Rexam gains foothold in Mexican can market

"Rexam intends to become a major player in the Mexican can market, manufacturing about a billion cans here a year,"​ a Rexam spokesman told FoodProductionDaily.com.

The acquisition will give Rexam an 11 per cent share of the Mexican can market, which is growing at 2 to 2.5 per cent a year.

The Mexican can market is dominated by Famosa, which has nearly a 50 per cent share of the market. Other competitors include Modelo with 28 per cent, Grupo Zapata with 11 per cent and Crown Cork and Seal with 3 per cent.

According to the Rexam spokesperson, Vitro-American National Can decided to sell the VanCan business in order to concentrate on its core business of glass packaging.

The consideration, on a debt and cash free basis, is $26.5 million, subject to adjustment. In 2003, VanCan had sales of $70 million, of which $35 million was reported in the Rexam 2003 results under turnover of associates.

VanCan has one plant located in Querétaro near Mexico City. It started as a green field site in 1995 and is now a major supplier to the Mexican beverage market. The plant has two production lines and employs approximately 140 people.

VanCan will continue to be part of the Rexam Beverage Can Americas operation, which has 25 plants in North and South America.

"This deal represents another step in our commitment to extend our position in growing markets and to deliver increased value for customers,"​ said Rexam chief executive Stefan Angwald.

The acquisition of the remaining 50 per cent stake in VanCan follows Rexam's recently completed acquisition of Latasa, Brazil's largest beverage can maker. Just over 5 million shares of Latasa common stock and 80,000 preferred shares were acquired, bringing Rexam's ownership to 99.94 per cent of the issued shares.

The deal, valued at €396 million, gives Rexam a key foothold in the Latin American market. Latasa is the leading producer and supplier of aluminium beverage cans in Brazil, Argentina and Chile, generating sales of €347.2 million.

Rexam's acquisitions of both VanCan and Latasa are consistent with its strategy of strengthening its position in chosen markets, and the deals reflect a general pattern towards consolidation in the packaging industry. Major packaging firms such Rexam are concentrating on core markets to better serve their customers, who in turn are getting bigger.

The recent merger between Interbrew and Ambev to create the biggest brewer in the world is a case in point, while Morrison's takeover of Safeway in the UK shows that consolidation is happening globally.

The packaging industry has of course been beset by a few problems. The beverage can market in Germany has been hit by the much-criticised deposit regulation, which impacted on Rexam's sales. The company lost 1.4 billion units in Germany last year.

Nonetheless, Rexam​ remains one of the world's top five consumer packaging groups and the world's leading beverage can maker. The group employs more than 22,000 people in 24 countries worldwide and has an ongoing turnover of approximately £3.1 billion.

The group enjoys a global market share of around 23 per cent, equivalent to nearly 50 billion cans.