Coca-Cola stated that it might need to further rely on plastic bottles in the US since President Donald Trump's suggested tariffs are driving the cost of aluminium higher, according to its CEO James Quincey during its recent earnings call.
The worries follow Trump's announcement of a 25% tariff on all steel and aluminium imported into the country, which has the potential to increase the price of canned food and beverages nationwide. The tariff will come into effect on 12 March, potentially making aluminium cans significantly more costly and leading beverage firms to find alternative packaging materials.
A move to plastic bottles would add another layer of complexity to Coca-Cola's sustainability aspirations. In December, the company quietly eliminated its goal for recycled content in packaging, reducing its ambition from 50% recycled content by 2030 to a new target of 35-40% by 2035.
"If one package experiences some rise in input cost, we still have other packaging options that will enable us to compete in the affordability space," Quincey said to investors.
"So for instance, if cans of aluminium become more costly, we can emphasise PET [plastic] bottles, and so on."
But the head of Coca-Cola also played down the threat that tariffs pose to the business, pointing out that packaging accounts for only a relatively small proportion of overall costs. "I believe that we're at risk of overestimating the effect of the 25% rise in the price of aluminium relative to the overall system," he said. "It's not a big deal, but it's not going to revolutionize a multibillion-dollar US company. And packaging is just a tiny part of the overall cost base.”
In 2018, in his first term in office, Trump levied tariffs on imported foreign steel and aluminium, though most beverage companies were exempted. This time, though, he has indicated that the tariffs will be applied "without exceptions or exemptions."
CMI Research: Key Recycled Plastics Industry Insights
According to Coherent Market Insights, the recycled plastics industry will exhibit an impressive CAGR of 2023 to 2030 fueled by rising awareness regarding energy conservation and mounting concerns regarding discoloration of virgin plastic. It will likely demonstrate a strong rate of growth throughout the forecast period.
Analyst Opinion: Strategic Role in Recycled Plastics Industry Growth
According to experienced consultant Vidyesh Swar, the growing use of recycled plastic across different end-use industries like automobile and building & construction is poised to drive global recycled plastics industry growth.
Conclusion: Business Takeaways
The plastics recycling industry is confronted with changing challenges with fluid industry dynamics. Coca-Cola's possible shift to plastic bottles to meet increasing aluminium costs in the wake of Trump tariffs underscores the requirement for low-cost, environmentally friendly solutions. Businesses need to evolve with regulatory alterations and industry unpredictability while managing economic and environmental considerations.
