Rexam: German retail relistings would be European can ‘game changer’

26-Nov-2013 - Last updated on 26-Nov-2013 at 16:15 GMT

Rexam says that a move by Germany’s large discount retailers to relist cans would spur strong growth for the company in a country where can volumes collapsed suddenly in 2002.

Speaking during an investor seminar in London yesterday, Iain Percival, sector director, Beverage Can Europe said that within Europe Rexam was particularly excited about growth prospects in Russia, The Nordics and Germany.

Turning to the last, he said that in 2002 Germany was the largest can market in Europe with 7.2bn cans consumed per year.

But by end of the year, the government introduced a mandatory deposit system favouring glass and PET that led to retailers delisting cans from shelves.

Returnable system for cans since 2006

Rexam and its industry pees subsequently worked to develop a returnable system for beverage cans that was rolled out in 2006, and Percival said that volumes had since grown again.

Beverage can consumption was 1.4bn in 2012 compared with 500m in 2008, and Percival described Germany as a market in recovery with relatively high growth rates.

“We currently have three plants and an end plant in Germany, and we believe we are well positioned to benefit from this growth,” Percival said.

“We expect to see the market continue to grow at the current rate of around 300m cans per year. And if major discount retailers in Germany were to relist cans, this could be a significantly larger opportunity,” he added.

Rexam CEO Graham Chipchase tackled the same issue later on in a Q&A, when an analyst asked him what opportunities there were to increase can consumption in slow markets – including Italy and Germany – against the backdrop of a gentle medium-term economic recovery.

“The only one I see as a major game changer would be if the German big hard discounters relist the can. But will the can market in Germany go back to the €7bn mark, where it was in 2002? No,” Chipchase replied.

There are three major discounters in Germany - Aldi, Lidl and Netto, where the last is owned by Edeka Group.

CSDs have switched to PET…

“The reason for that, I think, is that the CSD market has switched to PET, and probably, will find it more difficult to come back to where it was in beverage cans," Chipchase said.

“But the beer market should, in theory, go back to being a largely returnable glass and beverage can market. So I think that’s the one that could change in a significant way.

Chipchase said it would be ‘lovely’ if other big European markets got to UK, Denmark levels, but admitted “that will take some time”.

“So a sensible assumption would be low to mid single-digit growth for some of those markets would not be unreasonable, apart from Germany, where things could change quickly if the hard discounters relist,” Rexam’s CEO said.

“But there’s no sign of that yet, though we’re working pretty hard through the industry associations to change their mind.”