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In 2008, CIV, Brazil’s leading national manufacturer of glassware and glass packaging solutions, celebrated 50 years of activity. As Michael Sommers discovers, while the company hasn’t forgotten its past, it is definitely looking forward to a future in which glass stakes its claim as the planet’s most reusable and recyclable material.

Based in the northeastern Brazilian state of Pernambuco, the Companhia Industrial de Vidros (CIV) and the marketplace it serves have certainly come a long way since 1958. When CIV inaugurated its glass-making plant in the capital of Recife, there was no such thing as a glass industry in the Brazilian Northeast. At the time, much of the region was poor and largely agricultural. Whatever glassmaking existed was strictly artisanal.

PACKAGE DEALS
Although CIV’s first products were inexpensive glasses for domestic use, it wasn’t long before new opportunities arrived. In the 1960s, national beer and beverage industries set up plants in the Northeast and needed someone to supply them with glass bottles.

CIV quickly came to the rescue. After enlarging the Recife plant and investing in top-of-the-line equipment, the company rapidly took control of the packaging market. During the ‘80s and ‘90s, when multinationals such as Coca-Cola, Campari, Ambev, and Pernod Ricard set up shop in the Northeast, CIV was already very well positioned to satisfy their needs. As production (and sales) increased exponentially, the company invested in three more plants strategically located throughout the Northeast: in Salvador (capital of Bahia), Fortaleza (capital of Ceará), and Vitória de Santo Antão (in the interior of Pernambuco).

By the year 2000, the company was furnishing bottles for all major national and international manufacturers of alcoholic and non-alcoholic beverages located in the Northeast. It had also branched out into two completely new markets – producing glass containers for the regional food industry (recipients for sauces, coconut milk, etc.) as well as the pharmaceutical industry (based in the states of São Paulo and Goías). As a result, CIV became Brazil’s third largest national manufacturer of glass packaging – (although it is number one in terms of national companies) – supplying 25 percent of the market. Having achieved success, the company also wanted to ensure its future. Interestingly, in doing so, it looked back to its origins.

GETTING DOMESTIC
“Although CIV started out producing drinking glasses, we soon discontinued the line in order to focus exclusively on the increasing packaging segment.” recalls Henrique Lisboa, commercial and marketing director of CIV. “However, in the early 2000s, we decided to start it up again. This time, the glassware segment was treated as a separate business guided by its own team of directors. For a long time, it was secondary to our main packaging lines. Recently, though, we’ve begun giving it a lot more attention. Brazil’s packaging market is quite mature, and we’ve been at it a long time. But the domestic glassware market has grown a lot over the last three years and there is lots of room to expand. There is much more opportunity for new products and new distribution channels in this segment, and we’re very motivated.”

Aside from glasses, CIV now produces highly affordable jars, pitchers, bowls and other items in an increasingly large variety of sizes, colors, and textures all geared towards lower-income Brazilians. All in all, the company fabricates over 100 different items. At the moment glassware only accounts for 25 percent of business (75 percent is packaging). However, according to Lisboa, this ratio is set to change as the company plows forward with an ambitious plan to launch 20 new items every year over the next few years. It has even begun to branch into completely new domestic product segments such as the manufacture of thermoses. “We started producing these last October and are already selling 80,000 units a month,” says Lisboa. “This is a great opportunity because the same clients who buy our glassware are buying our thermoses. And we already have the sales and logistical structure in place. Over the the next two years, our goal is to conquer 20 percent of the domestic thermos market.”

Having already conquered around 20 percent of the national glassware market, the company ranks third nationally in overall sales of domestic items, but first in terms of low-priced products geared towards working-class consumers. CIV doesn’t make so-called “refined” products for more upmarket consumers. Instead, it prefers to concentrate on Brazil’s significant mass market. With the recent economic revival in Brazil, working class Brazilians have more purchasing power than ever before and this market has enormous potential..

Glassware has traditionally given CIV an extra edge at home, where the emphasis the company places on quality design combined with the constantly expanding mix sets it apart from competitors. More recently, it has also paved the way to modest international success as well. “In truth, exports have been tough for us due to the currency exchange,” admits Lisboa, referring to the dramatic decline of the U.S. dollar against the increasingly robust Brazilian real. “Exports of packaging products have dwindled considerably since these items are commodities and can’t compete with a devalued dollar. However, with our glassware, we can attach a lot of added value in terms of design and decoration that appeals to customers. We’ve had success throughout Latin America and in some African countries. As a result, exports of our glasses, bowls and other items now account for 15 percent of all our glassware sales. Overall, the glassware segment has grown enormously – by 25 percent between 2005-2006 and 13 percent between 2006-2007.”

ADDED VALUE
The importance of adding value to CIV’s products is a key strategy. Aside from working with design firms to constantly perfect and update both glassware and packaging products, the company has recently undertaken major investments with the aim of improving quality and increasing quantity (at the moment, the company produces 1,000 tons of glass a day and 1.5 billion units a year). As part of the Grupo Cornelio Brennand, a 90-year-old Recife-based company with interests in energy production, CIV has the backing to make serious investments. Over the last three years, CIV spent $50 million on constructing, enlarging, and modernizing its furnaces and building new warehouses. It has earmarked another $20 million for updating facilities, purchasing new equipment, and expanding its workshops and furnace areas. Already, such investments have borne fruit. In 2007, CIV’s revenues totalled 390 million reais, and expectation for 2008 are that sales will reach 510 million reais.

“Globally, the prospect for glass products is very promising,” declares Lisboa. “And the trend towards glass as a packaging solution is ideal from an environmental perspective.” According to Lisboa, glass adheres to the concept of the ‘three Rs’: it is returnable (something Coca-Cola has really initiated in the last few years); reusable (in Brazil, people commonly use jars for decorative vases, drinking glasses, etc); and recyclable (not only can it be melted down over and over again without losing value, but doing so requires less energy than melting down other materials). “The potential is particularly big in Brazil where glass packaging is far less prevalent than in other countries,” confides Lisboa. “For instance in Brazil, the average person consumes five kilos of glass packaging a year, compared to 40 kilos in Spain and 70 kilos in Holland.

Moreover, individual ‘long-neck’ bottles represent only 4 percent of Brazil’s beer market, a figure that is much lower than in other countries. These discrepancies reveal a major growth opportunity as Brazilian consumer behavior aligns more with global tendencies.”

As CIV strives to meet the changing nature of the marketplace and demands of consumers, it also makes sure that it’s consistently attuned to the needs of its clients. Ultimately, a big factor in its success stems from the fact that it views the company, not as one business, but as many. “CIV’s corporate and managerial model is another major difference that sets us apart from competitors,” confesses Lisboa. “Not only are the packaging and the glassware divisions run as separate businesses, but specific lines within each division are operated as autonomous units with their own directors,
managers, and specific goals. For instance, in the packaging division, the unit that makes liquour and beer bottles is managed by people who have a background in the alchoholic beverage industry. They not only know about glass, but they know about beer, whiskey, and other products. As such, they know how to add value that benefit our customers.”

Indeed, when asked if the company has a guiding philosophy, Lisboa stresses the importance of symbiosis between the manufacturer and the clients it supplies. “In the end, you only grow if your client grows too,” he explains. “So we make it our business not to just know about glass, but about what’s going in the glass as well.”

Volume:
11
Issue:
5
Year:
2008


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