Ardagh - North American glass packaging

Sinking Demand Leads to Glass Overcapacity in North America

The glass container industry has been in a long-term decline. About 30 years ago, there were more than 100 glass plants in North America, but today this figure has been greatly reduced. Three players, Owens, Anchor and Ardagh, account for the majority of output. In terms of what the glass containers are used for, there are four main categories. The most important by far for this sector is beer bottles: “What happens in beer drives the outlook for the entire industry.” The next biggest is food, followed by spirits and finally, although still significant, is wine.

The North American glass packaging market saw a substantial volume decrease in 2018 and there is now oversupply in the market. Although pricing is “pretty stable” at the moment, owing to the relatively long-term contracts that are common in this industry, the specialist believes oversupply could drive prices down in the future. One way the main companies have been trying to correct prices is through closing down excess capacity. Although some moves have been made already, it’s “like a poker game”. Companies are waiting to see what each other is doing, he says, because “you don’t want to be the leader in the market who’s fixing the problem for everybody else with your dime.”

Ardagh is one of the main players in beer, and making bottles for this sector accounts for about a third of its production. However, demand for beer bottles has been shrinking in North America. Three factors are driving this: people are drinking less, more beer is being imported and brewers are switching to cans. The last aspect is the most significant. Aluminium is cheaper, prices are relatively low in historical terms, and this switch helps brands appeal to new audiences such as women and younger people.

To access all the human insights from Third Bridge’s North American Glass Packaging Interview, click below to view the full transcript.