The facility, which employs 60 people, will produce a 'high end' aluminium cap for Australian and New Zealand wine producers, said the group yesterday.

Alcan has been selling its Stelvin wine cap in Australia and New Zealand since 2001 when the two countries became the first big users of cork alternatives.

Around 40 per cent of Australian wine producers now use screw caps and more than 80 per cent of New Zealand wines opt for this closure, said Claude Dagescy, manager of Alcan's Australian closures business.

The company says the screw caps are growing in popularity because of their practicality and high performance versus traditional wine corks.

The new factory will produce 180 million caps by 2007, he said, and has capacity for expansion should the market continue to grow as expected.

"There are around 450 million screw caps being sold in Australia currently and we expect this to increase. Capsules should reach a 50 per cent share of the wine market in the next two years," he told AP-Foodtechnology.com.

Alcan will also continue to import screw caps from France to meet demand from the New World wine markets.

Alcan took over the capsules and closures distribution businesses of Classic Packaging and Nellie Products, previously distributors of its Stelvin caps, last year and sees the new Adelaide facility as a way of building its market share in an increasingly competitive segment.

"The idea is to be closer to the customer, reduce delivery times, and also work with our clients locally on developing new products," said Dagescy.