The 15-year-old Little Rock, Arkansas, USA-based Mountain Pure LLC, a manufacturer of bottled water and juices whose territory stretches across about 13 states in the South, recently had found itself at a turning point. With competition from other bottlers rising, along with its costs of doing business, the US$20 million company was finding it a tough go to squeeze any more profits out of its operations. So the company turned to a solution that more US-based bottlers are giving a try these days: manufacturing their own PET bottles.
This past summer, the company installed a SIG BlowMax 12 machine, the company's first PET blow molder. So far, the results have been good.
"If you're planning on staying in the business, I don't think you have any choice," says Mountain Pure's owner, John Stacks. "If you don't have an integrated system where you do your own blow molding, then there's just not any margins in it, it's just that competitive of a market."
And Stacks is not alone. The beverage world is seeing more and more North American bottlers turn to PET self-manufacture. While the trend has been happening for at least five years, it has picked up steam in the past 12 to 18 months. Experts say it is becoming easier to run preform systems and the aging equipment base of some converters is leading to, at least in some cases, inefficient production.
Stacks says the move to self-manufacturing of PET has resulted in both cost savings and production efficiencies. He breaks it down like this: To ship half-liter PET bottles to his plant costs about 8 cents per bottle. Shipping a preform instead drops that down to around 3 cents. Add an additional penny to blow each bottle using a machine that can handle 150 million bottles a year and the total cost to blow a preform comes to about 4 cents, cutting the PET costs in half. For a 24-pack that comes out to a savings of almost a dollar per case.
Have there been any hitches along the way? For one thing, there is the learning curve. Some Mountain Pure employees have had to be retrained and new people hired. Gordon Bockner, of the Bethesda, MD, USA, packaging consultancy Business Development Associates, says this should be taken seriously. "The theoretical analysis of self-manufacturing is all well and good, but one tends to overlook the fact that you have a learning curve," he says. "You can run up it quickly or not so quickly and while the suppliers of the equipment are very eager to help you, it is a significant learning curve."
Nevertheless, for the reasons described by Stacks, along with others—for instance, the lightweight PET bottles favored by bottled water manufacturers tend to dent during shipment—more US bottlers are willing to take that chance. And the machines are getting more user-friendly. "Self-manufacturing only makes sense in selected situations," Bockner says, "but given the increasing availability of relatively easy technology and new filling situations, there are more and more of those situations around."
In fact, Peter Andrich, vp sales for SIG Beverages North America, Inc. - Corpoplast Division, believes the technology has gotten past the point where it is intimidating to a new user. "We ship the machines to greenfield startups in Bangladesh or countries like it where they have to overcome a lot more challenges than a factory here would, and it works," he says. The technology has improved in other ways as well, says Andrich, including improved utility consumption, degree of automation and speed.
Andrich recommends self-manufacturing for those running more than 80 million bottles per year. Companies under 300 million bottles do not need to be manufacturing their own preforms, the cost efficiencies are just not there. Instead, buying them from a converter and then just blow molding them themselves will do.
And Rick Brewer, vp sales for the converter Amcor PET North America, stresses there are several grades of choices in between, including on-site locations, wherein a company like his operates a blow-molding facility co-located with the bottler, or near-site locations, where the converter sets up the blow-molding location near the bottling plant. "We are an industry now that's 30 years old and there are alternate ways to source containers than just buying them," he says. "But that is not necessarily full-blown self-manufacturing." BW
