Rexam takes Russian tumble: 10% beverage can market share slide


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Some of the standard cans offered by Rexam (Picture Credit: Rexam)
Some of the standard cans offered by Rexam (Picture Credit: Rexam)

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Leading can maker Rexam has suffered a 10% market share loss in Russia in 2013, hit by the opening of a plant by Polish rival Can-Pack in March with a one billion can per year capacity.

Packaging giant Rexam issued an update on H1 trading yesterday, as it announced the start of a process to sell its healthcare business to pursue beverage can investment opportunities in high growth markets.

“At around 10% of sales, the business is not core, and the sale will allow us to focus solely on our beverage can operations,”​ CEO Graham Chipchase said.

Rexam is still deciding how to use any sale proceeds, Chipchase said, but added that the firm was making good progress pursuing beverage can opportunities in “faster-growing markets”​.

Rival Can-Pack plans second line

Turning to Rexam’s performance in the first five months of 2012, Chipchase told analysts yesterday on an investor call that Rexam had suffered a 10% beverage can market share loss in Russia.

Polish rival Can-Pack opened a new site in Novocherkassk (Southwest Russia) in March that can produce 250ml, 330ml and 500ml cans at a rate of 2600/minute and one billion/year, and plans to install a similar second line.

“What we’re seeing is a 10% market loss, because one of our competitors [Can-Pack] has opened new plant,”​ Chipchase said.

“And then we’re saying that the market generally is declining 2-3%, partly due to weather, and partly because the economy is not doing that well, as the price of oil has dropped below $100/barrel.

Jonathan Thornton, head of communications, told that Russia was predominantly a beer market for the company. Asked whether Rexam was looking to make up the market share loss quickly, he said:

"There are two players in the market there now. We always knew that we would never have a monopoly of a can market anywhere, so this is just a natural progression. Someone will always open up a market and others will come in."

Won back share in Brazil

Discussing Rexam’s trading more generally, Chipchase said that beverage can volume growth began the year more slowly than planned: while North America continued to perform strongly, volumes were disappointing in South America and Western Europe in April and May.

The Nordics were doing well, but there had been a slowdown in the UK, Spain, France and Benelux countries, he added.  Firstly, due to the wet weather, and secondly because of macroeconomic factors in Europe, with customers Carlsberg and CCE principally blaming economic issues.

“Volumes have seen some improvement in June in Brazil, as we regained market share, and H2 in Europe should benefit from further contractual price/volume arrangements,”​ added.

So which markets would Rexam consider investing in to secure beverage can growth? Credit Suisse analyst Lars Kjellberg asked.

“The high growth markets we’re looking at are Central America, the Middle East and Southeast Asia,”​ Chipchase replied, adding that while growth rates in Central America were still high, the Middle East was a bit of a “mixed bag”​, while Rexam’s customers were investing in Southeast Asia.

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