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Mexico Packaging Machinery Market Research Report

The Findings of a Market Research Study Conducted by Hanhausen & Doménech Consultores, S.C., exclusively for the Packaging Machinery Manufacturers Institute January 2002

© Copyright 2002. Packaging Machinery Manufacturers Institute, Inc. All rights reserved. The information contained herein shall not be distributed or shared by the recipient. No parts of this document may be reproduced without the express written permission of PMMI.

EXECUTIVE SUMMARY.................................................................................................. 1

I. ECONOMIC/ POLITICAL/ FINANCIAL ISSUES ................................................. 4

1.1. ECONOMIC PERFORMANCE AND TRENDS ................................................................. 4 1.2. POLITICAL OUTLOOK ............................................................................................... 6 1.3. ISSUES IMPACTING IMPORT OF PACKAGING MACHINERY INTO MÉXICO .................. 7

II. MÉXICO’S PACKAGING MACHINERY MARKET ........................................ 9

2.1. MARKET SIZE AND POTENTIAL................................................................................ 9 2.2. PACKAGING MACHINERY TRENDS, 2002–2003 ..................................................... 10 2.3. BEST PROSPECTS FOR PACKAGING MACHINERY SALES, 2000–2002 ..................... 11 2.4. DOMESTIC VS. IMPORTED MACHINERY.................................................................. 12 2.5. ORIGIN OF IMPORTED MACHINERY........................................................................ 12 2.6. CUSTOMER’S EVALUATION OF IMPORTED PACKAGING MACHINERY, SERVICE ..... 14 2.7. MARKETING TECHNIQUES AND PRODUCT EXPOSURE ............................................ 14 2.8. EQUIPMENT FINANCING......................................................................................... 16 2.9. MARKET DRIVERS—FACTORS THAT INFLUENCE PURCHASING DECISION ............ 17 2.10. REGULATORY FRAMEWORK .............................................................................. 17 2.11. IMPORT DUTIES ................................................................................................. 18

III. THE FOOD INDUSTRY....................................................................................... 20

3.1. INDUSTRY OVERVIEW ............................................................................................ 20 3.2. RANKING OF COMPANIES BY SIZE.......................................................................... 20 3.3. KEY PLAYERS ........................................................................................................ 21 3.4. SUMMARY OF INTERVIEWED COMPANIES .............................................................. 21 3.5. COMPANY PROFILES .............................................................................................. 24

Axa / Kir Alimentos, S.A. de C.V. ........................................................................... 24 Champiñones Monte Blanco, S.A. de C.V. .............................................................. 28 Grupo CHEN, S.A. de C.V. ...................................................................................... 31 DANONE de México, S.A. de C.V. ......................................................................... 34 Empacadora Bernina, S.A. de C.V. .......................................................................... 38 Grupo Warner Lambert México, S.A. de C.V. ......................................................... 45 Herdez, S.A. de C.V. ................................................................................................ 49 Joyco de México, S.A. de C.V. ................................................................................. 56 Conservas La Costeña, S.A. de C.V. ........................................................................ 60 Helados Holanda....................................................................................................... 66 Laboratorios Griffith de México, S.A. de C.V. (MTY)............................................ 70 McCormick Pesa, S.A. de C.V. ................................................................................ 73 Nabisco, S.A. de C.V. ............................................................................................... 77 Nestlè México, S.A. de C.V. .................................................................................... 80 Organización La Corona, S.A. de C.V. .................................................................... 85 Productos de Maiz, S.A. de C.V. .............................................................................. 95 Productos Gerber, S.A. de C.V. ................................................................................ 99 Productos Lol Tun, S.A. de C.V. ............................................................................ 102 Ricolino, S.A. de C.V. ............................................................................................ 106 Sabormex, S.A. de C.V. .......................................................................................... 111 Sigma Alimentos, S.A. de C.V. .............................................................................. 116

