Best Practices Success Stories

Euro Beverage Demand Shifts to Smaller Sizes, Healthier Choices

Europeans want to be healthier and, in the wake of previously unheard of smoking bans in pubs and reduced beer consumption, beverage producers on the continent are seizing the opportunity to market healthy alternatives to consumers of all ages.

Before examining new beverage trends for 2008, let’s take a quick look at the more mature markets and how healthier lifestyle trends are affecting them. First, soft-drink companies will rely on multipacks more than ever as they bring smaller container sizes to various countries. It’s clear that among older consumers smaller serving sizes are in favor, and this also is a growing trend for children. The dilemma faced by makers of carbonated soft drinks is to provide smaller individual containers without reducing transaction sizes. Sell the same volume of product but in different packaging configurations. As a result, multipacks are becoming a more valuable option for augmenting or reducing utilization of two-liter PET soft-drink containers. Further, six- and eight-packs of smaller cans and PET offer many consumers the serving sizes they want and allow beverage companies to maintain desired pricing.

Looking at some newer beverage products, multipacks of smaller containers also are expected to find favor with health-conscious consumers who want their daily intake of vitamins and minerals in a convenient and pleasant-tasting beverage. In Europe, it’s no secret beverage producers have leaped at the opportunity to provide convenient serving sizes of juices, yogurts, soy and milk products for personal consumption rather than family use. Marketing beverages to a wide range of consumers — from seniors to busy school children and their parents — by appealing to health concerns will be prominent this year and bodes well for multipacks. The message is: Mr. Smith, you’re getting older, start thinking about your bones. Mom, are the kids eating right and are the beverages they drink good for them?

Appealing to health concerns allows companies to introduce convenient ways to get the right doses of required vitamins and minerals, as well as an energy boost to help stay fit and active. We will see further proliferation of healthy beverages in Europe sold in multipacks of small containers. And there’s no better example than what’s happening in the juice business.

Juice products traditionally have been sold in large containers as a convenience to families. Every morning, moms pour orange juice from a large carton or bottle for the family breakfast. The container probably lasts about a week. Today, however, small containers of specialty juice products intended for individual consumption anytime are gaining market share. Much of this production is moving to smaller-size PET. It’s clear the segments of the juice market showing the strongest growth are products in containers a half liter or smaller. Further evidence comes from the availability of top-quality orange juice in small PET and recent news that a major global beverage company is developing a new 250 ml juice product for the European market. Companies are learning that new juice products with added vitamins and other nutrients marketed for individuals in small PET containers are perfect for various multipack configurations.

Small PET also will be strong in the bottled water market. Smaller sizes are showing excellent growth in balancing the product mix with large PET containers above 1.5 liters. New bottled water products with flavors and nutrients are becoming very popular with consumers, and these products are well suited for small PET and multipacks. Another force influencing container sizes for bottled water is legislation passed or under consideration in several countries to increase deposit charges for containers 2 liters or larger.

The aging of Europe’s population and widespread healthy lifestyle trends also is changing how and where beer is consumed. In Western Europe, the beer market is very mature but it is showing strong growth in Eastern Europe, especially Russia. A trend that will continue in 2008 in Western Europe is a shift away from beer consumption outside the home. Older consumers don’t go out as much, but they still want to enjoy a refreshing draft. This has spurred Heineken and other brewers to recreate the pub experience by marketing small kegs to be enjoyed at home using a draught device sold separately. The consumer now can enjoy a favorite draft brew without spending time and money at a local pub.

The shift to take-home, pub-style consumption isn’t favorable for beverage multipacks, but that will change. The continuing shift to home beer consumption eventually will spur growth in four-packs and six-packs of premium beers, especially among older consumers who drink less and may not want to buy pub-style kegs and home-draught systems.

For younger consumers, brewers will continue to experiment with new flavored beers and malt beverages to capture brand loyalty from fickle but potentially lucrative 21-25 year old beverage consumers.

Finally, a more universal issue for the beverage industry and food producers in 2008 is the increasing emphasis by national governments on reducing packaging to help protect the environment. Retailers, distributors and manufacturers in Europe are working to implement packaging options that will adhere to aggressive guidelines to reduce packaging materials. In England, the leading retailer is food giant Tesco. The company has set the bar quite high for its suppliers by pledging to achieve huge reductions in packaging materials for beverage and food products by 2010. The impact of Tesco’s edict has reverberated throughout Europe. As a result, the less-is-better concept is driving packaging decisions in the beverage and food industries.

Like it or not, minimal packaging is here to stay. So the challenge for retailers and producers is to adopt packaging solutions that are safe for the environment yet still provide meaningful marketing differentiation that moves products off store shelves.

For beverage producers and marketers in Europe, 2008 is shaping up to be a year in which the emerging trends of previous years will become mainstream. That means smaller serving sizes and containers will become more dominant as consumers get older and more conscious about their health and about the quality of the environment.

Written by:

Jordi Avellaneda is business unit director, core products, Europe for ITW Hi-Cone

Ton Hoppenbrouwers is business unit director, ITW packaging, Europe