India's Aluminum Can Market Faces Five-Fold Growth By 2020 - Hindalco

India's appetite for aluminum drinks cans could increase five-fold over the next seven to eight years, playing an important role in increasing the country's stake in global aluminum demand, the chief marketing officer of Indian aluminum producer Hindalco Industrial Ltd. (500440.BY) said Thursday.

"The aluminum can has only just arrived in India," Sachin Satpute told Dow Jones Newswires in an interview at CRU's World Aluminum Conference in London. Currently, less than 5% of India's drinks market uses aluminum cans, compared with over 50% of the U.S. drinks market, said Mr. Satpute.

India's beverage market is currently dominated by plastic PET bottles and glass, he said.

Things are changing, however. While the Indian drinks market currently uses around 1 billion aluminum cans each year--or 15,000-16,000 metric tons of aluminum--this could increase to 5 billion cans--or 90,000-100,000 tons of metal--in seven to eight years, said Mr. Satpute.

Driving the growth in the Indian aluminum can market is the popularity of drinks cans among India's young, growing middle class and a rise in domestic production, said Mr. Satpute.

"In India, there is nothing more western than holding a drinks can," said Mr. Satpute. "The young generation is very attracted to aluminum cans. As the middle class grows, we're seeing more demand for aluminum cans."

The recent development of domestic aluminum can production in India also supports growth in this sector, said Mr. Satpute.

U.K.-headquartered can maker Rexam PLC (REX.LN) opened an aluminum can production line with Hindustan Tin Work in December last year, and Polish can maker Can-Pack has also been expanding its can-making facilities in India in recent years. Hindalco, which is a unit of India's Aditya Birla Group and one of the largest producers of primary aluminum in Asia, is also preparing to start producing aluminum cans at it Hirakud plant, which is currently under expansion.

"Three years back, people were importing cans from Dubai and India," whereas can lines are now operating on Indian soil, said Mr. Satpute. "If aluminum cans become economical in India, there is great potential for demand growth. This is just like what we saw in the mobile phone space, where demand took off once phones became more affordable."

This year, India is expected to consume around 2.7 million tons of aluminum, a small fraction of the 65.5 million tons of estimated global demand, said Mr. Satpute. But while industry estimates peg global aluminum consumption growth at 4%-6% annually, India's consumption of the metal should grow at a rate of 11%-12%, according to Hindalco.