Sky Chefs, S.A. de C.V. ......................................................................................... 122 Unifoods, S.A. de C.V. ........................................................................................... 125 UNILEVER Margarinas De México, S.A. de C.V. ................................................ 128

IV. THE BEVERAGE INDUSTRY........................................................................... 131

4.1. INDUSTRY OVERVIEW .......................................................................................... 131 4.2. RANKING OF COMPANIES BY SIZE........................................................................ 133 4.3. KEY PLAYERS ...................................................................................................... 134 4.4. SUMMARY OF INTERVIEWED COMPANIES ............................................................ 134 4.5. COMPANY PROFILES ............................................................................................ 136

Alpura ..................................................................................................................... 136 BACARDI y CIA., S.A. de C.V. ............................................................................ 140 Derivados de Frutas, S.A. de C.V. .......................................................................... 144 FRUGOSA, S.A. de C.V. (Grupo Jumex) .............................................................. 148 Jugos del Valle, S.A. de C.V. ................................................................................. 152 Grupo Modelo, S.A. de C.V................................................................................... 156 Parmalat de México, S.A. de C.V. .......................................................................... 161 Pascual Boing, S. de R.L. ....................................................................................... 164

V. THE PERSONAL CARE INDUSTRY................................................................... 168


Avon Cosmetics, S.A. de C.V. ............................................................................... 169 Grisi Hermanos, S.A. de C.V. ................................................................................ 174 House of Fuller, S.A. de C.V. ................................................................................. 179 Industrias Alen, S.A. de C.V. ................................................................................. 183 Industrias LAVIN de México, S.A. de C.V. ........................................................... 187 Industrias Selectas (Myrurgia), S.A. de C.V. ......................................................... 191 Procter & Gamble Manufactura (P&G), S. de R.L. de C.V. .................................. 194 Productora de Cosméticos, S.A. de C.V. (Wella)................................................... 202 UNILEVER Home and Personal Care, S.A. de C.V. ............................................. 206 Grupo Warner Lambert México, S.A. de C.V. ....................................................... 210

VI. THE PHARMACEUTICAL INDUSTRY.......................................................... 214


APOTEX (Protein, S.A. de C.V.) ........................................................................... 217 Boehringer Ingelheim Promeco, S.A. de C.V. ....................................................... 221 Eli Lilly de México, S.A. de C.V. .......................................................................... 226 Laboratorios BEST, S.A. ........................................................................................ 230 Merck Sharp and Dohme de México S.A. de C.V. ................................................. 233

Novartis................................................................................................................... 236 Pfizer, S.A. de C.V. ................................................................................................ 241

VII. APPENDIX A........................................................................................................ 246

1

Executive Summary PMMI commissioned the production of a detailed report describing 50 Mexican companies that present tangible business opportunities for the sale of packaging machinery in the coming months. This report was produced by Hanhausen & Doménech Consultores (www.hdc.com.mx), a México City–based consulting firm, specializing in market research, identification of specific business opportunities, and project development. The report is divided into six chapters. The first describes México’s current economic and political environments and their potential impact on future equipment sales. The second describes the local market for packaging machinery, including imports and overall trends. It also presents key issues influencing the purchasing decision process and information on import tariffs, trade regulations, and the benefits that exisiting free trade agreements offer to suppliers from particular countries. Chapters three to six contain brief descriptions of the food, beverage, personal care, and pharmaceutical industries. They include a general assessment of these industries and of short-term sales opportunities, import trends by country, as well as the company profiles. These consist of a detailed description of the individual companies that were interviewed for this study and that will purchase packaging equipment in the coming months. Economic and Political Outlook The Mexican economy has performed well in recent years. México was able, for the first time in more than 25 years, to avoid a major economic crisis as a new administration took office. Economic performance in México during 2001 was mostly affected by the US economic slowdown, making local economic activity weaker than originally forecast, with GDP closing the year with a decline of 0.1%. Progress continued in abating inflation, which closed at 4.4%, its lowest level in about 30 years. The economy also showed a series of positive signs; inflation and, most importantly, real interest rates continued to decline. Passive interest rates dropped to about 7%, which is about a 50% reduction over the previous year. The government’s forecasts for 2002 expect GDP growth to reach 1.7%, inflation to close below a 4.5% increase, and the exchange rate to end the period at MXP 10.1 (Mexican peso) per US$1 (US dollar). The relationship between expected inflation and nominal exchange rate implies a 6.5% devaluation of the currency over the period. Despite packaging machinery imports in México being highly influenced by economic performance, 2001 was an average to positive year for packaging machinery sales, as there were more positive factors influencing packaging machinery sales than those negative factors of the economy.

