Crown expects 5% annual growth for global bevcan market

Major growth in beverage can capacity due to a “can renaissance” in North America was outlined by Crown executives at the canmaker’s virtual Investor Day.

Global can demand is expected to grow yearly by 5 per cent “over the next several years”, compared with the 2 to 3 per cent forecast prior to 2019, reported Crown’s chief executive Tim Donahue in a webcast to investors on 27 May.

Crown plans to increase its global capacity to 112 billion cans by 2025, a jump of nearly 35 per cent compared to the 83bn units it manufactured in 2020. In 2021 alone, global beverage can volumes are expected to increase by 10 per cent driven by expansion in North America.

Part of the short-term growth will be achieved with the installation of a second canmaking line in Crown’s Monterrey plant in Mexico to bring 1.2 billion cans on stream by the first quarter of 2022.

A second manufacturing line in the Hanoi facility in Vietnam is expected to add similar extra capacity by the end of the year.

“Our outlook for the future is also strong and we are off to a great start. We achieved record results in the 2021 first quarter… we have announced additional capacity expansion projects for the company’s beverage can businesses globally as we continue our multi-year programme to commercialise new capacity to support our customers growing brands,” Donahue said.

In the Americas region, including the US, Canada, Mexico, Brazil and Colombia, the canmaker forecasted capacity growth of 45 per cent from 40bn cans in 2020 to 58bn units by 2025. 

The speciality cans category is expected to increase from 16 per cent of the total units in 2019 to over 25 per cent in 2022. This is due to more than 70 per cent of new beverages being launched in slim and sleek cans, including still water, energy drinks, hard seltzers, wine and ready-to-drink cocktails.

Crown highlighted the construction of new facilities in the US, including the two-line plant at Bowling Green in Kentucky which was due to start up at the end of May. 

Other two-line plants are expected to be operational by the end of 2022 at Martinsville, Virginia, in the US, with capacity for 2.4bn cans per year, same as the new plant at Uberaba, Minas Gerais, in Brazil.

Ongoing expansions in the Americas also include the installation of a third canmaking line at Olympia, Washington and a second line in the Rio Verde facility in Brazil, both to be completed by the end of 2021. 

In the Europe, Middle East and Africa region, Crown forecasts growth of nearly 15 per cent from 27bn cans manufactured in 2020 to 31bn by 2025, achieved through line speed improvements in the plants at Kosice in Slovakia and at El Agba in Tunisia.

The canmaker expects a capacity increase of nearly 44 per cent in the Asia Pacific region, from 16bn cans in 2020 to 23bn by 2025 led by a strong rise in demand in south east Asia. 

Investments in the region include a new greenfield project in Vung Tau, Vietnam to start commercial production later this year. 

“Capacity that we are showing through the end of 2022 is tied to firm contacts. For 2023 to 2025, much of that will be tied to detailed discussions or recent contracts that we are not yet ready to disclose for competitive reasons. We feel very confident,” said Donahue.

The sale of the European Tinplate business to private equity firm KPS Capital Partners is due to close in the third quarter, he added. The €2.25bn (US$2.7bn) deal will help the canmaker fund beverage can capacity expansion, reduce debt and repurchase shares.

Donahue refuted analysts’ suggestions that the industry would be oversupplied with the extra capacity announced by the three leading canmakers in North America, along with Canpack’s announcement of its second plant in the US at Muncie, Indiana.

“We don’t see anything changing in the next three years,” said Donahue. “There will be continued growth due to consumer interest in the sustainability of cans.

“The market is significantly undersupplied, especially in North America right now, to the tune of perhaps 6 to 10 billion units, and that is going to take a long time for the industry to commercialise.

“The other thing I would point out is you’re dealing with only one market, we still have many other markets, [such as] south east Asia, southern Europe, South America, that are growing.”