Key Note said the industry faces a threat from cartons and resealable pouches, as well as bottles and jars, which may not have all the advantages of cans but are more convenient for some consumers.
“Some sectors of the canned foods market appear to be in an irreversible decline – canned desserts and canned cooking sauces are likely to disappear almost entirely within the next decade,” said Key Note.
Recession keeps volumes buoyant
Nonetheless, canned foods sales - dominated by major concerns such as Heinz, Del Monte and Princes - rose from £1.96bn in 2006 to £2.4bn in 2010, an increase of 22.6%. “Most sectors showed growth between 2009 and 2010 in value terms, although volume sales are generally declining across the market” said Keynote.
The canned vegetables sector, however, is bucking this trend, mostly due to the popularity of baked beans that represent 49.3% of this sector, itself responsible for 30.8% of overall canned sales: “The recession encouraged consumers to stock up on canned foods, the cheaper alternative to other formats, but even this didn’t stop the volume decline altogether.”
Furthermore, Key Note said that Premier Foods' introduction of Branston Beans in October 2005 began a "war of innovation" with Heinz that led to a wider variety of products, with customers more likely to find a niche that fits their particular taste.
Key Note expects rising commodity prices to stimulate sales growth of 16.7% between 2011 and 2016. It says volumes will be shored-up by high unemployment levels - with canned food generally less expensive than fresh equivalents - though product areas such as desserts (milk puddings, canned custards, sponge puddings with an "old-fashioned image") and cooking sauces will see sales fall “quite rapidly”.
Canning costs rise
Further contraction is expected in the UK canning industry as costs rise, the report warns, and more food manufacturers move their packaging operations overseas.
But Key Note said the canned food industry is still likely to witness more new product development, especially in canned- soup, vegetables and fish: “Products with reduced salt, sugar and additives are likely to be popular parts of this overhaul, as well as new items that will continue on from recent developments such as ‘no drain’ tuna and flavoured canned fish.
“However, the majority of NPD in the market is likely to have a negative impact on canned foods; improved types of alternative packaging, for instance, are likely to damage sales.”
The report notes that although cans are often seen as a relatively environment-friendly packaging, figures on the GreenBoxDay site show that only 2.5bn of the 12.5bn cans bought in the UK each year are recycled.