History

Carbonated soft drinks. The market share for soft drinks in refillable glass bottles declined from 100 percent in 1947 [GAO, p. 31] to less than 1 percent in 2000 [BW00]. The figure and table show how this decline concurred with the rise of metal cans and plastic (PET) bottles. During the 1960s, the concurrence of two important trends in the U.S. soft-drink industry accelerated the decline of refillable bottles. One trend was the consolidation of the bottling industry, and the other was the rise of one-way containers.

Coca-Cola bottling plant in Monahans, Texas. Courtesy of Billy Wells, Vernon and Mary Ann Rowe.

In 1960, 4,519 bottling plants were operating in the U.S. [BCNC, p. 239], and most of them were local operations like the one shown in the photograph on the right. The independent bottler delivered its soft drinks directly to stores within its exclusive market territory. Until the 1960s, local bottling and delivery was necessary because of the value of soft drinks "relative to shipping costs" and because of the refillable glass bottle [SSA, p. 96]. Better highways, trucks, and technology induced bottlers in contiguous territories to merge in order to improve efficiency and reduce costs [CW, p. 337]. The increasing importance of advertising and promotion through media whose coverage extended beyond the bottler's territory also created an impetus for consolidation. During the 1960s and 1970s, bottling operations consolidated also to adapt to the growing sophistication in the marketing of soft drinks and to the growing sophistication of their customer base. During the 1970s and 1980s, furthermore, Coke and Pepsi acquired many bottling companies in order to facilitate the introduction of new products and packages [SSA, pp. 3-5, 105]. By 1997, consolidation had reduced the U.S. bottling industry to 342 plants [BURO, p. 9]. Consolidation gave bottling and canning plants larger market territories with longer delivery distances, which diminished the economic advantages of refilling [SAPH, p. 137].

While the bottling industry was undergoing consolidation, one-way containers rose to prominence. One-way glass bottles made their debut in the 1940s. Although canned beer had already been popular for several years [SAPH, pp. 130-132], canned soft drinks were not on store shelves until the 1950s. However, cans became popular before one-way bottles did. The large supermarket chains saw a small but stable market for soft drinks in one-way containers and quickly packaged their private-label soft drinks in cans. Soon afterward, these supermarket brands conquered one-fifth of the market, partly because their plants' productivity overcame the inherent cost of canning soda pop. Coke, Pepsi, and other major producers followed but could not immediately match the productivity of the supermarket brands. The steel and can industries contributed to the growth of canned soda pop with a nine-million-dollar campaign to promote the steel beverage can. Soon after canned soda pop had held about 13 percent of the market in 1965, the glass container industry responded to the soda can with a campaign to promote one-way glass bottles. Coke and Pepsi followed by packaging their products in one-way bottles and aggressively promoting them. The one-way glass bottle--convenience packaging without the steel can's bad aftertaste--gave Coke and Pepsi a way to reverse the gains that the supermarket brands had made [CW, pp. 142, 324].

One observer blamed the aggressive marketing and promotion of one-way containers for instilling in consumers a habit of discarding beverage containers and, in turn, for declining return rates for refillable bottles [CW, pp. 325]. Declining return rates result in fewer trips per bottle and thus diminish the cost-effectiveness of the refillable bottle. During the period in which the consolidation of the soft-drink industry and the rise of the one-way container occurred, from 1959 to 1969, the average number of trips per refillable bottle dropped from 21 to 14 [BCNC, p. 239]. The one-way container not only liberated consumers from returning bottles, but also liberated retailers from the burden of managing deposit-return systems and bottlers from having to wash and inspect returned bottles.

Expanding market territories, the growing viability of one-way containers in the U.S. soft-drink market, and the declining trippage for refillable bottles concurred to give the one-way container a larger marketshare over the refillable bottle. Large multi-plant operations developed the ability to ship their canned soft drinks over distances of nearly 1,000 miles and then sell them at prices lower than those of a local bottler [CW, p. 331]. Furthermore, the can transformed many local bottlers into distributors of prepackaged products that came from faraway plants [CW, p. 324]. The replacement of steel cans with aluminum cans and the introduction of PET plastic bottles in the 1970s further diminished the popularity of the refillable glass bottle.

