Castel’s Angola Glass Blower Expands to Meet Demand

(Corrects sixth paragraph to clarify that local spirits are being produced. Story was first published on March 14.)

March 14 (Bloomberg) -- Vidrul SA, an Angolan glass bottlemaker controlled by Castel Group Ltd., may double revenue this year as beverage companies from China, Lebanon and South Africa start local factories to avoid customs tariffs.

Sales may reach $10 million in 2014, Vidrul General Manager Carlos Martins said in a March 11 interview at the company’s factory in Angola’s capital, Luanda, as the southwest African country raises import duties this month on most drinks and bottles to as much as 60 percent from 2 percent. Vidrul will spend $50 million over the next two years, including the installation of a new furnace to expand output, Martins said.

“The customs law is very important because it helps the government increase employment, diverts local drinks producers from importing bottles and it’s obviously good for our business,” Martins said. “The big surprise for us is the number of Angolan companies that need bottles.”

Angola is reforming its tax system by merging the collection agency with customs while raising fees to protect industries and diversify from petroleum, which accounts for 80 percent of taxes and 45 percent of the economy. The World Bank forecasts Angola’s $114 billion gross domestic product may expand by 6.8 percent this year as Africa’s second-largest oil producer recovers from a 27-year civil war that ended in 2002.

African Market

Closely held Castel, founded in Bordeaux, France, in 1949 and domiciled in Geneva, Switzerland, is the largest wine producer in France and Europe, and the second-largest beer and soft drinks business in Africa, according to the company’s website.

Stellenbosch, South Africa-based Distell Group Ltd. is expanding the production of local spirits in Luanda this year, while Lebanon-based Interbrand SAL is planning an X-tra brand juice plant in the city. CIF Lowenda Cervejaria Ltd., owned by China International Fund Ltd., will start offering Cuanza beer in June, Martins said.

Other local producers include three Coca-Cola plants and eight breweries owned by Castel, as well as Sociedade Industrial Lda, known as Sicasa, Kicando Commercio Geral e Agropecuaria Lda. and Fazenda Agricola Industrial Victoria Etape Lda., or Faive.

Angola, with a population of about 21 million, may brew 1.56 billion liters of beer by 2017, almost double the 831 million liters it produced in 2008, according to an October report by Wesgro, a Cape Town-based trade promoter. Carbonated soft drink output may increase to 28 million liters from 19 million liters over the same period.

Bottle Sales

Interbrand is ordering 100 million bottles a year from Vidrul, CIF wants 30 million, while Coke and Fanta may require 15 million, Martins said. The Angolan beer and soft drink market is valued at about $3.5 billion a year in revenue while the country’s annual glass bottle sales are worth about $100 million, he said.

Castel bought a 65 percent share of Vidrul in 2004 and invested $200 million within five years, Martins said. Founded in 1956, Vidrul was nationalized after Angolan independence in 1975. Lopo Fortunato Ferreira do Nascimento, Angola’s first prime minister, and his company Cobel, bought Vidrul in 1996, according to company documents. Cobel retains a 35 percent stake in the glassmaker, the documents show.

Vidrul produced 55,000 metric tons of glass last year and exported 22 percent to the African nations of Senegal, Togo, Burkina Faso, Mali, Ivory Coast, Niger, Guinea, Madagascar and Benin. Gabon joins the list this year and South Africa is targeted, Martins said.

Raw Materials

The company uses local sand and calcium while importing 45 percent of raw materials, including soda ash from Europe and South Africa. Electricity supplies and labor skills remain the largest obstacles, Martins said. A hydropower plant due to be operational by 2017 may boost electricity supplies, helping the factory maintain furnace temperatures of more than 1,500 degrees Celsius (2,732 degrees Fahrenheit), Martins said.

Ali Tarraf, president of Lebanon-based TAHS Industria Lda., said the company diversified into juicemaking this year, producing 20,000 bottles an hour in Luanda, because a construction boom in the city is shrinking and port fees make importing materials too expensive.

“We are in the construction materials business but we see it decreasing every year and taxes have gone up,” Tarraf said in a telephone interview today. “I’ve been talking with Vidrul to see if they have capacity.”

To contact the reporter on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Michael Gunn, Paul Richardson