Corona Brewer Expands From Beer to Bottles

Constellation Brands plans to produce more of its own bottles after finding early success at a glass plant it bought last year

A scare over bottle production last year accelerated Constellation Brands Inc.’s move into the glass manufacturing business.

The Corona Extra brewer discovered bits of glass in bottles last summer and issued a national recall that cost $37 million. A few months later it bought the glass manufacturing plant next door to the brewery from Anheuser-Busch InBev NV, which was operating it at the time. Constellation formed a joint-venture with Owens-IllinoisInc. to run the plant.

Michael Othites, Constellation’s senior vice president for operations in the beer division, said the company made the move so it could control its “own destiny.”

When Constellation and Owens-Illinois took over the glass-making plant, the inspection equipment wasn’t calibrated to detect the defect that occurred. The companies changed that and also worked to improve efficiency at the plant.

About 30% of the glass bottles the plant could have produced when Constellation and Owens-Illinois took over didn’t get made or needed to be discarded. The companies cut that percentage in half with a series of changes, including switching the molds it used to make bottles. The plant went to European-made molds from Mexican-made molds. The European-made molds needed to be repaired less often than their predecessors, which boosted efficiency, said John Kester, Constellation beer division’s senior vice president for operations services.

A two-percentage point improvement in efficiency equals about 10 million more bottles during production, Mr. Kester said, adding “It’s not trivial.”

Now that the operation is running more smoothly, Constellation and Owens are moving ahead with plans to expand the plant. They currently have one furnace and about 300 employees, but they plan to add three more furnaces in the coming years.

Each furnace will produce 1.5 million to 3 million bottles a day. When the fourth furnace is added in 2018, the plant will supply 50% of Constellation’s glass needs and employ 800 people.

Mr. Kester said he has some of the lowest freight costs in business. The glass is made in a furnace that heats sand, soda ash and limestone at 2,800 degrees Fahrenheit. It then travels to a molding machine and is gradually cooled before going through inspection. Afterward, it moves to a machine where a Corona label is printed on it and then it is put in cartons.

The glass bottles “come off the line and go through the wall and once they pass through the wall, the brewery has purchased them,” Mr. Kester said.

Source:WSJ