The Gloine Chronicles:
Focus México - Glass Industry
News Column
March/April of 2021
Whilst the glass industry in México continues to be affected by the COVID-19 Pandemic, leading glass enterprises view
strong long-term growth prospects from their investments in México. The nation’s trade agreement with both
the United States of America and Canada allows advantageous access throughout North America. In addition,
other nations – in the Caribbean Sea as well as in Central and South America – offer opportunities for export of
quality glass products manufactured in México. Richard McDonough reports.
A number of global companies have glass manufacturing operations in México. These businesses include, among others, such firms as BD, Crown Holdings, Libbey, O-I, and Owens Corning, each with headquarters in the United States of America (USA); Saint-Gobain and Saverglass, both headquartered in France; Gerresheimer and SCHOTT, each based in Germany; and Stevanato Group, with its headquarters in Italy. FEVISA, Glass & Glass, Glassia, Pavisa, Vidrio Formas, and Vitro are among major glass companies with headquarters in México. Production facilities are located throughout the nation, from Mexicali and Nava near the border with the USA to Guadalajara and México City in the central part of the country to communities near the Gulf of México in the State of Veracruz.
Among glass products manufactured by these firms include ones utilised in the automotive, beverage, construction, food, fragrance, and pharmaceutical industries, among others. Several of the businesses focus on the domestic market in México, whilst other firms focus on exporting products. In particular, México has been found by many in the glass industry to be an excellent location to serve their markets in the USA through the United States-México-Canada Agreement (USMCA); the “Treaty between México, United States and Canada (T-MEC)” is the name utilised in México. Beyond North America, glass products from México are exported by some businesses to nations in the Caribbean Sea, counties throughout Central and South America, and lands beyond the Western Hemisphere.
INEGI
The National Institute of Statistics and Geography (INEGI) of México provides detailed information on the glass industry through its Economic Information Bank (BIE). According to the BIE, there were 37,386 persons employed in the manufacture of glass and glass products in October of 2020; the number of individuals employed in this sector was 38,405 in 2019 and 34,882 in 2013. Of the total employment level in 2019, 10,122 individuals were employed in glass manufacturing (including automotive glass and float glass segments of the industry), 17,555 persons were employed in the manufacture of glass containers and ampoules, 4,160 people were employed in the manufacture of glassfibre, 4,301 individuals were employed in the manufacture of glass articles for domestic use, and 2,267 persons were employed in the manufacture of other glass products.
The total annual remuneration for people who worked in the manufacture of glass and glass products in México was 6,161,581,000 pesos in 2019, according to the BIE. In comparison, the total remuneration for individuals who worked in the manufacture of glass and glass products in México was 3,460,863,000 pesos in 2013.
The BIE indicated that there were 94 establishments involved in the manufacture of glass and glass products in México as of October of 2020; the number was the same in 2019, while in 2013, there were 98 establishments in this manufacturing sector. Of the total number of establishments in October of 2020, 22 were active in glass manufacturing, 21 were active in the manufacture of glass containers and ampoules, 12 were active in the manufacture of glassfibre, 15 were active in the manufacture of glass articles for domestic use, and 24 were active in the manufacture of other glass products.
The sales value of glass and glass products manufactured in México was 78,780,519,000 pesos in 2019, according to the BIE. This compares to the sales value of 48,322,959,000 pesos for glass and glass products manufactured in México in 2013. Monthly amounts for sales value during 2020, according to the BIE, ranged from a high of 6,863,475,000 pesos during the month of August of 2020 to a low of 3,925,702,000 pesos during the month of April of 2020. (Sales values for November and December of 2020 were not available at the time of the preparation of this news column.)
Statista
Some of the domestic production of glass and glass products within México is exported to other nations, while a variety of glass items are also imported from other countries into México.
The Glass Industry Overview Report issued by Statista, a market research firm, indicated that México exported (US) $1,780,000,000 worth of glass products. Using data from World’s Top Exports, an independent educational website, Statista stated that this volume represented 2.3% of all global exports of glass and glassware products during 2019 (the most recent year for export statistics from this firm). México (along with South Korea and Taiwan) was the 11th largest exporter of glass and glassware products.
México imported (US) $1,500,000,000 of glass products in 2018 (the most recent year for import statistics from this firm), according to the same report from Statista. Using data from Tridge, a global sourcing hub, Statista indicated that México was the 15th largest importer of glass products for that year. Overall, the amount of these imports represented 2.1% of all imports of glass and glass products worldwide.
Gerresheimer
Gerresheimer produces a variety of glass products
in México for the pharmaceutical industry.
(The photographs were provided courtesy of Gerresheimer.)
