“For the most part, the North American can industry is sold out for the next 24-36 months, and we don’t see the supply chain catching up to real demand until 2025-2026,” says Credit Suisse Equity Analyst Curt Woodworth. Beverage companies have been clear about shortages of cans this year, particularly in North America and Europe, and a "secular shift in the can industry is only in the early innings as its takes many years to optimize new plants," says Woodworth.
Global beverage-can demand has skyrocketed as the COVID-19 pandemic’s restrictions on bars, pubs, restaurants and major events has shifted consumption from draft beer to cans in multi-packs for home-consumption. In addition, new innovative products, like those in the USD 3.5 billon hard seltzer industry, lean heavily towards cans.
Ball Corporation estimates that shortages for the package in the US this year will top 10 billion cans. North America’s largest aluminum can maker disclosed in September to build a new aluminum beverage packaging plant in Pittston, Pennsylvania. The multi-line plant is scheduled to begin production in mid-2021 and will join the company’s other North American beverage can manufacturing facilities, including a new plant in Glendale, Arizona, which is currently under construction and scheduled to start up in first-quarter 2021 (inside.beer, 2.9.2020).The company expects that the new projects will add at least 8 billion units of capacity by the end of 2021.
Other large players in the market have also already reacted. Just three weeks ago, AB InBev and Rio Tinto, a leading global mining group, have formed a global partnership to deliver a new standard of sustainable aluminum cans. In a first for the canned beverage industry, the two companies have signed a memorandum of understanding committing to work with supply chain partners to bring AB InBev products to market in cans made from low-carbon aluminum that meets industry-leading sustainability standards (inside.beer, 6-10-2020).
In September, AB InBev’s subsidiary in Brazil, Ambev SA, reported to have opened its first own can factory in Brazil to satisfy the increased demand for beverages in cans due to the COVID-19 pandemic. The new factory is located in Sete Lagoas, 75 km north-west of Belo Horizonte, Minas Gerais and has a production capacity of 1.5 billion cans per year (inside.beer, 30.09.2020).
The aluminum industry is also heavily stressing the advantages of their products over other forms of individual packaging.A new report finds that aluminum cans have the highest circular performance. In the current U.S. system, more than 80% of beverage cans collected for recycling are recovered and turned back into new beverage containers, compared with 59% of glass bottles and only 13% of plastic PET bottles.
But to achieve a truly circular system, recycling collection rates must be greatly improved. Of the around 90 billion aluminum cans used in the United States each year, only around half are recycled. The other half end up in landfills.
“Aluminum cans are unique in that they were designed with recycling in mind and that is a large part of why the aluminum can is the most recycled beverage container in the United States and the world,” says Scott Breen,Vice President of Sustainabilityat the Can Manufacturers Institute (CMI). “Since metal, such as aluminum, recycles forever, and we already recycle aluminum cans at scale in the United States with 5 million aluminum cans recycled every hour, there is the potential for essentially all of the aluminum in beverage cans to be recycled multiple times, generating significant environmental and economic benefits.”
According to the findings of the report, the total emissions impact reduction potential for the same amount of collected material, once a 100% deposit collection rate is achieved for each material type, is for aluminum cans three times higher than plastic for PET bottles and 42 times higher than for glass bottles.