Coca-Cola (NYSE:KO) is weighing a shift toward more plastic bottles in the U.S. as new aluminum tariffs threaten to drive up production costs.
The 25% tariff, announced by President Donald Trump, takes effect on March 12 and applies to foreign steel and aluminum. Since Coca-Cola imports aluminum for its cans from Canada, the company is looking at ways to keep prices stable.
"If aluminum cans become more expensive, we can put more emphasis on PET bottles," Coca-Cola CEO James Quincey told investors in an earnings call this week. He acknowledged that packaging costs are just one part of the company's overall expenses but said rising aluminum prices still matter.
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"I think we're in danger of exaggerating the impact of the 25% increase in the aluminum price relative to the total system," Quincey said. "It's not insignificant, but it's not going to radically change a multibillion-dollar U.S. business."
Coca-Cola has been selling more drinks in aluminum cans in recent years as part of its sustainability efforts. Still, in 2023, nearly half (47.7%) of its beverages were packaged in plastic, while aluminum and steel cans made up just 26%, according to the company's most recent environmental report.
The company had set a goal to make all of its packaging recyclable this year and to use at least 50% recycled content by 2030. But as of last year, only 17% of its PET plastic contained recycled material.
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The tariffs aren't just a concern for beverage companies. Automakers like Ford (NYSE:F) also rely heavily on aluminum, and CEO Jim Farley warned the new policy could create "blow a hole," in the US auto industry, according to media reports. The tariffs come as part of Trump's broader trade strategy, which this time he says will be enforced "without exceptions or exemptions."
If Coca-Cola does increase its use of plastic, it's likely to draw criticism. The company has repeatedly been named the world's top plastic polluter. According to Break Free From Plastic's 2023 audit, Coca-Cola produces more than 3 million tons of plastic packaging each year.
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Environmental advocates argue that shifting away from aluminum—despite its higher costs—could make it harder to meet global recycling goals, particularly in areas with limited waste management infrastructure.
Meanwhile, Trump has also moved to bring back plastic drinking straws, rolling back federal rules that encouraged paper alternatives. The decision follows complaints from businesses about the cost and durability of paper straws, which many consumers say don't hold up as well as plastic.
Coca-Cola says it remains committed to sustainability despite the challenges. "We aim to collect and recycle a bottle or can for each one sold by 2030," the company said in its sustainability update. In 2023, it reported that 62% of its packaging was collected for recycling or refilled, and 90% was technically recyclable.
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This article Coca-Cola Warns Trump's Tariffs Could Force It to Use More Plastic – 'If Aluminium Cans Become More Expensive, We Can Shift to PET' originally appeared on Benzinga.com
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