Executive Summary

The apparent UK market for glass packaging containers is valued at an estimated £581m in 1994, which represents around 6% of the total packaging market (comprising paper and board, plastics, metal cans, glass and wood) whose sales are estimated at £9.6bn in 1994. Demand, by value, has increased significantly over the past few years, helped mainly by growth in sales of non-returnable beer bottles and partly by recovery from the recession.

Over the past decade, the industry was consolidated into a small number of large manufacturing groups, which brought many benefits to the competitiveness of the industry against other packaging materials. Access to greater financial resources has enabled the leading companies to invest heavily in the latest design and production technologies, and to radically re-organise the various businesses so they are more efficient units and able to respond quickly to new opportunities.

Various developments in the 1990s are tending to favour demand for glass packaging, but this will not necessarily make much impact on its current market share in the UK. These developments revolve around environmental issues and the cost of materials where glass has certain advantages. Recovery of waste packaging and recycling is accelerating under the stimulus of a combination of EU Directive, legislation and voluntary efforts. Glass is easy to recycle and cullet (waste glass) is a desirable and relatively cheap raw material for the industry. Its ready availability helps to contain the prices of virgin raw materials -- silica sand, potash, etc., which are plentiful and comparatively cheap. This contrasts sharply with the rapidly rising cost of paper and board, plastic raw materials and metals. These factors are helpful in stabilising demand for glass and in preventing the further erosion of market share, even though there is very little possibility of this share increasing because of the narrow band of activities where glass is predominant.

Prospects for the remaining years of the decade are unexceptional despite the more favourable environment for glass packaging. It is anticipated that growth, in value terms, will average approximately 1% per annum, reaching a total UK market value in 1999, of £680m compared with an estimated £608m in 1995, at constant 1994 prices.

The whole packaging industry will be affected by increasingly severe environmental legislation and taxation of packaging in order to force a reduction in consumption and, unless more value can somehow be added to the packaging materials, it seems inconceivable that the UK market will grow significantly. Customers have already shown that they are unwilling to absorb the present steep increases in packaging costs and, with the concentration of buying power among fewer large retail companies, this resistance will become even stronger.

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