OI gets UK boost from bottling of bulk imported wine

Owens-Illinois Inc. (OI), said a trend to bottle wines in the UK imported from as far away as Australia and Argentina is providing a pocket of growth in Europe’s otherwise stagnant $11 billion glass container market.

The UK is becoming a preferred destination for bottling New World wines which is boosting orders for glass bottles, Erik Bouts, president of operations in Europe for Owens-Illinois, the world’s largest glass-container maker, said in an interview. Half of the wine consumed worldwide is now shipped in bulk instead of being bottled where it is produced, said Rabobank analyst Stephen Rannekleiv.
Owens-Illinois, which also provides bottles for Bacardi and Jaegermeister, predicts its total European business to be little changed in 2014. Next year may also be “difficult,” Bouts said, as a near-stagnant euro-area economy and political tension with Russia curbs consumers’ willingness to invest.
“Overall the European food and drinks market will be stagnant but there are pockets of growth and you have to find them,” said Bouts. “That’s why you have to be close to the market and have a flexible asset base so you can tap into those opportunities.”
In a mammoth version of the bag-in-box wines on shop shelves, large producers can now ship wine in 40-foot vinyl bags inside containers to save as much as $3 in costs per case of wine, Rabobank’s Rannekleiv said. For supermarkets, it is also a way to develop private-label wines.