Real Results in Hand: European Aluminum Aerosol Can Market Experiences Boom Amid Cost Increases

New aluminum can shapes and manufacturing techniques continue to impress manufacturers and consumers alike.

Aluminum aerosol can producers enjoyed an excellent demand for their products in late 2005. Production increased by roughly 10% compared to the previous year's figures, according to AEROBAL, an international association of aluminum aerosol container manufacturers. Especially notable was the demand from the major European markets and from the U.S. market, which showed double-digit growth rates.

The drive in the market is mainly due to innovative shaping technologies offered by aluminum aerosol can manufacturers and the competitive advantage that arose from increased tinplate prices. These developments have given aluminum aerosol can producers the decisive competitive edge. Shaped cans offer brand owners a measurable added value because they stand out on the shelves, spur customers sales figures and thus support brand owners to achieve a higher market share.

Pressure on margins

While demand is booming and production capacities are fully occupied, dramatic cost increases are eating up can producers' profit margins. Due to rising oil, gas, and raw material prices in 2005, energy cost in the plants soared by between 15% and 20%. The costs for slugs, coatings, and transport packaging material went up by roughly 5%, and freight cost increased by about 10% in the course of this year. All in all, these individual cost increases mean that there is an additional overall cost burden of at least 5% per can.

On top of that, shaping adds to the materials price because in most cases it requires the input of more aluminum for the can production in order to meet customers' specifications. The increased technological complexity goes along with unavoidable efficiency losses due to slower production speeds which can amount to 10% for some highly complex or long shapes. Thus, shaping is increasing the can cost to the same extent.

According to some aluminum aerosol can manufacturers, these cost hikes would make it necessary to increase can prices by between 5% and 10% depending on the specification. This price increase is inevitable so that the industry can make further investments to keep its machinery up to date and maintain its technological leadership. This leadership will make technical breakthroughs like shaped cans possible to the benefit of customers.

Prospects are promising

Due to its ubiquity, packaging finds itself at the top of the list when it comes to marketing and promotional issues. Attractively shaped aluminum aerosol cans offer a distinct added value for customers and consumers. Thanks to their flexible production technology, aluminum aerosol can manufacturers will ensure that their customers get striking packaging solutions that differentiate the brand on the crowded store shelves.

Currently there are no signs that the lively demand for aluminum aerosol cans will lessen in the near future. Since incoming orders stayed on a high level late in 2005, the industry approached a production record of two billion cans in 2005 that will bode well for 2006.

Gregor Spengler is Secretary General of AEROBAL, an international association of aluminum aerosol container manufacturers. In January, thirty years after its founding in 1976, AEROBAL shed its European tag. The newly international organization has accepted non-European members such as CCL Container, Alucon, Exal, and Euro Asia Packaging. For more information, visit www.aerobal.org.