The Gloine Chronicles:
Focus USA - Glass Packaging - Year 2020
News Column
January/February of 2020
The glass packaging industry in the USA shows continued growth in some segments, but also continues to
face headwinds as market demand declines in other segments. Regulations discouraging the use of plastics
in some single-use products potentially expands the market for both glass and aluminium products,
while changes in customer preferences have affected the demand for glass in the beer industry in the USA.
The Forest Grove Plant of Gerresheimer is located in Vineland, New Jersey.
(This photograph was provided courtesy of Gerresheimer.)
Glass packaging is utilised for a variety of products, including ones used in the beverage, pharmaceutical and healthcare, beauty, and other business markets in the United States. The markets for glass packaging saw promise as well as difficulties during 2019.
The value of shipments from Glass Container Manufacturing firms totaled USD $5,074,286,000 in 2016 (the most recent year for this report), according to the United States Census Bureau (Census Bureau). This represents a modest increase from the value of shipments in 2010 – USD $4,937,651,000.
A total of 13,636 people worked in Glass Container Manufacturing businesses with a payroll of USD $895,757,000 the United States in 2016, according to the Census Bureau. These numbers represent a continued decrease from employment levels in both 2006 (14,193) and 2010 (13,834).
The weight of Glass Containers and Packaging products generated in the USA has been in steady decline since 1980, according to the United States Environmental Protection Agency (EPA). In 1990, 11,830,000 US tonnes of glass was generated; in 2000, 11,040,000 US tonnes; in 2010, 9,360,000 US tonnes; and in 2017 (the most recent year for this report), 8,930,000 US tonnes of glass was generated.
Recycling of Glass Containers and Packaging products in the nation, according to the EPA, increased from 2,620,000 US tonnes in 1990 to 3,190,000 US tonnes in 2015; since then, recycling of glass has decreased. In 2017, 3,030,000 US tonnes of glass were recycled.
One of the major segments of the glass packaging industry includes manufacturers of containers for the pharmaceutical and healthcare industries. Gerresheimer, a firm headquartered in Germany, is one of the largest. This international firm has three facilities in the USA.
“We are developing first-class glass solutions to meet highest quality requirements,” stated Mr. Dietmar Siemssen, Chief Executive Officer of Gerresheimer AG. “In our new innovation centre [built in the USA], we will bundle our glass expertise and all our experts to develop new products and technologies, together with our customers in one place.”
In 2018, operations in the Americas represented 27% of the global revenue of Gerresheimer. Eleven percent of all company employees were working in the Americas.
Gerresheimer produces pharmaceutical glass packaging at its plant in Chicago Heights, Illinois.
(This photograph was provided courtesy of Gerresheimer.)
Containers for beverages are another critical part of the glass packaging industry.
Ardagh Group, headquartered in Ireland, is one the largest suppliers of containers for beverages. This company has facilities that produce glass packaging in a number of communities in the USA. The firm recently reported revenue in its Glass Packaging North America unit “increased by 1% to USD $438 million in the third quarter [of 2019], compared with the same period last year, principally reflecting increased selling prices to recover higher input costs, partly offset by unfavourable volume/mix effects.”
The first nine months of 2019 saw Ardagh Group take USD $12 million in charges for exceptional items, including restructuring and impairment charges to goodwill, in North America. This was in addition to an impairment charge to goodwill of USD $186 million taken by the firm in 2018 regarding its North American operations. Ardagh Group reported at that time that “The impairment charge primarily..[arose] as a result of a challenging market backdrop of continuing reductions in demand and volumes of glass packaging for domestically-produced mass beer brands as a result of the growth in consumption of imported beer [in the USA].”
Owens-Illinois (O-I), an international glass package manufacturer headquartered in the USA, also took impairment charges in 2019. During the first nine months of 2019, O-I took USD $70 million in restructuring, asset impairment, and other charges as well as a USD $595 million charge for goodwill impairment. This last charge reflected the “unfavourable beer trend in North America,” according to a report from O-I.
One of the major global beer and spirits companies that uses glass bottles for much of its packaging is Diageo. “According to data from our consumers and customers, we know they prefer the luxury of glass packaging for the brands they enjoy,” stated Mr. Ronald Holmes, Packaging Director, Diageo North America. “We also want to use packaging which has the lowest environmental impact whilst protecting, delivering and presenting the quality of our brands.”
