Hindalco bets on demand for aluminium cans if US consumption trend changes amid recession fears

Hindalco Industries MD Satish Pai

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At a time when recession fears in the United States seem probable, Hindalco Industries is quietly positioning itself to benefit from any potential shift in consumer habits.

The company said a potential economic slowdown could lift demand for aluminium beverage cans, as more Americans opt for at-home consumption - a trend that supports volumes in the packaged drinks segment.

In conversation with Moneycontrol, Hindalco’s Managing Director Satish Pai said that economic downturns often nudge consumers toward staying in, which in turn boosts demand for products like soft drinks and beers packaged in aluminium cans. This behavioural trend favours Novelis, the company’s US-based subsidiary, which counts beverage majors like PepsiCo and Coca-Cola among its clients.

Novelis derives about 60 percent of its product mix from beverage packaging, with the remainder spread across automotive, aerospace, and electronics sectors. It is a significant player in the global aluminium beverage can industry - not just as a supplier, but also as a world-leading recycler. The company produces aluminium sheet used to make beverage cans and recycles billions of used cans annually, playing a key role in the circular economy.

Novelis is also recognised as the world’s largest producer of aluminium sheet for beverage cans, supplying materials to global brands such as Coca-Cola and AB InBev. This scale and dual role - as both producer and recycler - make it a central figure in the global packaging supply chain and a major beneficiary when consumption habits shift toward packaged beverages.

“During COVID, we saw the highest can demand ever. If there is a slowdown in the US economy, can volumes could rise again - though that may be offset by weaker auto demand, which has a higher margin per tonne,” Pai said.

Despite recent concerns flagged by beverage giants about softening demand, Hindalco continues to see robust can orders in North America. “The market is short of can supply by around 500,000 tonnes. While we have some capacity, much of the shortfall is being met through imports from Korea and other regions,” he added.

While the beverage can segment may benefit in the near term, the company is also taking a longer view. Hindalco is gradually repositioning itself as a more downstream-focused, solutions-oriented player. With a capex plan of Rs 45,000 crore over the next few years, about Rs 2,000–3,000 crore has been allocated for expanding its value-added offerings.

The company is developing components for electric vehicles, battery systems, and even venturing into smartphone manufacturing. “We’ve begun work on battery systems and are making inroads into smartphones—focusing on parts related to electrification, where we see rising demand,” Pai said. The company is preparing to manufacture smartphone bodies at one of its extrusion facilities.