Demand for cups and lids is projected to increase 4.3 percent annually to $6.8 billion in 2010. Advances will be driven by growth in disposable personal income levels and a favorable outlook for foodservice revenues, especially in key cup and lid markets like quick-service restaurants, coffee and snack shops, and convenience stores.

In unit terms, demand will advance 3.2 percent yearly through 2010. Price increases for plastic cups and lids will moderate from the 2000 to 2005 pace, reflecting normalization of resin costs. These and other trends are presented in “Cups & Lids,” a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

Growth in lid demand will outpace cup demand, advancing 4.8 percent per year through 2010. Gains will be attributable to an increasing percentage of drinking cups using lids, growing demand for higher-value specialty lids, and continued solid advances for single-serving packaging cups. Best opportunities are expected for flexible and rigid lids for packaging cups, a result of expanding applications. A favorable outlook for foodservice revenues will also boost demand for portion-sized cups, which will in turn support heightened demand for flexible lidding.

While drinking cups will continue to dominate the market, the smaller packaging cup segment will post the fastest gains based on good prospects for product demand in key applications as well as further development of newer applications where cups meet consumer demand for smaller package sizes. Demand for food packaging cups and lids is expected to climb more than seven percent per annum. Trends toward healthier eating and increased targeting of specific demographic groups, such as women and children, will also stimulate opportunities.

The foodservice market, which represented 72 percent of demand in 2005, will continue to represent the bulk of sales in the cup and lid market. While the large established base and maturity of some applications will hold down overall growth, a number of trends will aid demand. These include the increased prevalence of larger drinking cup sizes and the shift to premium coffee in quick-service restaurants and convenience stores to strengthen their competitiveness vis-a-vis gourmet coffee chains. Despite intensified competition from other venues offering specialty coffee, ongoing solid revenue expansion in the coffee and snack shop segment will also fuel advances for cups and lids.