Soaring potential in South Asia
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Simon Jennings discusses the beverage can market in South Asia, as well as its key players and trends
South Asia, with a population of nearly two billion people, has the largest concentration of people in the world. Its ‘emerging’ economies have been showing strong growth over the past few decades. This trend is likely to continue, though there have been, and no doubt will be, some sharp reversals from time to time in its different countries. Beverage can usage in the region comes in at just over 1.5 cans per capita per year. This is low compared to many of the other large so-called emerging economies, with a market which is still only similar in size to that of one of the smaller European countries.
This may seem disappointing to some who are driven by short-term needs. However, having been personally involved in the region for the past decade and a half, with the start of the first beverage can plant in India in 2007 (Rexam HTW) and then with first plant in Pakistan (Pakistan Aluminium Beverage Can) in 2016, where I continue to be the chairman of the business, I see opportunity.
The countries of South Asia (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) are part of the South Asian Association for Regional Cooperation (SAARC), which brings some benefits, but there are geographical and political barriers which impact and influence the market structure for beverage cans.
The countries have many similar trends influencing demand, including: growing GDP albeit from low levels; a proportionately larger young population when compared to the rest of the world except Sub Saharan Africa; low alcohol per capita consumption across the region due to religious beliefs, with an above average focus being on non- alcoholic drinks; traditional grocery distribution, with emerging modern grocery distribution; and a high level but decreasing usage of returnable glass bottles, which will all drive growth and will do so over the medium term.
India is the largest market in the region (physically and in terms of demand), with 2.1 billion cans being supplied from four local can plants and imports from Sri Lanka.
Ball has two plants in India, each with one line, with a total nominal capacity of 1.3 billion units. The original plant on the outskirts of Mumbai was built by a Rexam Hindustan Tin JV, with a small capacity DWI steel line to meet the demand, which at the time was only around 200 million cans. This line was replaced in 2012 with an aluminium DWI line due to customers’ preference and line performance. Rexam built a second plant at Sri City in Southeastern India, 1,300 kilometres away, which started operations in 2016 and at the time had plans for another plant in Northern India, but this has not been followed through by Ball after the acquisition. Can-Pack opened its first plant with a single aluminium DWI line in Aurangabad in 2009, 300 kilometres to the east of Mumbai, which had a design capacity of 1.2 billion units. Its second plant, again with a similar single aluminium DWI line, is in Haryana, 1,300 kilometres away in Northern India, which began operations in 2018.
Both Ball and Can-Pack import their ends into India at present.
The Indian market mainly demands 250ml slim cans for soft drinks and 500ml, 211 diameter cans for beers. The proportion of 330ml, 211 cans has diminished with growing demand for 300ml and 330ml sleek and 180ml slim cans.
Ball Corporation’s team in India worked closely with long-term partner, O’cean Beverages, to launch its O’cean Energy Drink Sustainability Edition. Image: O’Cean
India is also importing cans, on a tariff-free basis, from Ceylon Beverage Cans, a plant which was set up in 2014 by Muttiah Muralitharan, Sri Lanka’s famous cricketer. The aluminium DWI line has a design capacity of 1.2 billion cans, and an ends line. Initially, the plant was going to be focused on the local market and supplies to their related filling company. However, changes in consumption patterns driven by legislation and tourism patterns, and more recently a sovereign financial crisis, led to a more export-focused strategy with deepwater exports of filled and empty cans, as well as those in the region. A recent press announcement (included in CanTech International’s June news) has highlighted a new ink with the retail distribution arm of the major Indian conglomerate, Reliance and Muttiah Muralitharan, by which Ceylon Beverage Cans and its sister filling company will supply cans and filled cans for the local Campa Cola and other products.
With the diversity of sizes and even with modest growth, it is likely that further production capacity increases through speed ups and/or new lines will be needed to meet Indian demand in the not-so- distant future.
Pakistan is a distinct market to India due to historical and political events, and access to Afghanistan is limited by topography.
Both markets have seen good growth despite different but significant local issues, with demand having more than doubled in the past five years to reach 900 million cans in 2023. The market is predominantly focussed on soft drinks requiring 250ml slim cans, with the demand for 300ml standard 211 cans falling away rapidly.
These markets are mainly supplied by Pakistan Aluminium Beverage Can (PABC), with its single DWI aluminium line in Faisalabad in the north of the country, more or less equidistant from Karachi and Kabul. The business, which was originally set up by Ashmore Group Plc, was joined by the Liberty
Mills Group, whose businesses include textiles, power generation and pharmaceuticals. Its line has expanded from its original capacity of 700 million cans to 950 million cans and is currently undergoing the installation of equipment for its final speed- up to reach its maximum design capacity of 1.2 billion cans.
PABC, which was floated on the local stock market in 2021, is now planning to double its capacity, with the potential for a second line at either the current site or a new plant in Karachi, where the principal shareholder has many operations.
Along with the local and Afghan markets, PABC is also exporting 250ml slim cans overland into the growing Central Asian markets, where can making capacity has or is planned to be installed to meet the demand for 440ml and 500ml cans for beer.
Bangladesh, where the demand is around 250 million cans per annum, imports most of its cans from India, Sri Lanka and Pakistan. The Liberty Mills Group, which has strong connections and business interests in Bangladesh, is actively looking with PABC at building a beverage can plant in Bangladesh.
In conclusion, there is huge potential in the South Asia region, where demand at the beginning of the century was less than 200 million cans and is now nearing 3.3 billion cans. Looking forward, I see South Asia meeting its potential with per capita can consumption, rising to the levels seen in the other ‘emerging’ economies.
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