October 5, 2006 Frigoglass, Europe's leading manufacturer and solutions provider of Ice Cold Merchandisers (ICMs), with operations in 14 countries across three continents, announces today its intention to build its first production plant in China. The plant, which will be located in Guangzhou, began construction in September 2006 and is scheduled to begin first production in November 2007.
The Company believes the location is ideal due to the nature of the highly talented personnel that reside in the region, as well as Guangzhou''s position as one of China's largest industrial zones. This will allow Frigoglass to capitalize on lower manufacturing costs while effectively developing a high quality and cost efficient supplier base.
Production will be phased, with full capacity of 120,000 units per annum expected to be reached within four years of commercial production (expected by the end of 2007). The Company expects the plant to cost Euro 15 million, and will be financed with cash and debt with payback estimated within 7 years.
In its new state-of-the-art plant Frigoglass will produce a product range of innovative, yet competitive ICMs specially designed for the evolving China market. As with all Frigoglass products, the China range will incorporate the Company's expertise in high performance cooling, effective ICM energy management and environmental-friendly solutions, as well as superior and flexible merchandising
With near double digit GDP growth and rising disposal income China has significant potential for long term growth. In comparison with most other countries, China has a low per capita consumption of soft drinks but is a world leader in total beer consumption. Furthermore, impulse sales solutions for beverages are underdeveloped justifying the Company belief that this is the ideal time to enter this competitive market.
The Company's first priority will be the Coca-Cola system and the brewery sector and afterwards the other carbonated soft drink, water, juice and ready-to-drink tea companies, the latter being the fastest growing beverage segment in China.
Dimitris Lois, Managing Director commented "We have previously stated that China is one of our key focus regions, given the low penetration of ice cold merchandising solutions. Having studied the country for over a year we have decided that the most appropriate entry route into this challenging, but long term potentially highly attractive market is through Greenfield development in Guangzhou, with accelerated sales initiated in time for the 2008 Olympics."