Pharmaceutical packaging is a growth industry in México. Gerresheimer, headquartered in Germany, has a glass manufacturing plant in Santiago de Querétaro, Querétaro. Products produced by Gerresheimer in México include 2ml, 3ml, 5ml, 10ml, and 20ml vials; 1ml short, 1ml long, 2ml, and 5ml syringes; and 2ml, 3ml, and 5ml cartridges.
The Méxican operations of Gerresheimer are part of the firm’s efforts to support COVID-19 vaccination efforts with pharmaceutical containers. “Facing the very challenging situation of a global pandemic we will do everything to support any upcoming COVID-19 vaccine campaigns in close cooperation with our customers,” stated Dietmar Siemssen, Chief Executive Officer of Gerresheimer AG in a news statement issued on 16 June 2020. “…We are investing more than ever to deliver the highest quality products with additional capacity. We are fully prepared to support the global market demand for potential COVID-19 vaccines with our vials and syringes…being produced in our large production facilities in the USA, México, Europe and Asia.”
In recent comments, Héctor García Padilla, Senior Plant Director, Tubular Glass Converting at the Gerresheimer Querétaro, noted that “Several billions of vaccines, approximately 2.5 billion, will need to be administered in a short time in order to achieve a return to the way things were before. I can comment that Gerresheimer, in its different plants, will be producing approximately one third of the needs for vials for the vaccines that will be filled and applied during 2021 at a global level. With the group’s global plant network, we are increasing our production capacity through investments in new equipment and adapting our plants at a speed not seen before to meet existing and future demand. It sounds easy, but the process of increasing and expanding production capacities in a limited time brings many challenges and the decisions we need to make must be immediate and effective. We must add that the personnel involved in the production processes changed completely their way of operating and then it becomes a big puzzle that must be assembled without mistakes. I can assure with great pride that the 600 people who work in this plant have been faultless in the way they have respected all these changes, looking after their health and safety, for the well-being of their families. I appreciate their participation and respect for the fulfilment of all these measures.”
Glass & Glass
Glass & Glass provides a variety of decoration services for
the glass packaging products manufactured by the firm.
(Photograph was provided courtesy of Glass & Glass.)
Glass & Glass manufactures a variety of glass containers and is based in Altamira, Tamaulipas. “We have a wide array of type III quality products, designed to provide solutions to the perfume, and wine and liqueurs industry, also glassware,” according to a statement issued by Glass & Glass. “We offer our services in all the country, Latin America, and the United States, with offices in México City, Altamira, Monterrey, and Guadalajara.”
Customers of Glass & Glass are concentrated within México. “For now…we are in national markets of candles and getting strong with spirits, also with our base of the perfume line products,” the statement continued from Glass & Glass. “…We are starting to grow in international food markets and cosmetics…Our geographical position 300 miles from the border and…13 kilometres to Altamira´s port give us the opportunity to reach markets in the United States, Canada as well as countries throughout the Caribbean. So we are working on developing projects with international clients and this year we will begin to have a presence in those countries.”
The firm explained that it provides a number of services to its customers. “…We offer different types of containers finishing to generate the attention desired,” detailed the statement from Glass & Glass. The business also provides “screen printing/pad printing/frost [and] liquid paint with a wide variety of colours and metallic finishing, translucent and/or solid covering the totality of the container, blurred, touch of colour, or combination of colours.”
As with other businesses in the glass industry in México, the COVID-19 Pandemic impacted Glass & Glass. “Definitely 2020 was a difficult year, the unexpected pandemic that has affected the markets and the industry,” noted the statement from the business. “It was a strong impact in the months in which the virus reached Mexico, May-August with the government instruction to close nonessential businesses, strongly affected our client portfolio which forced us to carry out a furnace stoppage, which we took advantage to perform maintenance and internal improvements.”
Glass & Glass manufactures glass packaging
products in Altamira, Tamaulipas, in México.
(Photograph was provided courtesy of Glass & Glass.)
Glassia
An aerial view of the Glassia facility in Mineral de la Reforma in Hidalgo.
(The photograph was provided by Glassia.)
“Year 2020 has been a very tough year in the Méxican glassware industry because of COVID-19,” stated Francesco Leoncini, Sales and Marketing Director of Glassia. The business operates a glass manufacturing facility in Mineral de la Reforma in Hidalgo. “We were not as affected as some other glass businesses in México because our operations were considered to be essential to the country because part of our products are primarily used for the food industry. Whilst we lost business in the food service business – as many restaurants and hotels closed – we were able to increase business in other sectors. Other glass companies, not producing essential products, were closed for a time by government order.”
