Stakeholders in the glass packaging industry have been trying to devise ways to overcome the falling growth and dwindling margins. Reducing production costs remain the ultimate goal for glass packaging producers. One approach is to use more cullet (recycled glass) instead of virgin raw materials to save on energy usage. It is estimated that every tonne of cullet saves 322 kWh of energy, 246 kg of CO2 and over a tonne of virgin raw materials. Some producers have now directly involved in collection process or joined hands with recycling companies to get access to the recycled glass. One of the prime examples of such initiative was Vetreco, which was founded in 2010 by a project supported by Ardagh, Saint- Gobian (Verallia) and Zignago Vetro with the aim to improve the business of cullet in glass packaging, and increase glass recycling.
In addition to initial high production costs, some intrinsic attributes such as heavy weight and fragile nature of glass containers are also contributing to the overall costs at various stages through the supply chain. Glass is inherently heavier than plastic and consumes comparatively more energy during transportation. A number of technologies have been developed to reduce the weight, and make the glass thinner. For instance, Narrow Neck Press & Blow (NNPB) technology helped glass container producers to manufacture light weight glass packaging products.
Given the fierce competition amongst glass packaging manufacturers, particularly in the mass containers market, producers are also seeking opportunities in those high growth markets where they would also have proximity to cheap raw materials and energy. The Middle East and Latin America remained some ideal destinations for the same reasons. After lifting sanctions, Iran is now able to provide an ideal environment regarding raw materials, energy, high-demand domestically and proximity to high growth markets neighbouring markets.
Commodity Inside understands that margins will continue to remain a problem for glass packaging producers. However, introducing new designs and shapes will be some ways which can increase sales. Glass packaging producers in premium and prestige container markets will continue to enjoy higher margins. Producers in the personal care, particularly fragrances, will continue to remain a stronghold for glass packaging over the next decade, and likely to be unscathed from any significant falls in margins as well cannibalisation from alternative packaging.
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