GW: How important is Chile to Verallia’s regional performance?
Chile is one of the most competitive wine producers and exporters in the global market, thanks to its outstanding landscape and ideal soil/weather/geographic conditions.
Our strategic presence in this export hub will allow us to strengthen Verallia as one of the most competitive glass suppliers for the wine industry, serving customers with superior quality products, within a world class service and with innovative ways to do business and develop sustainable packaging for all stakeholders.
GW: Currently, what key challenges does Verallia face in the local market?
Chilean wineries maintain very high standards because 80% of the bottled wine volume is exported to markets that demands an excellence level of quality such as Japan, China and the USA etc. This challenging environment with high seasonality and demand variations, requires us to be flexible, agile and to anticipate the constant market changes from global consumers, while maintaining excellence as a world class supplier for the wines of Chile.
GW: What are the highlights of your performance in the past 12 months and what is Verallia’s standing in the local market?
In recent years, we have supplied Chile’s top 20 wineries, representing close to 80% of bottled wine volume. As well as consolidating our presence among the key players, however, Verallia Chile remains flexible, aiming for superior service levels and servicing the needs of the premium and small business segments, who nurture the future expansion of the Chilean wine sector.
A diversified portfolio with innovative designs and superior functionality (such as our Knon and Ego lines) provide the ideal combination of a premium image with the great taste of the wines of Chile, strengthening the brand as one of the best cost x quality perception, from new world wines.
GW: Typically, who are Verallia’s main customers and how is the market evolving?
Our clients are mainly Chilean wineries, from the largest players to small craft and personalised wineries. We partner with them, not only the local market development but also via the global reach of Verallia to support their international business development.
Expanding internationally is also a way to grow through innovation and competitive world class bottles, due to the geographic strategic positioning of Chile and the easy way of doing business there. We have been a key partner for customers to help the growth of Chilean bottled wine exports over the past 10 years by +20% and will continue enhancing their competitiveness through our recent investment at the Rosario plant.
GW: Are any market sectors performing better than any others and if so, what is the driving force?
Our participation is more apparent in still and sparkling wines. In relation to the former, consumption has remained stable in recent years, where brands have tried to attract a younger consumer (under 40) and where sparkling wines have become very successful, although the strong base is the still wine segment.
GW: What is the history of the Rosario production facility in Chile and its location?
Our history in Chile dates back to 2006, when Verallia (formerly SG Envases) acquired 51% of BO Glass Containers SA. Operations started in 2007 within a production facility with one unit melter furnace and two 12-section Heye IS machines. We are located in the VI region, O’Higgins, Central Valley, strategically positioned close to many customers and their vineyards.
GW: What was Verallia’s motivation for undertaking a $40 million expansion of the Rosario site in early 2020?
Verallia maintains a core competence of glassmaking for the wine business. Considering that Chile is one of the top five wine export hubs worldwide, the strategic investment in a furnace expansion and technology upgrade at the Rosario plant is a key element to driving the growth for our company and our customers.
Our world class footprint, together with a senior management team and seasoned, highly skilled workforce, provides a unique combination to excel in this demanding, high standard business for the wines of Chile.
GW: What are the key elements of this latest investment and what benefits will Verallia achieve as a result?
The new furnace at Rosario is set to generate an additional annual production capacity of approximately 50,000 tonnes. This end port regenerative furnace was built with increased energy efficiency, allowing high cullet usage and employing the latest technologies for the pollution abatement system, resulting in a reduced carbon footprint and a cleaner environment.
Flexible production is provided via the latest IS tandem machines, thereby optimising the service levels delivered to customers, while increasing total capacity. Furthermore, the latest inspection machines, digital technology and full on-line capabilities will serve our customers and their clients with a world class quality level.
Collectively, this expertise, together with proven high quality production and a skilled workforce, will retain Verallia’s position as a preferred glass supplier partner to foster the growth of its customers.
GW: How have customers reacted to this investment and the opportunities it presents?
This investment was very positively received by clients, who see the advantage of working with one of the world’s leading glass bottle producers, with solid and high production standards allowing them to comply with the demanding quality measures required by the Asian, European and North American markets. Regardless of the size of the customer, this increase in production capacity represents an unbeatable condition for responding to demand on time and with greater flexibility in new and innovative bottles that allow them to add value to their brands.
GW: What specific measures are you taking to control energy, raw materials and other production costs?
The advanced furnace design features the latest process control technologies, supported by clean natural gas firing, together with additional electric boosting and increased cullet usage. This will give us a step change in terms of energy efficiency, operating at a world class level of converted kWh per kg of melted glass.
Lean operation and our Verallia industrial management platform for continuous improvement will provide the cost optimisation projects for productivity and supply chain savings, while our unique designs for the Knon and Ego bottles, with outstanding push-ups up to 61mm, create a high premium image but in lightweight bottles that reduce the consumption of natural raw materials in every glass bottle.
GW: What are your hopes and expectations for the business in the next 12 months?
The investments made by Verallia in Chile allow us to look to the future with optimism, regardless of the uncertain times we are currently facing because of Covid-19. Our challenge is to partner with customers in these changing times, when new habits and consumption patterns are evident, through different distribution channels, sustaining high quality standards and aiming for the perfect service level with innovative designs and business models.
Our focus is maintained on the safety of our workforce and local community, supporting entities such as nursing homes for the elderly and homeless shelters (Perpetua Escobar nursing home, Madre de la Divina Providencia nursing home and Hogar de Cristo shelter) with PPE, sanitary supplies and medical devices. We are engaging our best efforts to go through these challenging times, while building a readiness for the secure and prompt ramp-up of the wine of Chile market, emerging as a stronger and more competitive player at the new world.