“Most of our production focuses on manufacturing glassware and bakeware products,” explained Mr. Leoncini. “We also produce candle jars. We have customers in the retail industry, in the business-to-business market, and in the food service industry.”
“We actively supply the domestic Méxican glass market as well as export our glass products to the USA and Canada in North America and throughout Europe,” Mr. Leoncini continued. “Market supply was limited in the USA in 2020, and we were able to fill some of that market demand from production in México. We currently have 80% of our revenue from products sold within México, with 20% of our revenue from products exported. We are striving to eventually have 50% of our revenue from the domestic market in México and 50% of our revenue from exports to the USA and Canada as well as Europe.”
“We anticipate increased demand for certain types of glassware products,” noted Mr. Leoncini. “We’ve had customers in the hotel industry, for example, purchase glass tumblers for use at their properties instead of plastic bottles. Some of our other business customers have installed filtration equipment on their water faucets and provided glass tumblers for the same socially-conscious reasons.”
“We are maintaining 2019 business and forecasting growth to continue through 2021,” Mr. Leoncini stated. “We are planning to increase the production of higher value products. We anticipate at least 18 different new innovative products in design and technology.”
Pavisa
Pavisa Glass has a manufacturing plant located in Tultitlan, México.
(The photograph was provided courtesy of Pavisa Glass.)
Pavisa Glass manufactures “premium glass bottles and stoppers with full in-house decoration focused on the spirits industry as well as fragrance and cosmetics; crystal bottles and stoppers for ultra-premium presentations in spirits as well as fragrance markets; and pressed glassware to complete the customer experience in the premium spirits category as well as promotional and gift glassware associated with the marketing needs of our clients in that category,” said John Zanini of Pavisa Glass.
Business operations are located throughout the world. The firm’s global headquarters is in México City, with its USA headquarters in Connecticut and its European headquarters in Paris, France.
“Grupo Pavisa is committed to respond to the needs of our clients during these complicated times,” detailed Mr. Zanini. “Our operations are extremely flexible by design. We are able to quickly respond to changing client needs allowing clients to adjust demand, innovations, and marketing initiatives quickly and efficiently. All of the above factors impact our clients and therefore our own business strategies, but our culture and service model has proven very successful in responding to challenges as opportunities.”
Mr. Zanini indicated that “for the last few years growth has been more than 20% each year including 2020 with even higher growth anticipated in 2021,”
Pavisa Glass produces glass packaging for a number of fragrances.
(This photograph was provided courtesy of Pavisa Glass.)
Heineken
The beer market directly impacts the demand for glass bottles in México. With its headquarters in the Netherlands, Heineken is one of the largest producers of beer in México. In its report on Third Quarter results for 2020 (ending 30 September 2020) issued on 28 October 2020, Heineken indicated that “in México, beer volume declined by a mid-single-digit due to the dry laws, particularly in the Southeast, and stock-outs caused by restrictions on brewing operations at the start of the quarter. The premium and low- and non-alcoholic portfolios increased by double-digits…” In the same report, Heineken indicated that on 17 September 2020, the firm “…announced it is exploring the Hard Seltzer category with the launch of Pure Piraña in México…[which] will be available in a range of up to nine different flavours to test local preferences.”
Constellation Brands
Another company active in the Méxican beer market is Constellation Brands. This firm has the exclusive right to import a number of Méxican beer brands into the USA, including Modelo Especial which, according to Constellation Brands, “…is the best-selling imported beer, fourth best-selling beer overall [in the USA] and…Corona Extra, the second largest imported beer and seventh best-selling beer overall in the USA.”
“For our Méxican beer brands, packaging materials represent the largest cost component of production, with glass bottles representing the largest cost component of our packaging materials,” according to the firm’s 2019 Annual Report. In its quarterly report for the period ending 30 November 2020, issued by Constellation Brands on 7 January 2021, the firm indicated that “We have entered into various contractual arrangements with affiliates of Owens-Illinois [O-I] primarily for the purchase of glass bottles used largely in our imported beer portfolio. Amounts purchased under these arrangements were (US) $115.5 million and (US) $155.2 million for the nine months ended 30 November 2020, and 30 November 2019, respectively, and (US) $46.0 million and (US) $28.8 million for the three months ended 30 November 2020, and 30 November 2019, respectively. The decrease in amounts purchased for the nine months ended 30 November 2020, was largely driven by reduced production activity in early fiscal 2021 [Spring of 2020] at our Méxican breweries in response to COVID-19 containment measures. The increase in amounts purchased for the three months ended 30 November 2020, was largely driven by efforts to replenish inventory levels in our distribution channels following the reduced production activity in early fiscal 2021.”
