Water, water everywhere – and so many bottle types in which to package it!
Through 2021, global plastic caps and closures demand in still bottled water applications is expected to grow 5.6% annually, the fastest gains among all beverage types, according to a new study from The Freedonia Group.
And it’s not just developing nations like India and Indonesia, where clean water is scarce, propelling the growth. From Madison Avenue boardrooms to Flint, Michigan preschools, trends in the highly developed US market – including increased consumer preferences for healthy, convenient beverages and an evergreen need for cheap bottled water in communities with contaminated water supplies – will play a role in the global plastic caps and closures industry going forward.
1. Fiji, Evian, & the Affordable Prestige Niche
What differentiates the likes of Fiji and Evian from their store brand competitors? We can debate all day the quality of the contents, but it’s the packaging and the perception it creates that win over a consumer before they ever taste a drop.
“Water marketed to make people think they’re really getting something special generally comes in pricier and more aesthetically appealing containers with snazzier looking closures," says Mike Richardson, an Industry Analyst with The Freedonia Group. "These products compete in a niche that I’d consider affordable prestige – with a price several times higher than store brand water, but still not really all that expensive.”
For example, the novelty rectangular shape of a Fiji water bottle – in addition to the feel of its heftier-than-usual blue plastic cap – gives off a generally more upscale impression than the cheaper, flimsier varieties sold alongside it. Among consumers who tend to automatically equate higher price with better quality, such contrast produces a perception of superiority that makes the more expensive product seem worth it.
While the price difference between premium and store brand bottled waters may be negligible to individual consumers, manufacturers of caps and closures stand to benefit greatly from the expansion of this trend, as the greater price-per-unit boosts their bottom lines.
2. “Generic’s Just Fine”: Evergreen Need for Cheap, Lightweight Varieties
Where premium bottled water brands net a higher price-per-unit, cheaper store brand types move in much greater quantities and thus represent vaster, more reliable opportunities for plastic caps and closures manufacturers.
“Store brand bottled water generally uses thin walled bottles and really inexpensive closures,” says Richardson. “Water in this niche competes almost entirely on the basis of price, and margins tend to be relatively low (even when the product is essentially gussied up tap water).”
Over the past decade, efforts to reduce the weight of bottled water has restrained the global market value somewhat even as volume gains have increased. According to Richardson, however, the lightweighting trend has likely peaked in many (if not all) markets, making room for value gains from the pricier caps and closures popular among more upscale brands.
Nevertheless, plastic caps face little competition in still bottled water applications. (Metal crowns and aluminum roll-ons enjoy a substantial position in sparkling water applications, but plastic types still dominate there as well.) Even as environmental concerns over the use of plastics in disposable consumer products mount, the need for cheap, clean water prevails, especially in the world’s most vulnerable communities.
3. Novelty, the Surest Way to Product Differentiation
Yet trends for ever more ornate caps and closures continue to stoke demand, as bottled water manufacturers increasingly see alternative or novelty types such as push-pull sports caps and bulk water spouts as easy means to differentiate their products on store shelves, raising the perceived value of the product for what is actually a very minimal cost.
“The appeal is partly due to shelf differentiation and partly due to an added perceived benefit,” says Richardson. “Consumers seem to think they’re getting a little extra for their money – and producers can provide that for only a tiny (per unit) additional cost.”
Many alternative caps and closures will incorporate a protective overcap as well, supporting further gains for plastic caps and closures manufacturers. Mitigating advances, environmentally friendly pouches and cartons for some high-end waters are expected to grow in popularity, though these packaging types are likely to remain niche through the short term.
Indeed, from heavy, high value-added threaded caps and novelty closures to the trusty, cheap tamper-evident caps of generic brands, one thing is for certain: Activity in the global plastic caps and closures market is often traceable to trends in the bottled water industry.
Want to Learn More?
Be sure to check out Mike Richardson’s new study, Global Caps & Closures, published by The Freedonia Group.
About the Author
Peter Kusnic is an Industry Studies editor at The Freedonia Group, where he also writes and edits blogs.