Coca-Cola weighs packaging shift as US tariffs drive up aluminum costs
US President Donald Trump has signed proclamations to close existing loopholes and exemptions, effectively restoring a 25% tariff on steel imports and raising the aluminum tariff to 25%. In response, Coca-Cola is seeking to adapt to the rising aluminum costs by exploring alternative packaging materials, including PET bottles.
The current US administration aims to “end unfair trade practices and the global dumping” of steel and aluminum. According to President Donald Trump, the tariff will take effect on March 12 “without exceptions or exemptions.”
James Quincey, chairman and CEO of Coca-Cola, says in a call with investors: “This is predominantly an impact in the North American or in the US business with the North American business, which is obviously a piece of the puzzle. If one package suffers some increase in input costs, we continue to have other packaging offerings that will allow us to compete in the affordability space.”
A spokesperson from Coca-Cola tells Packaging Insights: “We offer beverages in a variety of packaging formats — glass and plastic bottles, aluminum cans, and refillable packaging. Each option can play a role in helping reduce packaging waste and emissions.”
Managing tariff impact
According to James Quincet, as Coca-Cola assesses the current situation, its strategies remain focused on maintaining affordability and driving consumer demand.
“I think we’re in danger of exaggerating the impact of the 25% increase in the aluminum price relative to the total system. Packaging is only a small component of the total cost structure.”
He says that by adjusting supply chain strategies, sourcing, and can weights, along with potential price increases at some level, Coca-Cola can manage the situation within the broader context of its US business.
“I think we control enough variables so that we can adapt and mitigate our way through what is happening because it’s a combination of hedging, which we use on the key materials. It’s an opportunity to do mix management between different packaging materials..”
Opportunity for reusable packs
Environmental activists suggest that the US tariff presents an opportunity for Coca-Cola to shift a portion of its packaging and invest in expanding its existing refillable and returnable packaging.
“Coca-Cola has increased its use of plastic bottles. The company introduced the reusable glass bottle system in the 1940s with great success. It knows full well how to operate large-scale reuse and refill systems using glass, which, unlike plastic, poses no health risks to consumers,” Ramsden tells Packaging Insights.
Instead of increasing its reliance on PET bottles, which contribute to environmental pollution and pose potential risks to human health, Ramsden suggests that Coca-Cola could be “a true innovator and lead the industry toward a future of real sustainability by investing in refill and reuse systems.”
“Refillable Coke bottles are used widely in large country markets such as India, Brazil, Chile, the Philippines, and Mexico, among others. Reuse systems can be much better for business than single-use. Even after accounting for upfront capital and labor costs, data from hundreds of case studies show that businesses that switch from single-use to reuse save money.”
Coca-Cola’s refillable and returnable packaging comprised 14% of its total volume of products sold in 2023.
However, she points out that voluntary commitments alone may not be enough to protect public health and the environment, and it is important for governments to oversee and hold corporations accountable.
“We need governments to act at the state, national, and international levels to ban single-use plastic packaging and reduce plastic production. And the Global Plastics Treaty, which has been in progress since November 2022, is a once-in-a-generation opportunity to secure a legally binding policy,” Ramsden concludes.
