The Gloine Chronicles:
Focus México - Glass Industry
News Column
July/August of 2020
While the glass industry in México is currently faced with the challenges posed by the COVID-19 Pandemic, long-term
trends point to likely continued growth of the glass industry in México. Among its strengths are its strategic location
adjacent to the USA as well as being part of one of the largest trading blocs globally. Richard McDonough reports.
A selection of glass products that were on display at the EXPO PACK México in 2018. The annual trade show is
produced by PMMI, The Association for Packaging and Processing Technologies, which “represents more than
900 North American manufacturers and suppliers of equipment, components and materials as well as
providers of related equipment and services to the packaging and processing industry.”
(Photograph was provided courtesy of PMMI, The Association for Packaging and Processing Technologies.)
The COVID-19 Pandemic has affected México as it has impacted countries throughout the world. The glass industry in México has not been immune to the effects of the pandemic. Short-term, no one knows the extent of how the COVID-19 Pandemic may alter the glass industry.
Long-term, the prospects for the glass industry in México look promising, based on comments from leaders within the glass industry. Key to the growth prospects in México include its geographic location, its inclusion in a free trade agreement, and the participation of a number of international businesses. Sustainability will likely assist in the long-term growth of the glass industry in México.
Its location next to the United States of America has been helpful in the growth of the glass industry in recent decades in México. The costs to do business in México are less than the costs to operate in the USA. Labor expenses, real estate costs, and other operational items are typically less in México than in its neighboring country.
The North American Free Trade Agreement (NAFTA) has allowed logistic and supply channels to operate regardless of the national boundaries between México, Canada, and the USA since January 1, 1994. Previous barriers to trade and investment were removed with the implementation of this trade agreement. NAFTA will be replaced by the United States-México-Canada Agreement (USMCA) this summer. While the “USMCA” is the name used for this trade agreement in the USA, the “Treaty between México, United States and Canada (T-MEC)” is the name utilized in México. This successor agreement will continue to allow and is anticipated to enhance the economic integration between the three countries.
A news statement on April 24, 2020, noted that “U S Trade Representative [USTR] Robert Lighthizer today notified [the U S] Congress that Canada and México have taken measures necessary to comply with their commitments under the United States–México–Canada Agreement (USMCA), and that the Agreement will enter into force on July 1, 2020.”
“The crisis and recovery from the COVID-19 Pandemic demonstrates that now, more than ever, the United States should strive to increase manufacturing capacity and investment in North America,” Ambassador Lighthizer continued. “The USMCA’s entry into force is a landmark achievement in that effort. Under President Trump’s leadership, USTR will continue working to ensure a smooth implementation of the USMCA so that American workers and businesses can enjoy the benefits of the new agreement.”
Governmental leaders in México share the sentiments of their American counterparts regarding the T-MEC.
“The forthcoming entry into force of the T-MEC will boost the economic recovery of our country and the North American region after the health emergency caused by COVID-19,” according to a statement issued by the Ministry of Economy of México on April 24, 2020. “Likewise, it will provide legal certainty for the benefit of the development of our populations.”
“The Ministry of Economy will continue to work closely with the different dependencies of the Federal Public Administration, the private sector, and their counterparts in the United States and Canada for an effective implementation of the T-MEC,” the statement concluded.
This graph shows the growth in revenue of Glass Container Manufacturing in México
from 2011 to 2017, with projections through 2023.
(The graph was provided courtesy of Statista using data from Instituto Nacional de Estadística y Geografía
(INEGI) of México - The National Institute of Statistics and Geography of México.)
Global businesses active in the glass industry have found México to be a strategic location to invest in existing and new facilities.
One of the largest glass manufacturers in the world is Saverglass. The firm, headquartered in France, has a major facility in México. “Saverglass specializes in the production and decoration of luxury and high-end glass bottles for the wine and spirits industry,” stated Mr. Franck Collet, President of Saverglass USA. “We are proud to have a local presence in the Americas, and our new facility in México has enabled the company to bring its vast knowledge, service quality, and superior manufacturing technology to distillers and producers in key markets.”