O-I
In addition to its relationship with Constellation Brands, O-I has substantial glass manufacturing facilities in México. The COVID-19 Pandemic affected operations of O-I in México during 2020. In its statement of financial results for the first quarter of 2020, O-I indicated that “Total sales volume in tons declined 1 percent [in its Americas market segment] as additional shipments attributed to the Nueva Fanal acquisition in mid-2019 were more than offset by a decline in volumes linked to COVID-19 and the continued decline in the North America beer category.” The pandemic continued its impact on O-I as reductions in glass production occurred in México in subsequent months. According to financial results reported by O-I, “Production levels [in the second quarter of 2020] were down approximately 20 percent from the second quarter of 2019 reflecting required curtailment to comply with government decrees to manage the pandemic, including disruptive lock downs in México and the Andean countries, as well as the company’s effort to align supply with lower demand and manage inventory.”
O-I reported lower profits for the third quarter for its Americas segment (including operations in México as well as other countries in the region) during 2020: “Segment operating profit in the Americas was (US) $113 million compared to (US) $123 million in the third quarter of 2019. Shipments increased 2.0 percent in tons. Cost inflation was elevated due to foreign currency pressure and was partially mitigated by the benefit of favourable selling prices. Savings from the company’s turnaround initiatives and cost reduction efforts partially offset the impact of lower production levels. Results were unfavourably impacted (US) $1 million by foreign currency translation.”
Whilst the COVID-19 Pandemic affected some of its operations, O-I detailed how it strived to help others faced with the impact of the pandemic. A distillery that produced alcoholic beverages in the USA altered its production to package “...hand sanitizer in 1 liter glass bottles,” according to a news statement dated 9 April 2020, from O-I. “The distillery turned to longtime partners, O-I Packaging Solutions in Plano, Texas, [in the USA] for its very large packaging order. The O-I Packaging Solutions team and O-I’s plant in Guadalajara, México, moved into high gear...” to provide the distillery with the needed glass products.
The news statement quoted Susan Mosher of O-I Packaging Solutions: “As a team, many players had to respond quickly to provide…support, from our Plano office to the México plant and the commercial team to make this happen quick.” She noted that O-I was proud to provide “...glass and to be part of something great to help others knowing the end product was going to local hospitals.”
Recycling
Cullet is utilised by a number of glass companies in México. Some of the cullet is internally-produced product, whilst other cullet comes from third-parties that recycle finished glass products from end-users.
Recycling of glass is part of the operations at Glass & Glass. The firm indicated that it is “aware of the importance of recycling and the quality of our products, in our process we use our own cullet.”
Glassia also utilises internally-produced cullet. “We recycle unused glass within our production process to achieve high quality standards,” stated Mr. Leoncini of Glassia.
“Grupo Pavisa has a strong commitment to social responsibility, sustainability initiatives, and the wellbeing of the community at large,” said Mr. Zanini of Pavisa Glass. “Grupo Pavisa founded several years ago a curbside collection company to collect and recycle glass returning it to the product stream. That company is today independent and a source of recycled materials for Grupo Pavisa. Additionally, we purchase glass from other recyclers and glass industry manufacturers for use in our production to increase the recycled content beyond what is possible from inhouse recaptured materials alone. Grupo Pavisa invests heavily in new technologies allowing us to increase recycled content in all products without compromising quality, or stability of product.”
The largest glass recycler in North America, Strategic Materials, operates glass recycling facilities in a number of communities in México, including in Mexicali, Baja California; Torreón, Coahuila; San Luis Potosí, San Luis Potosí; and Cancún, Quintana Roo. Customers are located in México and Latin America. “We accept and collect food & beverage glass containers by servicing manufacturing plants or receiving glass from third party suppliers,” noted Javier Lopez-Portillo, Vice President of Business Development – Latin America at Strategic Materials. “We process the glass and sell cullet back to container glass manufacturers.”
“Sustainability has always been at Strategic’s core as a business. In its first three years of operation in the Méxican market, the company recycled more than 180,000 tons of glass – one ton of CO 2 is reduced for every six tons of recycled glass, which equates to 30,000 tons of CO 2 prevented from entering the atmosphere,” Mr. Lopez-Portillo continued. “Recycled glass can replace up to 95 percent of virgin materials in glass containers and melts at a lower temperature, extending furnace life for container manufacturers. These benefits, which are eco-friendly and create efficient production, are why Strategic Materials services the largest glass container manufacturers in México. We are focused on providing a sustainable solution that exceeds our customers’ expectations and protects the nature that surrounds us.”