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Positive factors included:

a) Companies that placed on hold their investment plans in 2000 because it was an electoral year moved forward with their investment plans in 2001.

b) The Free Trade Agreement signed with the European Union reduced tariffs.

c) Low interest rates allowed for credit purchases.

d) The peso appreciated versus the US dollar and the euro, thus costs of imported

items were lower in terms of the local currency. Several of these positive factors are likely to continue to promote packaging machinery sales during 2002. The key factor that would result in fewer potential sales is a drop in the value of the peso against international currencies. México’s Packaging Machinery Market México’s packaging machinery market represented about US$422 million during 2000. Official figures for 2001 are not yet available, however, based on preliminary import figures, the total market value for 2001 could reach US$440 million with close to US$400 million being imported equipment. The Mexican packaging machinery market has registered constant growth since the 1994 economic crisis and has almost doubled its value in six years. Best Prospects for Packaging Machinery Sales, 2002–2003 In general terms, machinery types that represent the best sales prospects for the following two years are:

1. Carton form, fill, and seal machines 2. Labeling equipment 3. Filling machines for semi-viscous products 4. Bottling lines for plastic bottles 5. Coding equipment 6. Palletizing machinery 7. Conveyors 8. Horizontal form, fill, and seal machines

Opportunities This report presents specific packaging machinery sales opportunities within 50 companies from the beverage, personal care, pharmaceutical, and food industries. The combined total of these opportunities tops US$110 million over the next 48-month period.

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Companies in the beverage industry have indicated they will purchase over US$23 million, with important opportunities at Frugosa, Pascual Boing, Parmalat, and Bacardi. Frugosa (Jumex) is the largest fruit juice manufacturer in México and will start a process for upgrading its equipment, including packaging machinery. Pascual Boing will purchase new equipment to increase its production capacity and improve productivity. Parmalat will introduce new production lines for teas and condensed milk, which will require important purchases of packaging machinery. Bacardi will also introduce a new production line for their rum-based coolers called “Breezers,” creating the need for new packaging equipment. In the food industry, we present opportunities valued at over US$46 million, with especially interesting projects taking place at Sabormex, Nestlè, and Herdez. Sabormex was recently acquired by “La Costeña,” who wants to upgrade all the production processes and increase production capacity. Part of these additional investments will include the purchase of packaging machinery. Nestlè has plans for modernizing their filling processes for coffees and other powdered products. Herdez will increase production capacity at their 12 manufacturing facilities, requiring the purchase of new packaging equipment. This process will begin with their Ensenada and San Luis Potosi–La Paz plants. Personal care companies plan to purchase US$38 million worth of packaging machinery, with particularly important projects at Industrias Alen and Procter & Gamble. Alen is building a new manufacturing facility in the City of Puebla for which it will need to purchase process and packaging machinery at an estimated investment of US$18 million. Procter & Gamble has plans to replace existing equipment including US$13.5 million in packaging machinery. As for the pharmaceutical industry, some of the companies surveyed for this report have significant purchasing plans, like Pfizer with a budget of US$3 million and Novartis with US$2.5 million. Pfizer will initiate an investment program to continue improving its manufacturing efficiency and increase its production capacity. Novartis has plans for replacing its blister machines. These projects are just some of the examples of the opportunities outlined in the individual company profiles presented in this report.

