Beer is also playing a big part in the beverage can manufacturer’s plans for Mexico: a country seeing growth in beer and brewers, a shift towards cans over bottles, and boost in exports into the US.
Global beverage can unit volumes for Crown grew 9% in the quarter ending June 30, mainly attributed to the acquisition of Mexican can manufacturer Empaque last year, said Crown as it released its Q1 results this week.
Craft beer – in a glass or can?
Crown is the third largest producer of beverage cans worldwide. Net sales for Americas Beverage were $741m (for the three months ending June 30) compared to $594m during the same period in 2014.
John Conway, chairman and CEO, said the company has seen ‘notable beverage can growth’ in North America – an area considering the US, Canada and Mexico.
“We are very strong with our beer customers in Canada and now very, very strong in Mexico, somewhat less so in the US,” he told analysts in the earnings call. “We also have done an excellent job growing with the craft brewers and we've got a very large diverse group of craft brewers who are good customers and whose interest in cans is growing and whose purchase of cans is growing.”
This packaging mix shift from glass to metal, combined with the craft beer phenomenon, helped explain “why we’ve done as well as we’ve been doing with the brewers here in recent years,” added Conway.
Sizing up beer and soft drinks
Crown acquired Empaque, a Mexican manufacturer of aluminium cans and ends, as well as bottle caps and glass bottles, from Heineken last year. The acquisition aims to ‘significantly enhance’ Crown’s strategic position in beverage cans, particularly in this region.
Weaker volumes seen by the US soda market is nothing new or unexpected, said Timothy Donahue, president and COE, adding Crown had performed well in these conditions. The Mexican beer market, in contrast, looks more than capable of offsetting such weaknesses, added Conway.
“The Mexican market from a can perspective and a beverage perspective, particularly beer, is playing a big part in the US story,” he said. “And if you look at it that way, we think Mexican growth is going to at least offset or more than offset US weakness.
“And you need to think a little bit differently about our mix of customers going forward. With the Empaque acquisition, today, in North America, Canada, the U.S. and Mexico, our beer share is 40%, soft drinks is 60%. So, those things are all benefiting us.”
All eyes on Mexico
Mexico has been attracting the attention of big brewers and consequently interest from can manufacturers. Crown has upped its volume growth targets for the country. Exports of beer to the US from Mexico have been increasing as well.
“Two major brewers, who between them, have about 90% of the market in Mexico, are planning to increase their exports into the US,” observed Conway.
“And, more significantly for us, they're planning to change their package mix to start pushing cans a lot harder than they have.
“So what we're planning lines up very well with Mexican market growth and the major brewers' plans for increasingly aggressive exports into the United States”
As in Canada and the US, the choice of cans over glass for beer is also being seen in Mexican markets itself, said Conway.
“The Northern Mexican market tends to be more of a can market. Central and Southern Mexico is still very largely glass. We know that our beer customers are looking strongly at changing the pack mix in Central Mexico and Southern Mexico.”