Copyright Beroe Inc., 2013.

All Rights Reserved

November | 2012

Self-Chilled Beverage CansFuture of the Beverage Market?

Abstract: Joseph Company, a privately owned beverage company in the United States of America, invented a new Self Chilling Can in February 2012. The new can cools the contents without need for refrigeration and eliminates the use for CFCs for cooling. This new system can be used with a standard metal can, is environment friendly and does not have a huge incremental switching cost. Also, the metal can market is expected to lose 1% of its market share by value to its substitute paperboard market globally in 2013, mainly due to the increasing acceptance of these paperboard substitutes and sustainability initiatives of the consumer conglomerates. Consequently, the metallic can manufacturers are looking for new innovations to revive demand globally. Could this be that innovation? This article throws light on the procurement advantages of this new innovation, the acceptance of this technology across the globe, and the impact of this invention on the supply chain. The article also gives a perspective on what metallic can manufacturers can look forward to in the immediate future.

Author

Arjun Parasuram, Senior Research Analyst, Packaging Team

Copyright Beroe Inc., 2013. All Rights Reserved

In the modern era, technological systems have evolved to such an extent that they have succeeded in creating a need for instant gratification leading to a desperate craving for speed. And if this speed comes with convenience, it cant get any better. This is what the new technological invention by Joseph Company is all about. The recently launched self-chilled can, a first of its kind, eliminates the need for refrigeration, and brings down the temperature of the beverage contained in the can by about 300C (860 F), within 3 minutes! Whats more, this happens at the push of a button! The new beverage can employs the award winning (Stratosphere Ozone Protection Award) Microcool technology that uses atmospheric carbon dioxide to provide this cooling effect , whilst at the same time not adding to greenhouse gases in the atmosphere. West Coast Chill, the company that currently plans to mass market this invention has fixed the price at comparable levels to those of other premium brands such as Redbull. Breaking into The Market The global alcoholic beverage market was valued at around USD 1 Trillion in 2012, while the carbonated soft drinks segment accounted for USD 200 Billion in the same year. Metal can packaging accounts for around 4% of these beverage markets by volume globally. The metallic can market is estimated at around USD 60 Billion in 2012 and expected to grow 4% till 2014. With the leading paperboard can companies registering a year on year revenue growth of over 35% in 2011, the metal can market is expected to lose 1% of its market share by value to its substitute paperboard market globally in 2013. Although the beverage market is growing at around 3% annually, demand volumes for metallic cans has steadily slowed down, especially in the developed markets, and the rising metal prices have not helped either.

For Joseph Companys new invention, the metal can cannot be substituted by paperboard as heat conduction is the basis for the cooling functionality of the can. Also, the heat exchange unit, an inherent part of the cooling system of the self-chilling can, can be accommodated in standard can sizes. This has created a plethora of potential opportunities now available to can manufacturers, not only in the beverage industry but also in any consumable liquid products that require cooling. Also, with 60% of the 4 billion units of metal cans produced globally per annum accounting for beverage packaging, this new invention, by far, may turn out to be the solace that metallic can manufacturers have been seeking to compete with the growing substitute paperboard market. Considering the amount of energy and cost that is saved on electricity with this new invention, it would be no surprise to see a number of countries, in their bid to embrace the Kyoto Protocol* clauses, acknowledge and promote this innovation to reduce their carbon dioxide emissions. Since the technology is patented, the one aspect that manufacturers across the globe will monitor would be the quantum of energy used in the environment friendly vegetable extract in the heat exchange unit to bring about the cooling effect. When Pepsi took a similar initiative back in 1998, it was forced to back out due to the potential environmental threats that its invention would bring about then and consequently incurred financial losses. If Pepsi takes an interest in adopting this technology, it would possibly revolutionize the beverage industry. And if Pepsi does take this up, will its arch rival Coke be too far behind? These beverage giants, accounting for over 70% global market share by volume for carbonated soft drinks amongst themselves, have proven time and again, the colossal impact they can have on the global beverage market.
* According to the United Nations Framework Convention on Climate Change, The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change, which commits its Parties by setting internationally binding emission reduction targets.

The Question of Price Arguably, challenges associated with retail penetration do exist in the form of high pricing and non-reusability. A number of customers feel that the can is priced high, up to around three times more than a standard product. Roll-outs of small volumes have created a global perception of the self-chilled can as a premium product, used mainly in conditions that do not support cold storage: such as trekking and hiking. Nevertheless, the retail response over the last two months clearly indicates acceptance of the self-chilled beverage cans. Manufacturers expect that in the near future, bulk volumes of the self chilling cans will result in subsidization of prices to sufficient levels so that global leaders such as Pepsi and Coke will take interest in this invention. If this price reduction happens, manufacturers will believe that, as Mr. Joseph (CEO, Joseph Company) said, the self-chilling can is going to take the beverage market by storm. However, the future of the chilled can ultimately lies in the answer to the million dollar question on subsidization By how much? And will it be enough to titillate global beverage giants to sit up and take notice? Sources: www.beveragedaily.com, www.chillcan.com, www.westcoastchill.com About the author: Arjun Parasuram is a Senior Research Analyst with the Asia Pacific team at Beroe. His area of expertise is Packaging and with special interest in market entry strategies, productivity benchmarking and procurement strategies for the packaging industry. He enables procurement decision making that influences spends of over $ 15 M, at Fortune 500 companies, including 6 of the top 10 in the FMCG and Pharmaceutical Industries.
This article originally appeared in the December Issue of 'Inside Packaging' magazine from Packaging Gateway.