“The facility in México offers clients a full-suite of glass packaging services as well as top-of-the range bottles and decanters,” Mr. Collet continued. “Clients have access to ultra-modern and multi-process glass manufacturing services, including, both Antique Green and extra-white flint glass in large quantities and decoration services, all under one roof. Unique to Saverglass, clients can choose from eight-color ink screen printing with all types of inks/enamels, coatings, acid-etching and hot stamping.”
Saverglass focuses on several markets from its operations in México.
“The state-of-the-art facility in Jalisco allows Saverglass to serve the growing premium tequila and mezcal markets in México, but also Central American and Caribbean rum producers,” noted Mr. Collet. “It also serves American craft spirit distillers, as well as major brands (whiskeys and bourbons, gins and vodkas) in the U.S., and the U.S. wine market, particularly in California and the Pacific Northwest.”
This is an aerial view of the Saverglass facility in the Guadalajara Metropolitan Area of Jalisco, México.
(Photograph was provided courtesy of Saverglass, 2019.)
The firm is planning for substantial growth in 2020 and in subsequent years.
Mr. Collet said that “Saverglass opened the facility in México in October of 2018, and it produced 75 million bottles over the first year and expects to reach a production of more than 120 million bottles per year by 2020, boosting overall annual production to 720 million bottles and 520,000 tonnes of glass over time.”
As the COVID-19 Pandemic has impacted North America, governments in both México and the USA have declared glass manufacturing to be essential to their nations. Saverglass and other firms active in the glass industry have strived to operate in this new normal.
“For now, we are focusing on operations efforts amid COVID-19 and the increasing demand in the wine and spirits industry,” according to Mr. Collet. “Glass manufacturing is considered an essential business in the U.S. as well as the state of Jalisco in México. Saverglass is locally manufacturing, decorating, and delivering glass bottles to its wine and spirits customers despite the novel coronavirus outbreak. In America, the facilities are operating at full capacity and the logistic organizations continue to function normally, including the local warehouses in California, Washington, and Kentucky. There is no doubt that the application of the tariffs for Chinese glass has had a positive effect on the sales of Saverglass and of the North American glass industry. Even if Saverglass does not position Chinese glass as a competitor, some of its ranges can substitute for certain Chinese supplies.”
Mr. Raymundo (Ray) Morales Hernandez is the General Director of Glass & Glass.
(Photograph was provided courtesy of Glass & Glass, 2019.)
Another major firm active in glass manufacturing in México is Glass & Glass.
This business has a large facility in Altamira, Tamaulipas. Glass & Glass produces “quality products designed to provide solutions to the perfume, wine and spirits industries and tableware,” stated Mr. Raymundo (Ray) Morales Hernandez, General Director of Glass & Glass. “We have a broad portfolio of products and services that provide our customers a range of options according to their market needs and preferences, including our standard line and development of new products.”
Mr. Morales explained that the business focuses on customers in México, the USA, and Canada as well as countries throughout the Caribbean.
Growth has been steady at Glass & Glass in México. The company indicated that there was a 5% increase in production from 2017 to 2018 and an 8% increase in production from 2018 to 2019.
One hundred million bottles were produced by Glass & Glass in México during 2019, the company detailed. The firm anticipates a 10% increase in production during 2020.
“The glass industry in México has benefitted,” said Mr. Morales, “because of the free trade agreement with the USA and Canada and the import fees for the Chinese glass in the USA as well as the Fraiche business that has been growing with a good rate, year after year.” (Perfumes y Esencias Fraiche SA de CV is a major producer of perfumery products in México.)
“I think this year is a good challenge to reinforce our commercial and operational strategies,” noted Mr. Morales. “2020 brought many challenges especially the COVID-19 Pandemic that has shaken international markets and society in every aspect. With every challenge that presents, there is also a great opportunity for improvement and we are focused on taking action.”
