SIC 3085
PLASTICS BOTTLES



Included in this category are establishments primarily engaged in manufacturing plastic bottles.

NAICS Code(s)

326160 (Plastic Bottle Manufacturing)

Industry Snapshot

In 2000 U.S. manufacturing establishments shipped $8.0 billion worth of plastic bottles. This number marked a solid increase over 1997 levels, which totaled $6.3 billion. Imports into the United States, which reached $196 million in 1997, grew to $311 million by 2001. During the same time period, exports grew from $238 million to $323 million.

Organization and Structure

This industry is dependent on nine separate plastic bottle markets: soft drink, milk, medicinal, household chemical, toiletry and cosmetic, automobile and marine, juice and water, food (excluding milk), and industrial. All of these markets had moderate and steady growth over the last 10 years. Plastic bottles have been steadily replacing the aluminum and glass ones because plastic was convenient and cost effective.

Background and Development

In 1990, plastic bottles comprised 22.7 percent of the container market by material shipments, metal cans were 59.1 percent, and glass containers were 18.2 percent. A report by the Freedonia Group entitled "Beverages & Containers: Markets & Materials" claimed that metal would remain the dominant packaging material for beverages, but plastic would continue to gain market share at the expense of glass throughout the 1990s.

At the heart of this growing industry are the suppliers of plastic resins, which, for the majority of plastic bottles, are one of three types—polyethylene terephthalate (PET), high density polyethylene (HDPE), and vinyl.

Bottle demand for PET in the United States was 1.3 billion pounds in 1992, about 70 percent of the total PET market. The largest market for PET was carbonated soft drink containers at 910 million pounds. Single serving carbonated soft drink containers in 12, 16, and 20 ounce sizes were a 225 million pound market that was growing 25 percent annually.

PET resin producers supply the bulk ingredient to make plastic bottles, and their production in 1991 capacity rose to only 68,000 tons, while demand shot up to 206,000 tons. By 1992 demand had increased to 219,000 tons, while new capacity more than doubled, reaching 140,000 tons. Eastman Company expanded domestic resin production by 300 million pounds in 1993 and 1994 and 250 million pounds in 1995. In early 1992 PET resin stood at 65 to 67 cents per pound and fell at the end of 1992 to 62 to 64 cents per pound.

In 1992, PET resin demand from the soft drink industry topped 900 million pounds, and by 1997 it approached to 1.4 billion pounds. With PET resin bringing higher prices and worldwide demand exceeding supply, lightweighting of plastic bottles became PET manufacturers' highest priority. Environmental and pricing pressures prompted PET producers to investigate methods for reducing the weight of the two-liter bottle below 55 grams. A one-gram reduction alone represented significant cost savings for the industry.

The recycled version of HDPE, the second type of plastic resin, had previously cost more than its virgin plastic, and many packagers began using recycled HDPE to satisfy environmental concerns. But in 1994, there were indications that the gap between these plastics had significantly narrowed or, in some cases, disappeared. Important variables between these markets were the availability of high quality, well-sorted HDPE and the degree to which collection was subsidized by municipalities. As state lawmakers and major retailers insist on recycled content packaging, demand was expected to rise for this resin.

Vinyl, the third type of plastic resin, is used mostly for packaging household chemicals, liquid soap, shampoo, edible oils, and bottled water. In Europe, vinyl was the leading packaging material for bottled water, and 36 percent of U.S. and Canadian water bottlers reported that they used one or more sizes. For clear, one-gallon water bottles, vinyl was the leading material.

The market research firm SRI International of Menlo Park, California, projected U.S. consumption of recycled PET would increase 12 percent annually through the late 1990s, due mostly to the success of curbside collection efforts. During the 1990s the number of U.S. recycling programs that accepted PET in their bins increased from 575 in 1990 to approximately 3,100. Approximately 3.7 billion PET bottles were recycled in 1992. The major soft drink manufacturers began using PET bottles that contained a percentage of recycled resin. Some 19 percent of all plastic bottles were recycled in 1992, led by the 41.5 percent recycling rate of soft drink bottles. In 1991, 14 percent of all plastic bottles were recycled, also led by the 36 percent recycling rate of soft drink bottles.

By the late 1990s, the majority of PET was used for soft drink bottles, but other drinks, such as juice, water, and beer, as well as nonfood items, had increased consumption to a weighty 40 percent of the market. Production of PET bottles was taking off. Manufacture of PET beer bottles was not as successful as others. For one reason, the darker-colored bottle made it difficult for local recyclers to easily identify and separate it from other recyclables. Early bottles did not protect against the introduction of oxygen, which dramatically shortens beer's shelf life. Also, increased cost made consumers less likely to purchase beer in plastic bottles. But new bottles designed with numerous layers were making progress toward lengthening shelf life.

Also less successful than soft drinks was water in plastic bottles. Until late 1999, a harmless PET byproduct called acetaldehyde could be detected in bottled water by its slight but fruity flavor. A researcher at Aston University was developing additives that would act as barriers to the chemical's taste.