Beer. As soon as packaged beer became popular in the mid-1930s, cans competed with refillable glass bottles for the market. The figure and table show how the rise of metal cans and a fluctuating but significant demand for one-way bottles concurred with the decline of refillable bottles. One-way containers helped national beer companies conquer the U.S. market, and their conquest further diminished the use of refillable glass bottles.

Before Prohibition, most beer was served from draught in restaurants and bars. When the popularity of packaged beer rose shortly after Prohibition, canned beer appeared just shortly after refillable bottles had held 25 percent of the market. During the years between the end of Prohibition and the beginning of World War II, nevertheless, the U.S. beer market was still dominated by local and regional breweries, which shipped all of their beer in kegs and refillable bottles and sold almost all of it to restaurants and bars. The costs of returning empty bottles to the brewery maintained this dominance. A viable market for canned beer did not appear until World War II, when U.S. brewers shipped millions of cans of beer to military personnel overseas. Toward the end of the war, the Armed Forces received beer also in one-way bottles. After the war, veterans influenced the increasing popularity of one-way containers, but other post-war trends accelerated this trend in beer packaging. The veterans and many others could afford beer in one-way containers, which were more expensive. Furthermore, frequent cross-country migration and television advertising of the national brands made local breweries seem irrelevant. Indeed, these post-war influences and the inherent advantages of one-way containers put the national brewers in a position to conquer the American beer market. During the 1950s, the increasing efficiency of packaging and distributing beer in one-way containers accelerated the growth of national brewers such as Anheuser-Busch and Miller. Meanwhile, the difficulty of competing with the national brewers' mass production and mass marketing, and the inherent difficulties of managing a small business, forced many of the once-dominant local and regional breweries to close. During the 1960s, the national brewers expanded while both the trippage and the market share of refillable bottles declined. The 1970s brought the increased use of aluminum cans and the introduction of products such as light beer, which the locals could not readily offer [SAPH, pp. 128-136].

Milk. The shift from home delivery of milk to retail sales, and the development of cartons and one-way plastic jugs, contributed to the decline of refilling in the milk industry. The development of one-way milk containers began with the paper carton in 1906 and progressed to the plastic-coated paper carton in 1932. In 1964, the milk industry welcomed one-way plastic jugs made of high-density polyethylene (HDPE). Refillable bottles made of another type of plastic, polycarbonate, entered some dairy markets in the late 1970s. During the 1980s and 1990s, many U.S. dairies supplied milk in refillable polycarbonate bottles to schools and to other institutions. Milk delivered to homes historically came in refillable glass bottles but came in cartons in some parts of the U.S. during the 1960s and 1970s. When supermarkets took the distribution of milk away from home delivery, they forced the use of one-way containers by packaging their private-label milk in cartons and by refusing to accept milk from other companies in refillable bottles [SAPH, pp. 145-147].

U.S. Policies

You may be familiar with the deposit laws of Michigan, Maine, Oregon, and other states, but did you know that the first deposit law was imposed long before these states imposed theirs? In 1934, the National Recovery Administration required deposits of two cents for small bottles and five cents for large ones after bottlers had been using the non-collection of deposits as a competitive weapon [BCNC, p. 236]. Since 1934, concern about litter rather than about competition motivated the enactment of laws regarding beverage containers. In 1953, Vermont enacted a ban on non-refillable beer bottles, the first law that restricted beverage containers. The state did not renew the law in 1957 because it apparently did not reduce litter [RTI, pp. 1-2]. Concern about litter arose again during the late 1960s and early 1970s, when one-way containers packaged about 60 percent of the volume of soda pop in the U.S. and about 75 percent of beer. During that time, over 350 proposals were introduced in Congress, in state legislatures, and in local legislative bodies [RTI, pp. 1-2, 101-102]. Many of these proposals included bans or taxes on non-refillable containers--policy instruments that have proven themselves effective in other countries. Nevertheless, from this flurry of legislation came some of the first deposit laws, which apparently intended to reduce litter and promote recycling rather than to preserve refilling. Oregon's deposit law was the first in the U.S. in 1972. During the 1970s, four other states enacted their deposit laws, and some of these states reported temporary surges in the sales of beverages in refillable bottles [GAO, pp. 7, 15]. Four more states enacted deposit laws during the early 1980s. One of these four states, Iowa, saw an increase of two percent in the market share of beer in refillable bottles after it enacted its deposit law [SAPH, p. 233]. Besides the 1953 Vermont law, only one other law in the U.S. took direct aim at one-way beverage containers. Under a law that was repealed on October 1, 1998, New York imposed a one-cent tax on non-refillable containers of carbonated soft drinks, mineral water, and soda water [NYS, p. 157].