He related that Glass & Glass sees demand for glass bottles for premium spirits, especially in the Tequila and Mezcal categories. “There is also a great demand for candle jars in the Latin American market,” concluded Mr. Morales.
Glass & Glass operates a major glass manufacturing facility in Altamira, Tamaulipas. The main plant is to the left in
the foreground in this photo, with the logistics area to the right. A new warehouse of Glass & Glass is at the top of this photo.
(The photograph was provided courtesy of Glass & Glass, 2020.)
An international company with headquarters in Germany, Gerresheimer, has a major business unit manufacturing glass in México.
“Gerresheimer is a leading global partner to the pharma and healthcare industry,” stated Mr. Hector Garcia, Managing Director of Gerresheimer Querétaro S.A. “With specialty glass and plastic products, the company contributes to health and well-being.”
Ampoules, serum vials, screw thread vials, and ready-to-fill syringes are among products manufactured by Gerresheimer Querétaro S.A. from its plant in Santiago de Querétaro, Querétaro.
“Our customers are based in all parts of the world but mainly we service the America´s market, including the United States, México, Guatemala, Central America, Brazil, Chile, [and] Argentina,” said Mr. Garcia. “We also export our products to Germany, India, Italy, Austria, and China.”
Gerresheimer anticipates sustained growth in the pharmaceutical industry.
“Our pharma customers want to prevent health risks for patients,” Mr. Garcia continued. “Hence the rising demand for the perfect primary packaging that guarantees the pristine condition of the medication. Pharma companies are increasingly moving toward zero-defect manufacturing and, as a primary packaging provider, we are doing the same. We are constantly expanding our quality offerings so we can offer our customers the best solutions. That applies not only to improving product quality but to all other processes as well, such as product qualification and technical services, product development, regulatory support through to advice on filling processes.”
Workers are seen here at Gerresheimer Querétaro S.A. in Santiago de Querétaro.
(The photograph was provided by Gerresheimer Querétaro S.A.)
On July 1, 2019, O-I announced that it had “completed the acquisition of Nueva Fábrica Nacional de Vidrio, S. de R.L. de C.V. (‘Nueva Fanal’) from Grupo Modelo, a wholly owned affiliate of Anheuser-Busch InBev SA/NV in a transaction valued at approximately (US) $188 million.” O-I is headquartered in Perrysburg, Ohio, in the USA.
Located near México City, the Nueva Fanal facility “has four furnaces to produce and supply approximately 300,000 tonnes of glass containers annually for Grupo Modelo brands serving the local and global export markets,” as outlined in that news statement from O-I. “In acquiring Nueva Fanal, O-I continues to execute its strategy of investing in the growth of sustainable glass packaging, specifically premium brands, such as Corona, one the most popular and fastest growing beer brands globally,” stated Mr. Andres Lopez, Chief Executive Officer of O-I.
This is one of the examples in México where brewery operations of one company are located adjacent to or near glass bottle manufacturing plants of a second company. A number of these connections are solidified through long-term purchase agreements where glass manufacturers supply the needed glass bottles for the breweries.
One of the largest purchasers of glass bottles in México is Heineken. The firm’s 2019 Annual Report noted that México was one of its fastest growing markets in beer volume and revenue.
Part of that growth in beer volume was due to Heineken opening a new brewery in Meoqui, Chihuahua, in February of 2018. This brewery, the firm reported, was its “seventh in México, has a production capacity of 6 million hectolitres per year and produces brands such as Tecate, Dos Equis and Heineken for the Méxican market as well as for export markets.” Headquartered in Amsterdam in the Netherlands, Heineken detailed that it had invested (US) $500 million in the Meoqui brewery.
According to a news statement from Crown Holdings, Crown Vichisa S.A. of C.V. opened a new glass bottle manufacturing plant in February of 2018 to supply glass bottles for the new Heineken brewery in Meoqui. Crown Holdings invested (US) $120 million for the construction of this plant through its subsidiary. The news statement related that “the facility has a production capacity of 145,000 tonnes of glass, equivalent to 750 million bottles.”
