The Zacks Glass Products industry faces challenges from weak demand, rising costs and labor shortages, dampening its near-term outlook. However, the growing preference for glass, driven by its recyclability and sustainability, supports its long-term potential in packaging and construction.
Apogee Enterprises APOG has navigated these headwinds effectively, achieving improved margins and earnings through cost reductions, strategic pricing and its Project Fortify initiative. Its focus on innovation and acquisitions positions it for continued growth, making it a stock worth watching.
In contrast, O-I Glass OI struggles with declining earnings due to weak demand and production cutbacks, warranting caution for investors.
About the Industry
The Zacks Glass Products industry comprises companies that manufacture and sell glass products. One company produces glass containers for packaging beverages, food and pharmaceuticals. Another player in the industry offers coated and high-performance glass used in customized window and wall systems. The same company caters to the construction industry, ranging from commercial and multi-family residential to institutional buildings. It also provides coated glass for picture framing, wall décor and display applications. One company offers smart glass windows using Artificial Intelligence to adjust and suitably increase access to natural light while minimizing heat and glare. Another company developed an electrokinetic technology that can be retrofitted on any glass, enabling buildings to cut energy consumption and save on heating and cooling costs, the need of the hour.
Major Trends Shaping the Future of the Glass Products Industry
Weak Demand, High Costs & Labor Shortage Act as Near-Term Headwinds: Glass suppliers to residential and non-residential construction markets have witnessed soft demand due to elevated interest rates and persistent inflation. Similarly, the packaging industry has been impacted by muted customer spending, which, in turn, dampened the demand for glass in packaging. Additionally, the industry has been grappling with rising costs for transportation, chemical and fuel as well as supply-chain headwinds. The companies are seeing labor shortages for some positions and incurring steep labor costs to meet demand.
Customer Awareness to Drive Glass Packaging Demand: Glass is increasingly becoming the packaging choice for customers, given its endless recyclability without a loss in quality. More than 80% of recycled bottles are used in making new bottles. This also helps negate the requirement for raw materials. As consumers become more aware of their environmental footprint, a sharp spike in demand has been noticed for refillable bottles, which offer the most sustainable and economical rigid packaging option. Manufacturers are focused on improving their products by reducing the weight of bottles for more convenient handling. Premium cosmetic and beverage brands are opting for glass to differentiate their products through packaging and ensure quality maintenance. Per Statista, the global market value of glass containers and bottles is expected to surge to $88.3 billion in 2032 from $55.5 billion in 2022.
Glass Gains Traction as a Sustainable Building Material: In recent years, the use of glass gained popularity in construction as a sustainable alternative to traditional building materials, including wood and bricks, owing to its cost-effectiveness, lightweight, immense strength and environmentally friendly factor. Glass increases the influx of natural light in the building, reduces energy consumption, minimizes carbon emissions and enhances the aesthetic appeal of structures. Rising construction activities across the residential, commercial and industrial sectors will fuel the glass products industry’s growth. Increasing investments in the renovation or modernization of the existing infrastructure will also drive the industry’s growth. Various governments are introducing favorable policies and granting incentives to promote green construction to minimize greenhouse emissions and energy consumption, which bode well for the industry.
Technological Innovation is the Key: Some players revolutionized the industry by bringing smart glass panels or smart windows to the market. These innovative products are designed to enable people to lead healthier and more productive lives by increasing access to daylight and views while minimizing glare and heat from the sun and keeping occupants comfortable. These products also help cut down on energy consumption from lighting and HVAC, thus reducing carbon emissions.
