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Glass well ahead of the pack, on class |
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January 2008 |
 In 2007, the winner in the SA packaging subsector growth stakes - by a large margin - was glass.
/~The volume growth rate in glass consumption in SA (including imports and SA Breweries' (SAB's) float replacement) was an estimated phenomenal 16.6% in 2007 (compared with 6.6% in 2006), according to BMIFoodpack.
By comparison, other packaging subsectors (metal, plastics, paper) are likely to have grown by 3-6% in 2007.
Glass has benefited more than almost any other food or packaging sector from aspirational-linked growth in consumption by SA's emerging middle class.
Consol Glass, which accounts for 75% of glass production in SA, has been expecting and experiencing healthy growth for glass for the past five years. Nampak Glass accounts for the balance of SA production.
However, the 2007 growth rate was artificially boosted by the process of replacement by SAB (Operation Calabash) of its float of about 400m returnable beer bottles (although incremental glass requirement will only be 220m units over an 18-month period (approximately 100,000t)).
Stripping out the Operation Calabash element, on a comparable basis it is likely that "normal" growth in glass will be 10-12% in 2007.
Even at this growth rate, glass is undoubtedly the highest-growth sub-sector in the SA packaging industry.
Ockert van Heerden, Consol's business manager for food and beverage, says the growth in glass recently has been primarily due to:
- Strong export growth in wine.
- Organic growth across all categories.
- Pack conversion from alternative packs to glass.
- Consumption migration to more premium one-way packs.
Says Van Heerden: "A product in glass allows people to feel special for a few moments. Glass is probably unique in that the packaging makes people feel good. 'I buy a product in glass because I'm worth it and I can', is a typical quote from a consumer."
Other factors which explain the growth in glass, according to Mike Arnold, MD of Consol, and Dale Carolin, Consol Glass's divisional director for sales and marketing, have been:
- Continuous increases in disposable incomes.
- Overall volume growth in food and beverage consumption.
- Migration of consumption in the broader beverage category.
- Migration to premium brands generally in alcoholic and non-alcoholic drinks, and particularly in fruit juices and mineral waters.
- The tradition and nostalgia associated with glass - "the 'welcome to life' clink factor."
- Increasing awareness that glass is 100% recyclable (although this does not take into account energy used in recycling it).
- Glass is unique in catering for both the cheapest (returnable) and the most expensive (non-returnable) packaging. In SA, the glass market is at the bottom and the top - there is a large volume of glass in returnable beer and cold drink bottles, but also a growing slice of the upper market.
Marketing and innovation
In many overseas markets, glass packaging use is also growing, but not as fast as in SA. There, the growth is often driven by legislative and environmental considerations, and the health trend, says Carolin.
"Where a food can display quality, it should - other things being equal - be packed in glass," he says.
In SA, the aspirational growth in the market has apparently been reinforced by direct advertising by Consol to consumers, which emphasizes the quality of glass and its premium packaging aspect.
In other countries glass's image of quality is apparently not as strong as in SA. For instance, plastics often constitute premium packaging in the US because of functionality (for instance, squeezability).
Carolin says that the direct-to-consumer advertising of "quality and class" in SA, which has been Consol's strategy for the past decade, has worked because when the consumer buys a brand or product in glass, the packaging becomes more top-of-mind.
In SA, Consol is the only company spending on advertising glass packaging. It therefore regards itself as "owning the glass brand", Carolin says. However this advertising is only one leg of Consol's marketing strategy.
Another leg is Consol's two ConsolXPRS shops.
The Cape Town ConsolXPRS shop is primarily a factory shop. But the Woodmead, Johannesburg, shop is "experimental/experiential" retail, says Carolin, which "adds to glass's brand equity and heightens awareness of it".
There, not only Consol's products are sold but also imported products to create awareness and affinity with the trendiness and quality of glass.
These shops, and Consol's general marketing strategy, communicate that there are other trends towards glass - for instance in architecture.
Increasing conversions
Throughout the world, bottled water is the fastest-growing beverage category.
In SA, glass accounts for only 2% of bottled water packaging. By contrast, in Europe, it accounts for 10%. This indicates the potential for glass in SA to gain from PET in this subsector, says Carolin.
Many up-market bottled water brands are already being packed in glass, he says. For instance L'Baude, which won a Gold Pack Award for its heavy blue PET bottle, now also has a glass offering.
There are, of course, instances where functionality means that plastic should be used, says Carolin. "For instance, if a beverage is to be drunk by children, plastic or metal packaging may be better."
In carbonated soft drinks - which still dwarf bottled water volumes in SA - glass is still the biggest packaging type by volume. About half of this subsector's beverages packaging is in glass, inclusive of returnables.
However, the carbonated drinks market was flat in latter-2006 and early 2007 because of a shortage of carbon dioxide supplies.
There are other examples of glass's gains. For instance, the winemakers of Worcester, Western Cape, now have wine bottles with braille markings to allow the blind to choose for themselves.
Consol Glass invested over R500,000 to tool up operations for this at its Bellville, Western Cape, plant.
Embossing, special bottles
Increasingly glass customers are using embossing as a key differentiator. For instance SAB's Castle bottle has had a Charles Glass embossment for the past few years.
"Embossing is not difficult and does not necessarily add cost," says Carolin. Consol Speciality Glass has technology from Europe which should make access to moulds more available in future to smaller companies which want to package in glass.
This would allow them to access glass with their own designs (though there will still be a critical level needed, below which production would not be economic).
Generally, Consol applies technology licenced through Owens-Illinois of the US for the beer industry; current projects are focusing on narrow-neck and light-weight (but sufficient-strength) bottles.
"We are working on a project that will deliver the lightest beer bottle, by capacity, in the world," says Carolin. - Teigue Payne
Consol Glass:
Tel 011-874-0000.{/mosregread}
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