Your Business Outlook - April 2003

Blow molded household and industrial chemical (HIC) containers are expected to show 4.0% average annual growth over the next five years. HIC products include a wide variety of chemicals commonly found in homes and businesses. They are predominantly in liquid and concentrated liquid form. HIC’s are typically packaged in 8-oz to 5-gal blow molded containers. In 2002, this market consumed approximately 1.2 billion lb of resin. That amount should grow to 1.46 billion lb by 2007. HIC containers represent about 12% of all blow molding poundage, according to Mastio and Company’s latest Blow Molding Market Study.

There are many molders of HIC containers, but the market is dominated by a few large companies, including Owens-Illinois, Inc., Consolidated Container Co., Graham Packaging Co. L.P., Plastipak Packaging, Inc., and The Clorox Co. Collectively, these five firms produced nearly 70% of blow molded HIC containers in 2002.

 

Negative trends

Some recent packaging and design trends have helped slow the growth of blow molded HIC containers. In particular, growth in the fabric-softener sector has been blunted by the success of extrusion-coated paperboard refill containers in popular brands like Downy and Snuggle. Refillable packaging is expected to spread as companies and consumers look for ways to be more environmentally friendly. In the detergents sector, growth is being slowed by introductions of ultra-high-concentration detergent formulations that are typically packaged in much smaller containers.

Additionally, manufacturers’ search for new and innovative package designs is causing a shift toward the stretch-blow molding process and away from traditional extrusion blow molding. Stretch-blow molding is favored for its higher output rates and elimination of scrap from trimming and deflashing.

The HIC market has also been affected by the slow economy. Consumers tend to make HIC products last longer by using smaller amounts to stretch their supplies or even do without some “nice-to-have” but non-essential cleaners and chemicals during hard times. Additionally, consumers may gravitate increasingly to lower-priced generic HIC brands whose containers carry less profit for the molder. The slow economy also pushes some retailers to just-in-time ordering in place of stocking inventories.

Fortunately, the HIC bottle market is relatively immune to competition from overseas. Domestic producers are highly automated, and there would be no cost savings in shipping bottles from overseas—even though this is a growing trend for other blow molded markets. On the other hand, some HIC blow molders are looking overseas for relief from escalating resin costs here. Some of these molders are importing HDPE and PET resin from other countries where prices are lower.

Seasonality has a profound effect on the HIC market as well. Winter slows the demand for products such as bleach and laundry detergent because consumers don’t spend as much time outdoors.

 

HDPE has competition

HDPE is the resin of choice for most HIC containers. Medium-molecular-weight (MMW) HDPE predominates, although some producers use a small amount of high-molecular-weight (HMW) HDPE. Use of lower-cost post-consumer recycled HDPE continues to grow, both in blends with virgin resin and as separate layers of coextruded bottles.

HDPE has some competition from PVC, which has hydrocarbon barrier properties that are not possible with untreated HDPE. In addition, stretch-blow molded PET resin is growing in HIC containers. It yields a high-clarity bottle that possesses greater shelf appeal.

Mastio & Company, based in St. Joseph, Mo., is a consulting firm specializing in industrial-consumer opinion research and market trends in the plastics industry. For more information, call (816) 364-6200 or visit www.mastio.com/pt/outlook.html.