Current Conditions

By the early 2000s, U.S. production of plastic bottles was growing at a healthy pace. Shipment values increased from $6.3 billion in 1997 to almost $8.0 billion by 2000. PET remained the leading material used for plastic bottle production. According to the June 2002 issue of Recycling Today, some 95 percent of all plastic bottles sold were either made of PET or high-density polyethylene (HDPE). In fact, the strong market for plastic bottles supported a 10 percent annual growth rate for the larger PET resin market in the early 2000s, according to Chemical Market Reporter .

By late 2002, PET bottles incorporating deep colors had become especially popular in almost every industry segment, including the beverage sector. This trend, which began with the increasing use of tints, signified a break from the past when PET containers were almost exclusively transparent. According to Modern Plastics, one manufacturer reported an increase of more than 50 percent for color match requests, from almost non-existent levels in the previous years.

Manufacture of PET beer bottles, although still not as successful as other categories, had shown some improvement by the early 2000s. However, it remained a largely untapped market. Citing findings from a Sander Hanson A/S study, Food & Drug Packaging reported that while beer accounted for more than 40 percent of all beverage containers used globally, less than 1 percent of beer was marketed in PET containers. Areas where beer was being marketed successfully in plastic bottles included concerts, sporting events, and forms of outdoor entertainment, where cost is not the same kind of issue as it is in retail stores. PET beer packaging was being used in-store on a limited scale. However, consumer perception about compromised taste, along with the fact that glass and aluminum were cheaper types of packaging, remained major obstacles for significant market growth.

Although bottled water did not have the largest segment within the beverage industry by volume, its worldwide sales were skyrocketing by 2003, boding well for manufacturers of plastic bottles. Volume in this category was growing at 10 percent annually, according to Beverage World . At almost $1.7 billion, single-service plastic containers represented more than 61 percent of total bottled water sales. Compared to 2001, this number represented an increase of some 29 percent.

Industry Leaders

In the early 2000s the industry's leading firms included Plastipak Packaging Inc. of Plymouth, Michigan, with 2002 sales of $850.0 million, and Constar International Inc. of Philadelphia (a subsidiary of Crown Cork & Seal), with 2001 sales of $745.8 million. Although its operations extended beyond bottle manufacturing to include aerospace and defense, another major player was the Ball Corporation of Broomfield, Colorado, which recorded sales of $3.6 billion in 2001.

Workforce

In 2000, some 36,920 employees were employed in the plastic bottle industry, up from 25,100 employees in 1987. Of this total, the majority (more than 84 percent), were production workers. At that time, payroll reached $875.6 million.

Research and Technology

Within the burgeoning bottled water market, "nutritionally enhanced" or so-called "drinkable nutritional" waters were achieving rapid growth in the early 2000s. Also known as "nutraceuticals," these bottled drinks were enhanced with ingredients like vitamins, herbs, and antioxidants. Marketed to health-conscious consumers, the drinks were intended to address a variety of health concerns including heart health, vision, blood sugar, and weight loss. The plastic bottle industry was benefiting from this increased demand and was applying new technologies to meet this category's specialized needs. For example, new forms of PET were able to protect beverages from harmful ultraviolet rays that can damage the contents and properties (vitamins, color, and flavor) of enhanced beverages.

Another area of innovation in the early 2000s was the introduction of 12-ounce plastic containers that resembled cans. This development was a cross between a traditional plastic bottle and aluminum can. As Food & Drug Packaging explained in its December 2002 issue, except for the standard aluminum end found on regular all-aluminum cans, this emerging form of plastic container was transparent, allowing consumers to see the contents of colorful beverages—an especially popular characteristic in the early 2000s. Thus, the plastic bottle industry continued to provide innovative solutions that benefited beverage marketers in numerous ways.

Further Reading

Barry, Christopher. "Niche Beverage Markets Challenge Today's PET Packages: Soda and Water Are the Bread and Butter of PET but Untapped Markets Are Advancing New Technologies." Food & Drug Packaging, December 2002.

Bellas, Michael C. "The Bottled Water Surge." Beverage World, 15 December 2002.

Buwalda, Tim. "Rising above the Plastics Plateau." Recycling Today, January 2002.

Defosse, Matthew. "Deep Colors Play Clear Role in PET Bottle Market Growth." Modern Plastics, December 2002.

Demetrakakes, Pam. "Brewers Look at Plastic Again." FoodProcessing, September 1999.

"Hormone Mimic Linked to Obesity in Mice." Chemistry and Industry, 1 November 1999.

"Improving and Increasing PET Container Recycling." Beverage Industry, January 1999.

"Recycling Plastic Beer Bottles." Beverage Industry, June 1999.

Stack, E. Gifford. "Use of PET Bottles Is Exploding." Beverage Industry, May 1999.

Thomas, William D., et al. "Producer Price Highlights 1998." Monthly Labor Review, July 1999.

U.S. Census Bureau. Annual Survey of Manufactures. Washington, D.C.: U.S. Department of Commerce, Economics and Statistics Administration, U.S. Census Bureau, February 2002. Available from http://www.census.gov .

U.S. Department of Commerce: Bureau of the Census; International Trade Administration (ITA). "Industry Sector Data, Plastics Bottle Manufacturing (NAICS 326160)." 26 January 2002. Available from http://www.ita.doc.gov .

"Water Bottles All in Good Taste." Chemistry and Industry, 15 November 1999.



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