Refilling in the U.S. Today

Soft Drinks. Ale-8-One Bottling Company of Winchester, Kentucky, is probably the only soft-drink company in the U.S. that packages soda pop in refillable bottles. Up until the early 1990s, Stewart's, a chain of convenience stores in New York and Vermont, bottled and sold soft drinks and milk in refillable bottles [SAPH, pp. 282-300], but it no longer does so.

Beer. Massachusetts leads all 50 states in the use of refillable beer bottles: 16 percent of the volume of beer sold there comes in refillables. In 1998, three other states--Iowa, Connecticut, and Pennsylvania--reported that over 10 percent of their beer sales came in refillable glass bottles [BW99]. Massachusetts, Iowa, and Connecticut have deposit laws, but sales in bars and restaurants or other market conditions may be what is boosting refilling. Pennsylvania's small but viable market for beer in refillable bottles has been attributed to that state's restriction of beer sales to special outlets [SAPH, p. 173].

Milk. Home delivery of milk in refillable glass bottles is still available in many places. Marcus Dairy of Danbury, Connecticut [MARC], and Rosenberger's Dairies of Hatfield, Pennsylvania, deliver milk to homes in half-gallon refillable glass bottles. The half-gallon glass bottle is the only refillable container now used by Rosenberger's [ROSE], who used to provide milk to schools in polycarbonate plastic bottles [SAPH, p. 167]. Oberweis Dairy of North Aurora, Illinois, delivers milk to both homes and stores in half-gallon refillable glass bottles. Oberweis' retail market includes its own stores, two supermarket chains in the Chicago metropolitan region, and some other stores in Illinois and in St. Louis [OBER]. Many natural food stores also offer milk in refillable glass bottles. Another dairy, Lowell Paul Dairy of Greeley, Colorado, also sells milk in refillable bottles [ZERO].

Endnotes

• [BCNC] Woodroof, Jasper Guy, and G. Frank Phillips. Beverages: Carbonated and Noncarbonated. Westport, Connecticut: Avi Publishing Company, Inc., 1981. (B)
• [BURO] United States Department of Commerce, Bureau of the Census. Soft Drink Manufacturing. 1997 Economic Census: Manufacturing Industry Series. Report EC97M-3121A. Washington: U.S. Census Bureau, 1999. (B)
• [BW99] "Beer Packaging Shares." Beverage World June 1999: 44.
• [BW00] "CSD Packaging 2000." Beverage World June 2001: 37. (B)
• [CW] Louis, J. C., and Harvey Yazijian. The Cola Wars. New York: Everest House, 1980. (B)
• [GAO] Comptroller General of the United States. States' Experience with Beverage Container Deposit Laws Shows Positive Benefits. Washington: U.S. General Accounting Office, 1980. (B)
• [MARC] Marcus Dairy http://www.marcusdairy.com
• [NYS] New York State Department of Taxation and Finance. New York State Tax Sourcebook July 2001.
• [OBER] Oberweis Dairy http://www.oberweisdairy.com (L)
• [ROSE] Rosenberger's Dairies http://www.rosenbergers.com
• [RTI] Research Triangle Institute. The Beverage Container Problem: Analysis and Recommendations. Washington: U.S. Environmental Protection Agency, 1972. (B)
• [SAPH] Saphire, David. Case Reopened: Reassessing Refillable Bottles. New York: INFORM, Inc., 1994. (B)
• [SSA] Muris, Timothy J., Scheffman, David T., and Pablo T. Spiller. Strategy, Structure, and Antitrust in the Carbonated Soft-Drink Industry. Westport, Connecticut: Quorum Books, 1993. (B)
• [ZERO] Motavalli, Jim. "Zero Waste." E March 2001: 26.

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