Mr. Lopez-Portillo detailed that Strategic Materials studies “…markets here in México and in the United States to determine the best pricing for our customers and our cullet suppliers. We train our people to know the Méxican glass market intimately so we can help our partners make good business decisions. The company is developing custom collection systems for several Méxican states that are designed for scale and replication. These systems support local economy, bolster landfill diversion initiatives, reduce carbon footprints and provide value to glass.”
Euromonitor International
Euromonitor International, a market research provider, has issued a forecast that the overall market for glass and glass products in México is anticipated to grow from an estimated (US) $5,075,100,000 in 2019, to an estimated (US) $5,300,300,000 in 2024. The overall market for glass and glass products “is an aggregation of flat glass, shaping and processing of flat glass, glass fibres, and other glass products,” according to Euromonitor International.
A total of 14,376.5 million units were part of the retail volume in the Beverages Packaging Glass Category in Year 2019, the most recent year for data from Euromonitor International. “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 269 million units in Year 2019, 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.”
Tradeshows
A screenshot of a webinar detailing Innovations Opportunities In Package Design Facing the Surge of E-commerce in
Latin America held by PMMI, The Association for Packaging and Processing Technologies, on 13 October 2020.
(Image was provided courtesy of PMMI.)
The COVID-19 Pandemic impacted a number of tradeshows in México that provide forums for businesses active in the glass industry. One was the trade show planned by PMMI, The Association for Packaging and Processing Technologies. “Without a doubt…COVID-19 impacted EXPO PACK strongly, causing the event scheduled for 2-5 June 2020, to be cancelled and replaced by a virtual event in which, through a digital platform, attendees were able to connect with exhibitors digitally and find solutions to market opportunities,” explained Jorge Garibay, Director of EXPO PACK México and EXPO PACK Guadalajara produced by PMMI. “We created two series of webinars to maintain communication and continue training our attendees year after year. Topics such as trends, design, sustainability, circular economy and much more.”
Mr. Garibay indicated that “according to Euromonitor International [data] reflected in the Market Intelligence Report of PMMI 2020 (Guide to Global Markets 2020), expectations for the industry in the coming years are positive considering the impact of COVID-19 and other productive and economic elements in México on the behavior of the packaging and processing machinery industry for this and the next few years…”
As of the date of the preparation of this news column, trade shows planned for 2021 include EXPO PACK México scheduled for 8 to 11 June 2021, in México City, and Glassman Latin America is scheduled for 8 to 9 September 2021, in Monterrey. Please check with the individual trade show producers to confirm times and locations.
USA Trade Office
A report dated 18 August 2020, from the U S Commercial Service of the U S Department of Commerce, noted that “México’s already significant packaged goods production has been boosted with the increase in demand (mostly driven by the COVID-19 Pandemic) for sanitary, medical, and personal care products, as well as the tightening of food sanitary standards. For all these reasons, packaging machinery and food processing equipment is a best prospect industry sector in México.”
This report quoted information from the Méxican Association for Bottling and Packaging (Asociación Mexicana de Envase y Embalaje or AMEE) that “plastic is the most dynamic material used by all industries that utilise packaging products, having a constant growth of its market share…[during] the last five years. Concerning end-use segments for packaging equipment, the food and beverage industries exhibit the greatest demand for packaging materials, representing 58 percent of Méxican packaging machinery imports by value. This is followed by machinery for general packaging (14%), for personal care products (7%), and for pharmaceuticals (6%).”
The U S Commercial Service, again quoting information from the AMEE, indicated that demand for glass packaging is 19.5% of all types of packaging materials in México. Demand is greater for paper and cardboard, at 32.7%, and for plastic, at 29.3%; demand is lower for metal, at 18.1%, and for wood, at 0.4%.
“Many companies are looking at glass packaging, given its competitive prices compared to plastic containers, as well as its environmentally-friendly manufacturing process,” according to this report.
Glass Packaging Institute
“The Glass Packaging Institute (GPI) has been in active talks at the federal level related to COVID-19 essential operations in order to align [the] USA response to the pandemic with México and ensure that supply chains across borders remain intact,” according to a statement from the trade association for North American glass container manufacturers and the entire supply chain. “Since the pandemic, GPI has made an effort to study supply chain options for North American plants, and are studying options to increase the recycled content in containers delivered for US markets. The association is currently working on plans for projects that they can assist with in the future.”
Summary
These efforts to enhance supply chains throughout North America as well as increase the use of cullet in glass production are likely to help strengthen the glass industry in México. With its location – adjacent to the USA and within close proximity to a number of nations in the Americas – glass enterprises are likely to continue to be able to serve both a growing domestic market as well as export to other countries seeking quality glass products.
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.
© 2021 Richard McDonough