Overall, Mr. Holmes and other business leaders anticipate continued growth in the use of glass for packaging purposes.
“Glass usage will fluctuate according to market trends; however, it usually remains the same year to year - approximately 80% of the company’s global packaging is in glass by weight,” stated Mr. Holmes. “However, as volumes grow or as innovations take off, glass usage will increase.”
Wolf Spirit Distillery uses glass bottles for all of its Blood x Sweat x Tears Vodka.
(The photo was provided courtesy of Wolf Spirit Distillery.)
Newly established businesses in the spirits industry have also decided to use glass for most or all of their packaging needs.
Wolf Spirit Distillery is an example of one of those newer beverage companies that made the decision to use glass – new glass – for its packaging; the firm started selling vodkas in March of 2019.
“Vodka is a highly delicate liquid, so the most neutral packaging possible is critical for the end taster to be able to discern the various character notes; as of today, glass is the most neutral container,” explained Mr. Umberto Luchini, Founder and Proprietor of Wolf Spirit Distillery. “Aluminium, the second most eco-friendly packaging, slightly alters the character of the liquid. PET would never be an option for obvious eco reasons.”
One of the problems noted by several businesses that utilise glass for their packaging are difficulties in the supply chain for glass.
“The main external force impacting our business has been the ever growing demand for glass, coupled with the consolidation among glass producers,” noted Mr. Luchini. “This has led to long lead times to get the production quantities needed, as the big players tend to get priority, and there are only a handful of big glass manufacturers left.”
The sustainability of glass packaging is a key aspect considered by many in the beverage industry.
“A glass bottle can be bought, product consumed, recycled and back on the shelf in as little as 30 days,” stated Ms. Laura Hennemann, Vice President of Marketing and Communications of Strategic Materials. “Glass is inert and will not leach – and does not require a plastic liner like aluminium cans – preserving the taste of the product and providing health benefits to consumers.”
“We believe glass will continue to be a preferred alternative to single-use plastics,” stated Ms. Hennemann.
Travertine Spa utilises glass packaging for its personal care products.
(The photograph was provided courtesy of Travertine Spa.)
Businesses that manufacture personal care products for home use are among the users of glass packaging. For some businesses, the colour of the glass packaging is also important. Travertine Spa is one of those businesses.
“We use glass to protect our line of premium organic and wild-crafted skin care products,” stated Mr. Terry Carter, Chief Executive Officer of Travertine Spa. The business uses both purple and red glass to package its products. “Most essential oil products should be packaged in opaque or dark glass to protect the oils.”
Alternatives to glass continue to be options for containers for businesses with packaging needs. Containers for products used in the shower, for example, are more likely to go with aluminium containers. Box wine and wine sold in aluminium cans (with liners) are options in that industry.
Tariffs are another external force that currently affects or may affect in the future many in the glass packaging industry.
“In the summer of 2018, the Glass Packaging Institute (GPI) voiced its support for tariffs to be placed on imported glass Chinese food and beverage containers,” stated Mr. Scott DeFife of the GPI. “…There had been a sustained and significant increase in the import of glass containers from China, representing nearly 35% of global food and beverage glass container imports since 2008. In addition, Chinese glass container imports have increased over 40% since 2008.”
Mr. DeFife explained that the tariffs “appear to have had a positive impact on domestic glass bottle manufacturing. Through the 3rd quarter of 2019, versus the same timeframe in 2018, USA wine bottle shipments to customers from our domestic plants has increased by 2%. Imports of Chinese wine bottles (750ml size) have decreased nearly 7% during the same timeframe, and overall Chinese food and beverages container imports are down 16%.
Glass continued to be a major part of the packaging industry in the USA during 2019. Projections indicate that glass will continue to be a major component of packaging for the beer, wine, spirits, food, pharmaceutical, healthcare, beauty, and other related markets. Governmental entities are likely to continue to implement new mandates to encourage the use of glass and aluminium to replace the use of plastics. With these potential regulatory changes, the glass industry will have opportunities to compete with other options to expand the use of glass.
Do you have questions about the glass industry?
Governmental regulations? Company operations?
Your questions may be answered in future news columns.
Contact Richard McDonough at gloinechronicles@gmail.com.
© 2019 Richard McDonough