The market for caps and closures derives its demand from various industries ranging from food and beverage to pharmaceuticals. These industries amalgamate caps or closures in their own products to avoid contamination and to extend the shelf life of their mainline products. Growing demand for convenience food, alcoholic or non-alcoholic drinks, cosmetics, and pharmaceutical products, with increasing disposable incomes and rising health awareness is expected to make this market witness an uptick throughout the forecast period.
Beverage Packaging Is Expected to Boost the Demand for Caps and Closures
The demand for packaging of beverages is expected to increase on account of the convenience and reusability of bottles which led to the development in the consumption of non-alcoholic beverages. The growing packaging industry is estimated to further propel the growth rate of the caps and closure market. Furthermore, technological advancements such as automation in relation to the packaging equipment are estimated to further aid the growth of the packaging machines during the forecast period. The innovation of packaging technology to boost cost-efficiency is projected to improve the demand for beverage packaging in the coming years. Moreover, product innovation in relation to the application of environmentally friendly packaging materials is poised to further propel the growth rate of the packaging materials of beverages.
Furthermore, caps and closure manufacture today are also facing some challenges in terms of the cost of raw materials. Since, the prices of polypropylene, polycarbonate, aluminum, fluctuate, and are subject to high price volatility leading to the uncertain cost barrier for the companies and thus restraining the favourable caps and closure market trend. Also, many of the companies are strategically involved in mergers and acquisitions in this sector aiming to achieve greater share over its competitors in this fragmented market. For instance, in 2019, Berry Group a global manufacturer and marketer of plastic packaging products acquired RPC group which is a plastic product design and engineering company and similarly AR Packaging Group acquired a subsidiary of Nampak Limited in 2019 to establish its existence of food and consumer goods packaging business in Africa.
European and North American Region Is Expected to Hold a Significant Share in the Market
The increasing production of both alcoholic and non-alcoholic drinks in various parts of the world is expected to improve the market's growth over the next few years. The rising number of one-person households and resultantly their purchasing patterns are projected to augment the demand for beverages. The rising preferences of consuming sparkling water of the German population are also estimated to drive the demand for carbonated drinks in the region. The progressing fast-paced society coupled with the on-the-go convenience of lightweight plastic bottles is also expected to drive the demand for caps and closures. The recent trends of being mindful of overall health coupled with the inclination to purchase products like bottled water by some sections of the population can be attributed to the taste of hard water supplied in some regions of Germany and United kingdom is poised further drive the demand for caps and closure in the region. Moreover, the innovation in technology such as the use of automation in processing equipment is predicted to boost the demand for a new type of caps.
Asia Pacific Region Is Driving the Growth of the Market Over the Forecast Period
The Asia Pacific is a huge market pharmaceutical, cosmetic, beverage, and food packaging, improved standard of living of the people owing to the increasing household spending is one of the key factors driving the growth of caps and closures market. According to the Organisation for Economic Co-operation and Development, household spending in China grew from US$4.41 million in 2010 to US$8.94 million in 2017. Growing population and demand for convenience foods and beverage products is also one of the factors driving the market in China. Furthermore, increasing investment activities for expansion purposes by big market players are projected to further aid the caps anc closures market growth in the coming years. In 2017, in a joint venture with COFCO Coca-Cola Beverages, Coca Cola has invested $75.6 million in China by opening its 45th bottling plant in China, which is the company’s largest bottling plant in northern China. The demand for PET (Polyethylene terephthalate) for packaging bottled water by manufacturers due to its cost efficiency and recyclability is also estimated to enhance the demand for caps and closures. For instance, Nongfu Spring a Chinese bottled water manufacturer saw an increase in sales after switching to PET (Polyethylene terephthalate) bottles.
Source: Organisation for Economic Co-operation and Development
There are a high number of players in the caps and closure market. The key players in the market are geared towards development through technological innovation. However, SMEs are targeting their consumer base by using cost-efficient processing technologies. The products offered by players differ based on the enterprise size and the market base they cater, thus there is high differentiation in the market. The barriers to exit are high in this market as the investment regarding equipment costs for the development of these devices. The market is projected to have a stable growth rate owing to the consistent requirement of caps and closures in various end-user industries as a result the market is growing at a good CAGR over the forecast period.
ABOUT THE AUTHOR:
Rajat Sudan is a Market Research Analyst at Knowledge Sourcing Intelligence, working on estimates and global/regional specific reports on multiple industries ranging from healthcare to semiconductor, with a special knack for packaging. With the addition of his formal education in Economics, Commerce, and Finance, he is able to provide more light on the macro aspects of the story. To read more articles by him, and for more information regarding multiple global markets,visit www.knowledge-sourcing.com.