Glass Bottle Pricing to Rise Gradually
Glass bottles have a buyer power score of 3.8 out of 5; thus, glass bottle buyers are considered to have a moderate ability to negotiate with suppliers, according to IBISWorld. High product availability and standardization, as well as an increasing number of eco-friendly substitutes, has resulted in contracting demand for glass bottles, boosting buyer power. In addition, glass bottle buyers are increasingly centralized and consolidated across the downstream food, beverage, and pharmaceutical industries, which further boosts their negotiating power.
“Recent price trends have also weakened buyer power because rising input prices have stimulated an increase in production costs,” said Agata Kaczanowska of IBISWorld. “Additionally, buyers have sought out more expensive customized glass bottles to differentiate their product packaging, which has driven up the average price in the past three years. However, buyers will benefit from slowed price growth during the next three years due to higher automation and rising price competition from both substitutes and imports.”
Due to a high level of competition, major players are reportedly preparing for large orders and often offer long-term discounts under contract. Decreasing production costs as the volume of bottles produced rises also gives buyers of large quantities an advantage when negotiating prices. A potential merger in 2013 of two of the three major glass bottle manufacturers could also result in less negotiating power for buyers. Such a merger would reduce the competition among the top suppliers of glass bottles and could contribute to higher prices.
For more information, visit www.ibisworld.com.