Turkey's Anadolu Cam group will get a €26.5m loan to build a new bottling plant in central Russia, yet the firm's biggest challenge will be to address declines in glass packaging reports Chris Mercer.
The money, lent by the European Bank for Reconstruction and Development, will cover half of a €52.9m ($65m) project undertaken by Anadolu's subsidiary Ruscam-Ufa to build a new plant near its home city of Ufa.
Hans Christian Jacobsen, EBRD agribusiness director, said the project would help to improve the quality of glass packaging offered to food and beverage producers in central and eastern Russia.
Quality has been the name of the game for glass packagers in Russia over the last few years as lighter and more convenient forms of packaging, such as cartons and plastic, increase their market share.
"Up to 25 per cent of Russian alcohol is bottled in plastic and cartons, which are considered convenient by consumers and which offer greater possibilities for original designs," said a spokesperson for Russia's National Alcohol Association.
"In the next few years, the amount of plastic and carton beverage packaging could increase to 30 per cent or even 40 per cent, but our legislators have the role to play - they have been trying for a long time to pass a law requiring all beverages with an alcohol content higher than 9 per cent to be bottled in glass," he said.
Glass and metal have been the casualties of the lightweight, convenient packaging trend, declining by 15 per cent and 16 per cent respectively between 1998 and 2002, according to a 2004 report by Euromonitor, which also said these two packaging types were facing permanent decline.
All is not lost, however. The report said consumers associate glass with high-quality products and this has boosted olive oil and ketchup sales, offsetting the material's higher cost. Metal and glass also still have a 6.8 per cent and 5.5 per cent share of this market, narrowly behind rigid plastic at 7.6 per cent.
Anadolu, and other glass bottling specialists, must hope such premium avenues can be retained, while also working on ways to reduce the weight, fragility and cost of glass packaging.
In 2004, the EBRD lent €18.9 million to another Russian subsidiary of the Anadolu Cam group to modernise a bottling plant in the country's northwest.
For the new loan, the EBRD will be lender of record for the full €26.5m ($32.5m), but is taking €13.2m on its own books and syndicating the remaining €13.2m to a group of international banks.
Anadolu Cam is the largest producer of food and beverage containers in Turkey and a member of the leading Turkish industrial group Turkiye Sise ve Cam Fabrikalari.