PET Bottle Indecision Irks Beverage Industry

plastic bottles

Constant changes in the plastic ban covering PET bottles in Maharashtra has annoyed the beverages, alcohol and consumer goods industry. The norms for the ban on plastic packaging have been amended three times since March in Maharashtra. Other states like Gujarat, Tamil Nadu and Uttarakhand are also likely to implement similar bans.

Why is this important

  • In March, the Maharashtra government said that companies selling water and beverages in PET bottles with less than 500 ml capacity would be banned. A ban was also imposed on manufacturing, sale and distribution of plastic materials such as one-time-use bags, spoons, plates, PET and PETE bottles and thermocol items.
  • But in early April, it lifted the ban and allowed PET bottles of all sizes. This provided relief to companies such as Bisleri, Coca-Cola and PepsiCo, all of which sell their brands in PET bottles of 250 ml or above.
  • On June 30, Maharashtra government banned all PET bottles smaller than 200 ml.

The latest notification has hit liquor makers and makers of personal care products that are sold in PET bottles smaller than 200 ml. Nearly 15-20% of regular segment liquor brands sell through small bottles and miniatures in volumes and could get impacted. To replace them with glass bottles would mean higher cost, lower margins and a higher price for consumers.

Stock to be impacted

The solution does not lie in banning a particular size but in recycling plastic waste. Changing regulations will require updating the production systems, moulds and machines which will have the cost implication.

Manpasand Beverages Ltd (CMP: Rs 164, MCap:Rs 1,881 crores, FY2020E PE: 8.89)

Varun Beverages Ltd (CMP: Rs 750, MCap:Rs 13,696 crores, FY2020E PE: 28.5)

GM Breweries Ltd. (CMP: Rs 915, MCap:Rs 1,672 crores, TTM PE: 22.8)

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