Favourable tax changes boost Finnish can boom, Rexam

The firm has just announced plans to build a new £68m beverage can plant in Finland, specifically in Mantsala north of Helsinki.

The build is scheduled for completion in 3 years, but Rexam expects the site’s first line to be operational at the start of 2013, with the second line operating from January 2014.

Rexam cited strong growth within Nordic markets in recent years as a reason for building the new plant, as well as Finland’s transition from glass bottles to can fillings.

In the last 5 year the beverage can’s share of the pack mix for beer in Finland grew from just above 10% to more than 60%, the company said.

Jonathan Thornton, Rexam's director of corporate affairs, told BeverageDaily.com: “The main driver [for the growth in can usage by brewers] was Finland moderating its high tax on cans in 2005. The tax was removed in 2008. I think there was pressure from retailers and consumers to do this, because the can is the package of preference. ​

“Cans are less bulky [compared with bottles] and easier to transport. Also, the recycling question is very prominent in the Nordic countries. So, it was a potential there in market terms that was released when the taxes were modified and then withdrawn.”​

Growing and emerging markets​

Asked whether Rexam was seeing growth in beverage categories other than beer, Thornton said that beer was the main growth area.

The drink accounted for more than 60% of can sales in Finland, the spokesman said, and 80% of can sales in the Nordic countries.

Rexam said it anticipated growth in Finland and throughout the Baltic states, but Thornton did not provide details of expectations for specific markets.

“I don’t know whether we rank them in order, but they are growing and emerging markets for us. I think there is potential there,” ​he said.​

Thornton added that in other countries Rexam had seen the can market develop of its own accord, but that the rise of the can had also reduced the market share for glass.

“In some countries they have a well-functioning glass return system, so there will be a balance,” ​he said.

Cans were also well placed to compete with polyethylene terephthalate (PET) bottles, the Thornton said, despite the transition from cans in some categories.

“PET has always been on the fringes of beer, but it has never really taken off,​” he said, while the barrier qualities had not been properly perfected.

“PET is fantastic for soft drinks, but especially within developed markets, but also within developing markets, the can has shown that it’s a good package," ​Thornton added.​

Critical market mass​

Plant efficiency across Rexam’s EU can production network would also be enhanced by the Finnish production facility, Thornton explained.

Currently, the firm was “feeding” ​the Finnish market with cans produced in Swedish, Danish and Russian plants, he said, to achieve the “critical mass” ​in terms of market demand before opening the new site.

Thornton said: “Once you get the critical mass in the market, you establish a can plant. This frees up capacity in our other plants instead of our cans in Sweden filling into Sweden can feed into Germany and Northern Europe, allowing better efficiency across our network.​

“You don’t just build up a plant and hope the business will come. You need to feed the brewers with cans from outside, then you set up a plant.”​

That said, shipping cans long distances was inefficient, said Thornton, citing Rexam’s penetration of the Russian market in 1996.

At that time Rexam was “one of the biggest hauliers in Europe”​, he said,​shipping millions of cans into Russia from its plants in Germany and Sweden.