India - Next big thing in global aluminium beverage can business

With consumption of beverages such as soft drinks in stylish, attractively contoured cans rapidly catching up with both urban youth as well as rural folk in the country, aluminium beverage can manufacturers like Rexam and Can-Pack are experiencing a consistent upward spiral in business.

Interestingly, though the aluminium beverage cans market in the country is on a high growth trajectory, it is still to catch up with the Western and other developed countries. In fact, a large chunk of the Indian aluminium beverage cans market belongs to the beer segment. Shanker Gopalkrishnan, president, Madras Consultancy Group (management consulting, and market research services), Chennai, explains, “The total market share for aluminium 2-piece beverage cans was tiny compared to the global market of over 350 billion beverage cans. Of the Indian market for beverage cans, nearly 60 per cent is accounted for beer and the rest by carbonated soft drinks. The dominant packaging is still glass and PET.”

With consumption of beverages such as soft drinks in stylish, attractively contoured cans rapidly catching up with both urban youth as well as rural folk in the country, aluminium beverage can manufacturers like Rexam and Can-Pack are experiencing a consistent upward spiral in business.

Interestingly, though the beverage cans market in the country is on a high growth trajectory, it is still to catch up with the Western and other developed countries. In fact, a large chunk of the Indian beverage cans market belongs to the beer segment. Shanker Gopalkrishnan, president, Madras Consultancy Group (management consulting, and market research services), Chennai, explains, “The total market share for aluminium 2-piece beverage cans was tiny compared to the global market of over 350 billion beverage cans. Of the Indian market for beverage cans, nearly 60 per cent is accounted for beer and the rest by carbonated soft drinks. The dominant packaging is still glass and PET.”

Challenging market conditions

While the Indian aluminium beverage cans market, compared to the West, is still in nascent condition, it is facing further growth challenges in the form of policy hurdles such as excise duty on aerated and sweetened beverages. Netscribes points out, “The current hike of 3 per cent excise duty on aerated or sweetened beverages is slated to have a negative impact on the entire value chain. This is the third consecutive increase in excise duty since July 2014 and has resulted in an overall increase of 75 per cent, from 12 per cent to the current 21 per cent. As per industry estimates, the aerated beverages industry has been witnessing a slowdown, with a compounded annual growth rate of 12 per cent in recent years, declining to less than 4 per cent in 2015. The hike in excise duties will slow the growth of the already mellowed beverages can sector even further.”

Nevertheless, high growth in segments like juice and healthy beverages in India is showing a positive effect on the beverage cans industry. B S Pani, independent industrial consultant, Orissa, states, “There are several concerns to be addressed to develop a clear and certain road map for the growth of aluminium beverage can industry in India. But as some of the leading market experts of the industry have been predicting of late, India could be the next big thing to happen to global aluminium beverage can business.”