ACI doubts viability of Amcor glass expansion

ACI chief executive Peter Robinson has pointed out that his company can bring additional capacity equivalent to 200 million wine bottles a year on stream within months and at minimal cost.

Amcor’s plan to double its capacity would also add 200 million wine bottles a year to total production, but at a cost of $125 million.

Clearly, if Australia’s rapid growth in wine exports is to continue at rates similar to those of recent years, wine bottle production capacity must stay ahead of that growth.

But ACI itself can produce more bottles than the entire Australian annual wine production would require, even if all of it went into glass, and the additional 400 million bottles for which the two companies will have capacity, will not be required for several years, even if export growth rates rise.

Yet both producers say they have no intention of entering into a price war. That is a question that may need to be revisited when Amcor’s additional capacity comes on line.

ACI’s Robinson rather understated the case when he said analysis showed that demand for premium wine bottles was more than adequately serviced by existing industry capacity in the medium term.

“After investing heavily in new capacity at our Adelaide plant, ACI also has the ability to meet future growth by bringing on stream additional capacity equivalent to 200 million wine bottles within months and at minimal cost. This will be by far the cheapest incremental capacity available to the glass industry and will underline our position as the lowest cost producer,” he said.

“ACI fully supports the Australian wine industry and is absolutely committed to its continued success. We take our leadership in the glass packaging market seriously and have dedicated the world’s best technology and expertise to not only maintain but enhance our market position”

ACI had, for over 100 years, been efficiently providing all glass packaging in Australia and had been instrumental in providing new capacity and infrastructure support to the highly successful wine industry.

“ACI, a subsidiary of the world leading glassmaker Owens Illinois, operates the world’s largest and most technologically advanced wine bottle making plant at Adelaide.

“Despite the entry of a second player into this arena, ACI has continued to see substantial growth and has maintained its close relationship with Australia’s wine industry through long term contracts with all major wine companies for substantially all of their high volume requirements for premium wine bottles,” Robinson said.