Ambev to make own beer bottles in Brazil

Brewer Ambev plans to set up a USD 50 million container glass plant with an annual capacity of 100,000 tonnes at Resende (Rio de Janeiro), to start production by September 2007. The company consumes 1…

Brewer Ambev plans to set up a USD 50 million container glass plant with an annual capacity of 100,000 tonnes at Resende (Rio de Janeiro), to start production by September 2007. The company consumes 120 – 130,000 tonnes of glass bottles a year and internal production would cut its costs in the south-east region, where it runs seven plants and where 50% of consumption is concentrated. The exact location of the plant, together with government incentives and funding from the BNDES development bank, are under consideration. The plant will manufacture long neck and also 600ml beer bottles, which account for 70% of beer sales in Brazil, where returnable 600 ml bottles have a life span of 12 months. Ambev is pursuing the verticalization of its operations and already manufactures labels and bottle tops, in addition to handling 50% of distribution. Ambev is the largest consumer of glass packaging in Brazil, and its current suppliers Owns Illinois (Cisper), Saint Gobain, and CIV would be affected by the move; Cisper is likely to be the worst hit, as it is the largest supplier. The domestic glass industry has spare capacity of 15%, with output of 850,000 tonnes in 2005 from an installed capacity of 1 million tonnes.