A joint venture between Constellation Brands and O-I, Industria Vidriera de Coahuila (IVC), operates a number of glass bottling plants in México. In early 2020, IVC opened a fifth furnace at its glass bottle plant in Piedras Negras, Coahuila. Corona and Modelo are among the brands of beer produced by Constellation Brands at its nearby brewery. The 2019 Annual Report of Constellation Brands indicated that the firm has “more than tripled…production capacity in México from 10 million to approximately 34 million hectoliters” since June of 2013.
Other major glass companies in México include two companies headquartered in Toledo, Ohio, in the USA. Libbey has a manufacturing facility for its Crisa brand glass tableware in Monterrey, Nuevo León. Owens Corning has multiple facilities in México, including a glassfibre manufacturing plant in México City.
In addition, Fevisa Industrial SA de CV, Pavisa Group, and Vidrio Formas SA de CV, among others, manufacture glass containers in México.
Saverglass produces a variety of glass products at its facility in Jalisco, México.
(Photograph was provided courtesy of Saverglass, 2019.)
The size of the glass market in México is substantial.
According to Euromonitor International, a market research provider, 14,862.9 million units were part of the retail volume in the Beverages Packaging Glass Category in Year 2019. “Beverage packaging,” stated the firm, “is the aggregation of alcoholic drinks packaging, hot drinks packaging, and soft drinks packaging.”
The retail volume of the Food Packaging Glass Category was 1,087.7 million units in Year 2019, as outlined in the report from Euromonitor International. “This [category includes] the aggregation of packaging for baby food, bakery, canned/preserved beans, canned/preserved fish/seafood, canned/preserved fruit, canned/preserved meat and meat products, canned/preserved tomatoes, canned/preserved vegetables, other canned/preserved food, confectionery, chilled fish/seafood, chilled lunch kit, chilled processed meats, fresh cut fruits, dairy, dessert mixes, rice, frozen bakery, frozen desserts, frozen meat substitutes, frozen processed fish/seafood, frozen processed potatoes, frozen processed poultry, frozen processed red meat, frozen processed vegetables, other frozen processed food, ice cream, meal replacement, noodles, oils and fats, pasta, ready meals, sauces, dressings and condiments, snack bars, soup, spreads, and sweet and savoury snacks.”
The report from Euromonitor International indicated that a total of 7.6 million units were part of the retail volume of the Home Care Packaging Glass Category in Year 2019. “This [category] is the aggregation of laundry care, dishwashing products, surface care, chlorine bleach, toilet care, polishes, air fresheners and insecticides.”
The retail volume of the Beauty and Personal Care Packaging Glass Category included 271.2 million units in Year 2018, the most recent year for these statistics, according to the report from Euromonitor International. This category includes “the aggregation of baby care, bath and shower products, deodorants, hair care, colour cosmetics, men's grooming products, oral hygiene, perfumes & fragrances, skin care, depilatories and sun care. Black market sales and travel retail are excluded.”
The growth of the glass industry in México has created opportunities for businesses beyond just glass manufacturers.
JOCOGLASS provides printing services – “by using our premium decoration techniques and our variety of finishes” – to a number of glass manufacturers as well as firms that utilize glass bottles in México. “Our sales were approximately (US) $500,000 in 2019,” said Mr. Garry Gargallo, CEO/Founder of JOCOGLASS. Mr. Gargallo explained that JOCOGLASS works with several producers of tequila, including Casa Dragones, Adictivo, and Codigo 1530 as well as with global companies such as O-I and Saverglass, among others.
Packaging machinery is another important part of the glass industry.
While the COVID-19 Pandemic has changed all projections, a report dated October 17, 2019, from the U S Commercial Service of the U S Department of Commerce, noted that “With México’s significant packaged goods production, packaging machinery is a best prospect industry sector in México.”
