The glass market gets back on its feet in line with the wine industry

With exciting prospects for this year, the glass industry keeps up its good performance, and expects to grow 10% in line with the rise in exports.

As it is happening with bottled wine exports, one of its main supplies keeps growing at high speed. Companies anticipate a 10% increase in demand this year, mainly propelled by the momentum of the wine business.

During the first four months of the year, Argentinian exports grew 20% in value, from USD 167.06 million in 2009 to USD 200.10 million in 2010, while in volume, results were also positive, with an 11% increase. In like manner, the average case price experienced an 8% rise. Last year, in the January-April period, wineries exported 12-bottle cases at USD 24.40, while in 2010, during the same period, the average price was USD 26.34.

The main destinations for Argentinian wines were the United States, Canada, the Netherlands, the United Kingdom and Brazil. This last destination, despite having fallen to the fifth place, was the country with the best performance, growing 53% in value, followed by Canada with a 35% growth.

“As a result of the crisis, there was a fall in demand in 2009. This year, however, we can see a rebound in orders, and we believe there will be a market increase of around 10%,” stated Walter Formica, General Manager of Verallia (Saint Gobain).

Due to the increasing demand the industry is facing, this company has invested 60 million dollars in a new furnace. According to Formica, it will take 18 months to build the furnace, which will be operational in 2012. “With this new plant, the company will increase its capacity by 70%. We are currently manufacturing around 400 million bottles a year and, with this new furnace, we expect to reach a production of 680 million bottles,” the General Manager highlighted.

Gustavo Caillaux, General Manager of the American company Owens-Illinois – which set foot in Argentina after taking over Cristalerías Rosario in March of this year – explained that he hopes “the activity will pick up and return to the growth path of the years before the crisis, with levels above 6%.”

According to Caillaux, Owens-Illinois “decided to settle in Argentina because this is the third glass container market in Latin America. It also has potential for growth, a strong presence and a preference for glass containers.”

Regarding its capacity, the company is still relatively small in relation to the size of the market: it currently produces about 80 million containers a year. However, “as we are linked to the demand from the wine business, we plan to increase production gradually in the next 5 to 18 months. We started investing in the plant on the very same day the purchase was closed. The plan is to spend several million dollars, and about 80% of the investment will be completed in the second and third periods of 2010. We have a very detailed execution plan to take the operation of Owens-Illinois Argentina – at its Rosario plant – to the levels that Owens-Illinois offers worldwide, not only in relation to equipment but more specifically to processes,” declared Caillaux.

In turn, Pablo Carbone, from Vetri Speciali, declared that this year started with a high demand, and growth prospects for 2010 are very encouraging. “We believe that growth in Argentina will be over 8%, particularly if we take into account the rise in exports. That is why we have finished a new furnace in one of our three glassware factories (in Pergine, Trento, Italy, where the company headquarters is located) increasing current production to the utmost capacity,” he remarked.