PETpla.net Insider 07+08 / 2012

REGIONAL MARKET REPORTS 18 PET planet insider Vol. 13 No. 07+08/12 www.petpla.net attempts to participate financially in their client’s, the bot- tler’s business, accepting operational and financial risk – by jointly investing and jointly running the bottling plants. Blowing and filling In this area, China is a veritable hot spot. The latest technologies find outlets in China and prime markets here. In today’s demanding PET world, blowing and filling and almost all related activities such as capping, labelling, pal- letising, transportation are interconnected, and in line and fully integrated. Supply of stand-alone machines for blow- ing is now the exception. Today’s China demands the most modern technology. Core equipment for fully integrated lines, especially for complex applications such as aseptic filling and hot filling are exclusively supplied by the high- tech companies from Europe. The leading machinery suppliers:  Sidel  Krones  KHS/Corpoplast According to Christian Blatt, General Manager of Krones in Taicang, who surely is an insider: “We all do extremely well – with different policies: Sidel with wholly local production. Krones with imported core machines and localised customer service. KHS in a joint venture with Guangdong Light Industrial Machinery Plant 2.” Right or wrong? We were to find out, when talking to the subsidiar- ies of the above “Big Three” on site. One more competent supplier is dedicated to challenging the “Big Three” – this is Sipa (blowing) after the merger with Berchi (filling). (In the June 2012 KHS announced their exit from the GLM2 joint venture. The company will invest in a production plant in Suzhou to build machines from the new EcoBloc range.) In addition to manufacturers of sophisticated high-end technology there is a large number of small companies that supply stand-alone machines with a lower performance profile. Some are international companies, but there are also some of Chinese origin. Customers include the small beverage producers, spread throughout the length and breadth of China, including municipalities, cooperatives. The Chinese market is no less vital and dynamic as far as these products are concerned but it is completely non-transparent and therefore not accessible for a classic, systematic survey. By contrast to the situation six years ago, there is no longer any demand for Single Step Injection Blow Moulding Machines. When it comes to the manufacture of PET bot- tles major companies like Wahaha and Tingyi have opted for the 2-stage technologies. Integrated blocked line systems: There is a total of approx. 550 integrated blocked line systems in the Chinese market.  Sidel: over 300 complete lines (Doubled in last 6 years).  Krones: approx.200 “blocked” lines (Market share dra- matically increasing)  KHS/Corpoplast: approx. 20 KHS with Blomax as well as Blomax in line with Shibuya/Japan. Beverage producers / bottlers: The largest beverages producers are also the largest bot- tlers in PET: Tingyi, Coca Cola Company, Hangzhou Wahaha Group, PepsiCo Uni-President. The four most important bev- erages producers/bottlers have undergone structural changes and further development over the last 6 years: Tingyi overtook Coca Cola in 2010 to take first place in the soft drink markets (including bulk/HOD waters). Tingyi und PepsiCo (23 bottling plants) as per company’s statement has entered into a strategic alliance - by Tingyi’s beverage subsidiaries becoming PepsiCo’s franchise bottler in China. Tingyi will partner with PepsiCo’s current bottlers to manufac- ture, sell and distribute PepsiCo’s carbonated soft drinks and Gatorade brands. PepsiCo and Tingyi will begin co-branding their respective juice brands using the Tropicana brand name under licence from PepsiCo. PepsiCo will retain branding and marketing responsibilities for these products. The alliance received regulatory approval in March 2012. Coca Cola has 32 bottling ventures and 41 produc- tion plants in China. Coca Cola has three strategic partners in China: Coca Cola China Industrial, Swire and COFCO Coca Cola Beverages. Coca Cola China Industrial – the former Kerry Beverages with 15 locations in China has been acquired by Coca Cola (B.I.G. = Beverage Investment Group)) and today operates as Coca Cola China Industrial Ltd. (CCCIL). Swire with licence from Coca Cola and 12 pro- duction locations, Cofco, a further licensee with 11 production locations. Hangzhou Wahaha has said goodbye to single stage technology in relation to the manufacture of PET bottles and over the last four years has been investing exclusively in equipment incorporating 2-stage technology. For the beverages market, the keyword is movement. As far as the market participants are concerned, they are being offered the chance to be part of the growth trend, but there is also exposure to risk. This is the reason for the agitation, the hectic pace, the constant realignment, the readjustment of strategy, the change of direction. There is and will be continued fierce competition for market shares and leading positions.“And certainly" - as someone truly said - "this show will run and run.” China part 2 PETplanet insider issue 9