4

I. Economic/ Political/ Financial Issues 1.1. Economic Performance and Trends México’s economy during 2001 would be aptly described as “a very stable environment.” There was basically no economic growth but no crisis either. For a country used to going through an economic crisis in the first year of every new administration, the news is encouraging. Economic performance in México during 2001 was mostly affected by the US economic slowdown, making local economic activity weaker than originally forecasted, with GDP closing the year with a decline of 0.1%. Progress continued in abating inflation, which closed at 4.4%, its lowest level in about 30 years.

Mexico's Economic Performance

3.5

-6.2

5.2 4.83.7

4.5

-0.1

1.7

7.1

4.56.8

35

27.7

15.718.6

12.3 10.5

5.6-8

-6

-4

-2

0

2

46

8

1994 1995 1996 1997 1998 1999 2000 2001/e 2002/e

GD

P G

row

th %

0

5

10

15

20

25

3035

40

Infla

tion

%

GDP

Inflation

Source: HDC with information from Banco de México

The Fox administration started 2001 making rosy forecasts on economic growth, but a deteriorating international environment combined with weak oil prices, a significant drop in exports, and a congress that froze most presidential initiatives hindered achievement of such a goal. While on average there was no growth for this period, economic performance was uneven between sectors. Those most negatively affected were exporters to the United States and the construction industry. Despite this static activity, we find that private consumption remained solid throughout the year, albeit at a reduced but positive growth rate. This is a key factor in explaining the demand growth for those manufacturing companies focused on the Mexican consumer. This is confirmed by the 7.5% growth in retail sales during 2001. The economy also showed a series of positive signs; inflation and, most important, real interest rates continued to decline. Passive interest rates dropped to about 7%, which is about a 50% reduction from those of the previous year.

5

The exchange rate remained stable and continued to appreciate against the US dollar in real terms. There is strong internal criticism for allowing the exchange rate to appreciate, but the central bank indicates that market forces determine the exchange rate. A healthy level of direct foreign investment (FDI), especially into the banking and insurance sectors, and relatively higher real returns have sustained an inflow of dollars to the Mexican economy, which has served to finance the trade deficit. There is a debate as to which is the key factor determining México’s trade balance. Various econometric models indicate that the US economic performance weighs in more heavily than real appreciation of the exchange rate. In any case, both factors had an impact during 2001, creating a negative trade balance, with a deficit expected to reach US$9.7 billion, a 21.6% increase over the previous year. Preliminary figures estimate exports for the year at US$158.5 billion and imports at US$168.4 billion. The drop in internationa l oil prices explains the significant increase in the deficit.