“The Méxican packaging machinery market is very dynamic, as it grows and diversifies with the Méxican economy,” the report highlighted. “Primary (processing), and secondary (handling) packaging equipment purchases have been growing about 5 percent per year, due in part to strong foreign direct investment in the food processing industry. The packaging machinery industry provides good opportunities for U.S. exporters. According to the Packaging Machinery Manufacturers Institute (PMMI), México is the second-largest buyer of U.S. packaging equipment, with Germany and Italy serving as other important suppliers.”
“In 2017, the most recent year for which data are available, the packaging material production industry represented 1.7 percent of México’s GDP, 5.8 percent of the industrial sector GDP, and 8.5 percent of manufacturing GDP,” the report continued. “In terms of 2017 volume, México produced 11.9 million tonnes of packaging containers and packaging materials with a value of (US) $14.6 billion.”
“Many companies are looking at glass packaging, given its competitive prices compared to plastic containers, as well as its environmentally-friendly manufacturing process,” the report detailed. “Despite the relatively high cost of European packaging products compared to U.S. equipment, Méxican companies regularly choose European solutions due to the barriers mentioned above, stronger after-sales service from European service centers in México, and the flexible financing options that European competitors provide. This leads some Méxican customers to adapt European equipment to local needs rather than choosing what may be a better priced and better designed U.S. solution for the Méxican market. U.S. firms should keep these critical points in mind, while continuing to take advantage of the U.S. reputation for innovative technology, geographic proximity, and the close bilateral trade relationship.”
Cullet is another aspect of the glass industry – both for manufacturers of glass as well as for businesses that utilize glass to package their products. While specific statistics are not available, recycling of glass appears to be growing within México. In some cases, businesses are collecting cullet; in other cases, cullet is part of an overall environmental strategy in sustainability.
“We take special care of raw materials that are used in our process, always selecting quality as a priority,” remarked Mr. Ray Morales of Glass & Glass. “We use cullet from our own process to maintain the super flint formula.”
“The environmental policy implemented in México follows the general policy of the Saverglass Group worldwide,” stated Mr. Collet of Saverglass. This includes the “use of cullet, energy savings, reduction of air emissions, reduction of packaging, optimization of transport, [and] use of organic inks and water-based coatings.”
Grupo Modelo reported in a news statement issued in May of 2019 that “The brewing company expects to add 30 thousand tonnes to the volume of glass that it recycles in the next two years…Approximately 70% of the packaging of Grupo Modelo's products is returnable, which avoids the production of 1.6 million tonnes of glass.”
“In the glass sector, we traditionally use a very high proportion of cullet in the glass melt, which makes an important contribution to conserving resources and reducing emissions,” explained Mr. Garcia of Gerresheimer Querétaro S.A. “Among our pharma customers, our highly break-resistant Elite Glass, prefillable, sterile injection vials and surface-treated, strengthened pharmaceutical vials are the innovations currently most in demand.”
Strategic Materials has five glass recycling facilities in México, including Mexicali, Baja California; Torreón, Coahuila; San Luis Potosí, San Luis Potosí; Cancún, Quintana Roo; and Orizaba, Veracruz. Customers for these operations are located throughout México and Latin America.
“We accept and collect food and beverage glass containers by servicing manufacturing plants or receiving glass from third party suppliers,” said Mr. Javier-Lopez Portillo, Vice President – Business Development at Strategic Materials. “We process the glass and sell cullet back to container glass manufacturers.”
“Recycled glass is our entire business in México,” noted Mr. Portillo. “We’ve grown, but are unable to share exact numbers.”
While the glass industry in México is currently faced with the challenges posed by the COVID-19 Pandemic, long-term trends point to likely continued growth of the glass industry within this North American nation. Its strategic location adjacent to the USA as well as its leadership among countries throughout Latin America and the Caribbean help position México from a logistical standpoint. The trade agreement about to be implemented between México, Canada, and the USA will provide businesses in the glass industry in México with continued access to one of the largest trading blocs globally.
Do you have questions about the glass industry?
Governmental regulations? Company operations?
Your questions may be answered in future news columns.
Contact Richard McDonough at gloinechronicles@gmail.com.
© 2020 Richard McDonough