the beer industry is very dynamic, where product innovation and changes have happened at a very fast pace across the different geographies. However, innovations in packaging have followed quite longer cycles. Much of this limitation can be attributed to the product. From amphorae in ancient times to glass bottles and then metal cans in the 20th century, beer packaging has changed at a snail’s pace. Glass and metal have dominated the market for the last 50 years and continue to do so in Indian industry.
The Indian beer market, which, according to datamonitor is expected to be worth USD 6.4 billion by 2013, a growth of 86.3 per cent over 2008, is struggling for packaging choices. In terms of volume, the market is expected to grow from 1.3 billion liters in 2008 to 2.1 billion liters in 2013. Prices of glass bottles, which form the bulk of packaging of Indian beer industry, have gone up by 25 percent in the last 12 months. Apart from prices, logistics is another nightmare for Indian brewers, as tax considerations have forced the brewers to locate the brewery unit in each state to save on taxes and it is practically impossible to have a glass bottle unit in the vicinity or in the state due to capital intensive nature of glass bottling plants. Harassed by the continuous price rises in glass bottles, India’s top brewer by capacity, United Brewery has announced to set up a glass bottling plant for captive use.
PET usage
PET bottles, which were introduced in the beer industry in 2003, are starting to get noticed on the Indian market as well. This form of packaging has had a considerable breakthrough in Eastern Europe, where it enjoys a market share of nearly 10 percent. Starting from Germany in 2003, several countries, mainly in Eastern Europe, have introduced beer in PET bottles. Outside Europe it was China, which adapted to beer in PET bottles in 2009. The global PET beer bottle consumption is estimated to be 6.0 billion units in 2010 and is forecast to grow at a compound annual rate of 5.3 percent to total 7.7 billion bottles by 2015, according to Pira International, a packaging research company. A recent report by the company says that PET bottles currently represent 2 percent of the 293 billion world beer packaging market volumes (633 ml pack equivalents).
Indian experiment
After many deliberations, the Indian arm of SABMiller launched one of its beers in PET bottles in March, earlier this year. Priced around EUR 2.00 (INR 120), the 1-litre Haywards 5000 PET bottle was launched in Maharashtra. The company plans to test the market in one state only, before moving to other markets. Against the traditional 650 ml glass bottle or metal can, the PET bottle is slightly larger and can be re-sealed.
The downside with beer packaging in PET bottles is that beer has to be used within 45 days from the date of manufacture, whereas the same product in glass bottles can be consumed within six months of the manufacturing date. Compared to glass bottles, plastic bottle filling lines are expensive as flash pasteurization is needed while filling beer in PET bottles.
However, as the take-away consumption of beer is increasing rapidly, Indian brewers are keenly watching the PET option. Even though United Breweries group is yet to officially announce any move, India’s top brewer is closely watching SABMiller’s move. A top executive from UB says, on condition of anonymity, “we are evaluating the prospect of selling beer in PET bottles. But there are limitations. The reason PET is not common is because it permits ingress of oxygen and egress of carbon dioxide. Beer does not stay stable in this format."
