NEWS ANALYSIS | PACKAGING Shake-up in single serve capsules
System rationalisation and a sharp transition towards aluminium are fundamentally changing the capsules industry, says Martyna Fong, author of AMI Consulting’s latest report on the market.
Single serve capsules are a dynamic market segment with a complex value chain. Global demand for rigid capsules is estimated at 71 billion units in 2020. Market reach, new channels and gaining more efficiencies has led to a heightened M&A and JV activity in the segment. By this token, 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 JDE agreed to contract-fill Illy. Nespresso’s 2019 arrangement to fill Starbucks on a mass scale in its central filling plant in Switzerland was a smart strategic move.
On the supply side, 2019 saw Berry Global’s acquisi- tion of RPC (including Neluplast) and Paccor’s acquisition of EDV Packag- ing. Other large capsules suppliers, such as Bisio, Menshen, Capsul’in, Saentis or Macchiavelli remain focussed and independent. The industry is likely to consolidate further, which will lead to withdrawal of some capsule systems in favour of others.
14 Aluminium is making
inroads into the coffee capsules market
All compatible capsules (both plastic and aluminium variants) accounted for over one-third of the single serve capsules market worldwide in 2020, a staggering increase of over 9 billion units in comparison with 2018. There is a clear trend towards rationalisation of systems, with a clear focus on Nespresso and Dolce Gusto in Europe and K-cup in the US. Those three systems account for 81% of the global market. Smaller systems may still offer reasonable returns but have limited growth potential beyond home markets. To this end, virtually all propri- etary systems fillers have now diversified their brand presence to accommodate Nespresso and Dolce Gusto compatible variants, either in-house or via contract- packing agreements. Nespresso system is the biggest global capsules platform. In 2020, the
INJECTION WORLD | November/December 2020
production of original Nespresso (including VertuoLine and Starbucks Nespresso) was almost matched with the magni- tude of Nespresso compati- bles. The compatible Nespresso system was the main contributor to growth, most via aluminium pack- aged variants. The original Nespresso platform is struggling to sustain its previous dynamics. The deal with Starbucks, whereby Nestlé now fills and markets Starbucks branded Nespres- so capsules, opened the door for a global main- stream retail rollout platform to mitigate the risks. The Nespresso capsules
market is now in the process of dramatic transition from plastic to aluminium. As a result, the industry has been gearing up to accommo- date the change, both on the filling side (with invest- ment in aluminium filling lines and retrofits) and on
the empty capsule supply side, whereby compatibles suppliers are having to diversify their portfolio to include aluminium. There are very high barriers to entry with aluminium, so the competitive context has been intense, and the ‘aluminium game’ will determine new winners and losers. Meanwhile, innovation in plastic capsules focuses on recycling-ready PP solutions, including polyolefin-based lidding film. Provided that other materials in the multilayer structure do not exceed 5%, used capsules can in theory be recycled in the PP packaging waste stream. In parallel, bio-based
resins have developed a meaningful presence in the value chain. Albeit their pen- etration is still small consid- ering global volumes, the current market context is attractive and facilitating
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