NEWS | MARKET STUDY Consolidation in capsules


AMI Consulting’s Martyna Fong highlights developments analysed in a new report on single-serve capsules, and opposite PTI reviews technical requirements


Single-serve capsules are a dynamic market segment with a complex value chain. The rigid capsules (metal and plastic) market is estimated at 60 billion units in 2018. While rigid capsules are conventionally associated with metal formats, the popularity of plastic alternatives means they have largely overtaken the metal ones. There are several coffee


brewing systems available with proprietary capsule designs. Nespresso and Keurig are brands that pioneered the segment and have the highest machine instalment rates globally. Nevertheless, the expiration of their design patents in 2012 brought about disruptive changes in the supply chain. The changes created new opportunities for both end-users and converters to tap into this growing market segment. In addition, the supply


chain of capsules is rapidly losing its oligopolistic nature and the former dominance of major suppliers is chal- lenged as the market expands. A more fragment- ed supply chain affects the


overall profit pool and the way consumers make their choices. Market reach, new channels and increased efficiencies have led to heightened M&A activity in the segment. In this context, Douwe Egberts merged with Jacobs (JDE), JAB took over both JDE and Keurig, Keurig merged with Dr. Pepper Snapple Group, Nestlé struck a deal with Starbucks and Blue Bottle coffee, Coca-Cola took over Costa Coffee, Lavazza bought Carte Noire from JDE and now there are rumours of their potential merger. The industry is likely to consolidate further, which will lead to withdrawal of some capsule systems in favour of others. AMI Consulting estimates the volume of all compatible capsules (both plastic and aluminium variants) in 2018 is equivalent to 23% of the single serve capsules market worldwide, driven by Nespresso, K-Cup and Nescafé Dolce Gusto machine penetration in households. There are around 200 Nespresso- compatible plastic capsule


Figure 1: Penetration of compatibles


Compatible (23%)


Original (77%)


with mono-layer PP and PBT are now being re-specified. High barrier technologies include: co-extrusion thermoforming, co-injection, barrier IML, barrier coatings and barrier compression moulding. Thermoformed single-serve capsules account for nearly 70%


designs, but only 10% of them are said to be able to deliver on quality. Nespresso is changing elements in the machine design cyclically, and the compatibles suppliers are forced to play catch-up. Anti-trust rules dictate that Nestlé makes design adjustments public with a lead time of six months to allow fair competition. Compatible single-serve capsules have now become fully embraced by consumers. They are accepted as good-quality alternatives. Mainstream commercialisation of compatible brands has leveraged their need to differentiate and add value. Quality and shelf impact dictate high barrier specification for capsules. Compatibles formerly made


Single-Serve Capsules report and events


A new report from AMI Consulting, in cooperation with Plastic Technologies Inc, is an authoritative and comprehensive deep-dive analysis of the global Single Serve Capsules market. It analyses the global market opportunity and maps out the complex supply chain structure. Order the report here. AMI is also organising two conferences for the single serve capsules industry in 2019: in Atlanta, USA (5-6 March), and Berlin, Germany (24-25 September).


14 INJECTION WORLD | January/February 2019


of global plastic capsules demand. The bias towards thermoformed formats has been created with the interlinked success of such systems as Keurig K-Cups in North America and Nescafé Dolce Gusto in Europe. The share of injection moulded capsules has grown versus thermoformed capsules, driven by “value” capsules (low oxygen barrier) that are compatible with Nespresso machines. This type of capsule is relatively easy to produce and the investment in the injection mould can be easily amortised with quick returns. Barriers for market entry for moulders are much lower than for producers of thermoformed capsules with integrated extrusion. Additionally, compression moulding technology was recently commercialised for the production of capsules and is gaining strong supporters in the industry. There is an urgent need to


review the materials used for capsules production in search of more sustainable options. Compostable capsules


are gaining market presence following development of materials and technologies.


www.injectionworld.com


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