Out of Africa
Managing director of Nampak Bevcan, Erik Smuts, tells CanTech International the company started up its new high speed aluminium can line at the beginning of May and plans to increase the operational speed to full production capacity in the third quarter of this year. “We have just started producing aluminium cans. We are in the process of commissioning the new line,” Smuts said. “We have installed a new high speed line that is currently running at 2,000cpm for the initial start-up phase. We will commission more body makers and bump up the production speed to 3,000cpm in the next three months to reach our new line’s 1.2 billion cans per year production capacity.”
Bevcan has installed the aluminium can line in its Springs plant, the company’s largest factory, that is located about 50km east of Johannesburg. The new line has been laid out in a U-shape configuration alongside two existing two-piece tinplated steel beverage can lines that are earmarked for conversion to producing aluminium cans in the near future. The aluminium can line is producing 330ml cans at present but is designed to manufacture can sizes ranging from 200ml slim line cans up to 500ml beverage cans. Equipment purchased to install the aluminium can line includes neckers and bodymakers from Carnaud Metalbox in the UK and two eight-colour Ragsdale decorators.
“We consulted with Crown about our new aluminium can line, but we designed the line ourselves,” Smuts explained. “We used to have three two-piece tinplate steel beverage can lines in Springs but the beverage can market previously declined, so we mothballed and then removed one tinplate steel line many years ago. The two other steel beverage can lines are still in full production.”
As well as being Bevcan’s largest beverage can production facility, the Springs factory also produces easy open end (EOE) super ends. The plant is equipped to produce around five billion EOEs a year, according to Smuts. Bevcan has installed its two-piece aluminium can line as part of a new business development strategy that is expected to include converting all or many of the company’s two-piece tinplate beverage can lines to produce aluminium cans in future.
Two-piece steel lines converted to aluminium
Plans currently call for the two existing two-piece steel lines to convert to aluminium can production by the first quarter of 2014. Next to be converted is expected to be the single beverage can line in the firm’s Cape Town plant which is planned to be ready to produce aluminium cans by the last quarter of 2014. Smuts explained that the timetable for Bevcan’s other can lines to be converted to aluminium cans will depend on the overall growth in demand in South Africa.
Recent volatility of tinplate prices and the difficulties this has created for the company’s customers has prompted Bevcan to introduce aluminium cans in a move intended to bring about greater stability in beverage can prices in future. “We have decided to install an aluminium can line for a number of reasons mainly to ensure we remain competitive with beverage can prices in the rest of the world,” Smuts remarked. “Because of tinplate price volatility our customers started looking at using aluminium cans to take the volatility out of their can procurement costs. To convert the beverage can market here from tinplate to aluminium cans, we decided to make a significant investment in the business, so that we can make cans at the lowest cost.”
Bevcan supplies a range of two-piece tinplate can sizes for different beverages. All of these will be produced in aluminium as well in future. The 200ml slim size is used mainly for mixers and soda water, Smuts noted, while the 250ml size generally is used for energy drinks. The slightly larger 275ml slim line can is used for energy drinks, fruit juice, ciders and some ready to drink (RTD) mixed alcoholic beverages.
Slender 300ml and 330ml can sizes both measure 58mm in diameter, Smuts explained. The 300ml size can is used to hold beer and cider while the 330ml size is used for iced tea, carbonated soft drinks, beer and juices. Bevcan also produces a standard 66mm diameter beer can in two sizes, 330ml and 440ml.
Noting that the company has the capability to produce 500ml cans if requested by clients, Smuts added: “We serve the whole of Southern Africa including neighbouring Namibia, Mozambique, Botswana, Zambia, Zimbabwe and all the way up to Tanzania. It’s more economical to supply most of these countries from here by road.”
Meanwhile, talking about the company’s steel beverage can production activities, Smuts explained that Bevcan currently operates seven two-piece steel beverage can lines including the two Springs plant lines. “Our current tinplate steel can capacity is about three billion beverage cans per year,” Smuts said. “We will speed up our two existing steel can lines in the Springs plant when we convert them to aluminium can production.
“With our new aluminium can line and the two enhanced lines after conversion to aluminium should provide two billion additional can capacity taking us up to five billion beverage cans a year. The rest of our steel can lines probably will convert over a two-year period, if it is economically viable.”
Growing black middle class drives growth
Bevcan’s decision to invest in a two-piece aluminium line and convert its steel lines follows a significant upturn in South Africa’s canned beverages market during the past two years, following an earlier lengthy decline in canned drinks consumption. “The black middle class is driving canned beverage consumption growth. The beverage can market was in decline for the last decade, but during the past two years it has started growing again,” Smuts commented. “We have been doing a lot of marketing for our beverage cans. We have been successful in convincing young black consumers about the attractiveness and benefits of cans. Cans are aspirational now. There has been good growth in sales of beer and mixed alcoholic drinks in cans.”
Bevcan’s successful beverage can marketing campaign, targeting new middle class South African consumers, is unusual in the international beverage can industry where it is filling companies that usually take the lead in promoting canned beverages in emerging markets. “We tried marketing through beverage brand owners but we did not have success, so we took a different approach and marketed our cans direct to consumers,” Smuts explained. “South Africa was similar to some other countries where cans were seen as a low cost commodity packaging, but we have changed that perception. We have convinced consumers of the key benefits of beverage cans. We ran a very successful “Can DO!” campaign, using TV advertising and other media coverage.”
Competition for cans
Beverage cans in South Africa face competition from PET bottles as packaging for soft drinks. Beer is traditionally sold in relatively inexpensive 750ml returnable glass bottles. “The glass beer bottle used to be the only premium packaging in South Africa, but in our opinion that is not the case today.”
Due to South Africa’s large size and the geographical spread of major consumer centres, Bevcan’s factories are located near to customers and major beverage consuming markets. In addition to the Springs plant, Bevcan operates three steel beverage lines in its Rosslyn plant located north of Pretoria. One beverage can line is installed in the firm’s Cape Town plant and one in the Durban plant.
Soft drinks fillers traditionally have been the company’s largest customers including Coca-Cola Canners of South Africa which recently awarded Bevcan a five year contract to supply aluminium cans for the company’s range of carbonated beverages. However, the share of beverage cans used for beer, cider and RTD mixed alcoholic drinks has started to grow recently as beverages in attractive cans become more fashionable with young people.
Nampak also produces beverage cans in Angola where the company is about to install a second two-piece beverage can line. Rising income levels, due to economic growth following recent development of the country’s oil and diamond resources, is boosting consumer spending including demand for canned drinks.
“We have an existing two-piece steel beverage can line in Angola and we are at the point of installing a second two-piece line,” Smuts said. “Money is coming into the economy and producing double digit economic growth. Our cans are being used to fill with beer and soft drinks.”