Demand for cups and lids in the United States are projected to expand 3.9 percent a year to $10.6 billion in 2020, according to a new study from The Freedonia Group, Cleveland. Gains will be supported by food trends that favor convenience and smaller portions, the market research firm details in its “Cups & Lids” report.

Unit demand will be helped by a growing focus on specialty beverages among foodservice operators and the expansion of food menus to include soup, oatmeal and other sides. Preference for premium coffee and fruit beverages will also bolster value gains as these drinks typically use more expensive cups and lids to accommodate whipped toppings or showcase the beverage’s color, the report also found.

Packaging cups will post the fastest gains through 2020, primarily because the products packaged in cups typically are smaller portions, specifically positioned to appeal to the time-conscious consumer. 

“As it becomes more common to snack throughout the day rather than prepare meals, healthy foods that are pre-packaged and portable will continue to gain favor,” says Katie Wieser, analyst for The Freedonia Group. 

Packaging products in this way also can drive revenues for food manufacturers, as it allows items to be sold at a premium. Fresh fruits and vegetables have seen some of the largest gains attributable to this trend, the report states. Cups used for coffee and tea will see the fastest growth of any major packaging market, and cups for dairy products will continue to show favorable increases because of the popularity of premium yogurt, the report notes.

Drinking cups made of paper, plastic or foam hold the largest share of this market. Gains for drinking cups will be slightly smaller than the cup and lid average due to the maturity of many applications.  However, demand for hot beverage cups will see healthy gains, driven by the popularity of premium coffee and the use of high-value insulated paper cups, according the report.

The mix of raw materials has considerably changed during the past decade, primarily for environmental reasons, as a number of foodservice chains have transitioned away from polystyrene foam and some cities have introduced bans on the sale or use of this foam. The largest beneficiary of these changes has been the paper cup, which is expected to show the fastest gains through 2020 and will continue to hold the largest share of the drinking cup market, the report states.

There also has been wider use of clear plastic cups, which allow for greater visibility of the beverage.