11 September 2006

The rapid expansion of New Zealand’s export wine industry has prompted world-leading glass packaging manufacturer Owens-Illinois (O-I) to expand its New Zealand operation.

O-I, which makes over half of the world’s glass packaging products, in August announced a US$47 million (NZ$75 million) expansion of its facility in Penrose, Auckland.

The investment will be spent on a new, energy-efficient furnace, which will expand the plant’s capacity by about 60 percent.

The expansion follows rapid growth in New Zealand’s export wine industry, which achieved record success in 2005/06. Export sales topped 58 million litres for the first time (up from 11 million litres in 1996), and the annual grape harvest was the country’s highest ever.

According to the New Zealand Winegrowers’ 2006 Annual Report, the growth was driven particularly by international demand for New Zealand sauvignon blanc, though pinot noir exports grew by 55 percent to become the country’s second-biggest export variety.

Strong sales were recorded in key markets the United Kingdom, United States and Australia, while there was strong growth in emerging markets such as Japan, the Netherlands and Ireland.

O-I New Zealand manufactures the majority of New Zealand’s export wine bottles.

“Because New Zealand wines focus on the quality end of the market, glass is the natural package,” says O-I New Zealand General Manager Brian Slingsby.

Mr Slingsby says the decision by O-I’s Ohio-based global board to invest in the Penrose plant reflects the company’s positive view of New Zealand’s economy and the future of its glass packaging industry.

“There’s global demand within the company for capital and of course the best business cases get priority on that capital."

“For New Zealand to have been awarded such a large sum is a significant vote of confidence in the country and the growth that’s been occurring over the past five years. It’s substantial support for New Zealand and the Asia Pacific region.”

O-I New Zealand prepared its business case with funding from Investment New Zealand. Investment New Zealand also visited O-I’s global chief executive officer and chief financial officer to emphasise government support for the expansion.

The new furnace will be in full operation by the third quarter of 2007. The increased capacity will mean that New Zealand-manufactured glass can replace imports from the Middle East and Asia.

It will also increase the plant’s capacity to substantially increase the amount of glass recycled from the waste stream. “New Zealand already does very well on glass recycling,” says Mr Slingsby. “Currently, about two-thirds of everything we manufacture comes from the waste stream and that’s a world-class figure.”

O-I, established in 1903 and previously known as Owens Illinois, has manufacturing facilities in more than 100 countries.

O-I New Zealand’s Penrose facility was established in 1922. It currently operates two furnaces and four machines, employing 186 people.

For more information, please contact:

david.sear@investmentnz.govt.nz

+61 3 9642 3403