New From the Freedonia Group: US Cups & Lids Demand to Reach $5 Billion in 2008.

CLEVELAND -- Demand for cups and lids in the US is projected to increase 4.0 percent annually to $5 billion in 2008. Growth will be driven by rising disposable personal income levels and a favorable outlook for foodservice revenues, especially in high-volume cup and lid consuming segments like quick service restaurants and coffee and snack shops. Growing consumer demand for convenient and portable single-serving packaging will stimulate strong opportunities for packaging cups. These and other trends are presented in Cups & Lids, a new study from The Freedonia Group, Inc., a Cleveland-based industrial research firm.

Growth in lid demand will outpace cup demand, advancing 4.9 percent per year through 2008. Gains will be attributable to a rapidly expanding packaging cup market, an increasing percentage of cups using lids, and growing demand for higher-value specialty lids such as those for upscale hot drinks. The increased level of drinking cups with lids will be driven by the rising volume of beverages purchased for offsite consumption as well as the trend in many restaurants to put lids on all disposable cups for safety reasons.

While drinking cups will continue to dominate the market, the relatively small packaging cup segment will post the fastest gains based on favorable product demand outlooks in key applications, as well as further development of newer uses where cups can reinvigorate product sales by meeting consumer demand for convenient single-serving package sizes.

The foodservice market, which accounted for 70 percent of demand in 2003, will remain dominant through 2008. While the large established base and maturity of some applications will hold down overall gains, a number of trends will bode well for cup and lid demand. These include a shift toward larger drinking cup sizes (which cost more than smaller cups), the importance of custom printing on cups, the popularity of value meals (which combine meal and beverage at a discounted price), and an increase in the level of drinks purchased for offsite consumption.