Direct Foreign Investment to Mexico

0

5

10

15

20

25

30

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001/e 2002/e

Tho

usan

d m

illio

n do

llars

Source: HDC with information from Banco Nacional de México

Peso vs. Dollar Exchange Rate

0.0

2.0

4.0

6.0

8.0

10.0

12.0

1994 1995 1996 1997 1998 1999 2000 2001 2002/e

Pes

os p

er D

olla

r

Source: HDC with information from Banco Nacional de México

6

The government’s forecasts for 2002 expect GDP growth to reach 1.7%, inflation to close below 4.5%, and the exchange rate to end the period at MXP10.1 per US$1. The relationship between expected inflation and the nominal exchange rate implies a 6.5% devaluation of the currency over the period. If what the central bank indicates—that market forces determine the exchange rate—is true, the government’s forecasts can’t predict the exchange rate. In all likelihood, the peso will continue appreciating in real terms as long as the downward trend in interest rates continues in the United States, and México keeps paying an attractive premium on local portfolio investments. México begins 2002 amidst the controversy generated by a so-called “fiscal reform bill,” approved by congress in the first hours of the year. In March 2001 President Fox had submitted a proposal to expand the sales tax base by including food and pharmaceutical products, which had been exempt. This measure was expected to generate an additional US$12 billion to finance social spending, lower the government’s fiscal deficit, and reduce its dependence from oil revenues. After severe criticism of this proposal and endless debates, congress developed and approved an alternative plan eliminating corporate incentives to reinvest profits, eliminating a payroll tax subsidy, and imposing an additional 5% tax on “luxury” items such as mobile phone use, boots, cosmetics, and restaurants. There are numerous other measures affecting various industries including personal care and beverages. It is not expected that this “fiscal reform” will derail México’s current economic stability and optimistic outlook. However, it does indicate the type of congress that the administration has to deal with in order to promote many necessary structural reforms for the modernization of the Mexican economy. The market for packaging machinery is highly influenced by the overall behavior of the economy. According to distributors of packaging machinery interviewed for this study, packaging machinery sales remained flat during 2001, growing in some cases, declining in others. Some factors that can explain the stability in this market include: solid consumer spending, FDI inflows, appreciation of the peso against the US dollar, and an important reduction in internal interest rates and country risk. All these factors explain why most companies have moved forward, and will continue to do so, with their investment plans in the near future. The Mexican economy is the largest economy in Latin America, and its outlook remains positive for industrial equipment suppliers. 1.2. Political Outlook In México there are eight political parties, of which three have real political power, while the rest usually join other parties to form coalitions during elections. México’s political history was dominated by the Partido Revolucionario Institucional (PRI) until the 2000 presidential elections when Vicente Fox, a former Coca-Cola executive and governor of the state of Guanajuato, was elected president on July 2, 2000, ending 71 years of dominance

7

of the Mexican presidency by the PRI. President Fox ran as the candidate for the coalition Alianza por el Cambio (Alliance for Change), formed by the National Action Party (PAN) and México’s Green Environmental Party (PVEM). At present the National Action Party (PAN) has the presidency and governs 10 states and over 50% of México’s population. The Institutional Revolutionary Party (PRI) governs 17 states and has relative majority in the federal congress. The Revolutionary Democratic Party (PRD) governs 4 states and México City, where it also has control of the local congress. The first year of the Fox administration has been difficult–and should be viewed in the context of a major regime and ideological transition. If events are analyzed under this context, the current political picture in México becomes clear. It will be unlikely, if not impossible, for Mr. Fox to move forward with any substantive project or reform because the PRI and PRD see the failure of this administration to be in their best interest. But both the PRI and the PRD will go through internal elections within a couple of months to select their new leadership, a process that in all likelihood will seriously divide and debilitate both parties. The next congressional election will take place in 2003; meanwhile the Mexican political agenda will continue to move slowly if at all. 1.3. Issues Impacting Import of Packaging Machinery into México Despite packaging machinery sales in México being highly influenced by economic performance, 2001 was an average to positive year for packaging machinery sales, as there were more positive factors influencing packaging machinery sales than negative factors hindering economic growth. Positive factors included:

a) Many Mexican companies placed on hold part of their investment plans because year 2000 was an electoral year, and those had been marked by strong economic crises in the past. After the 2000 elections and the entrance of the Fox administration, the Mexican economy remained stable, and those companies that placed investments on hold in 2000 moved forward with their investment plans in 2001.

b) The Free Trade Agreement signed with the European Union reduced tariffs of

packaging machinery from that continent, thus, prices of European machinery decreased between 4% and 10% during 2000 and 2001.

c) Low interest rates allowed companies to make major purchases using financial

options that had prohibitive interest rates in the past.

8

d) México continued to be the most important Latin American destination for international investments.

e) The peso appreciated relative to the US dollar and the euro, thus costs of

imported items were lower in terms of pesos. Several of these positive factors are likely to continue to drive packaging machinery sales during 2002. The single factor most capable of derailing this demand is a steep depreciation of the peso, however, this remains unlikely. México has no major impediments or regulations affecting the import of packaging machinery. The only possible difficulty might be the need for the importer to be included in the national register of importing companies. This obstacle can be easily overcome by requesting a customs broker to be the importer of the equipment. Custom brokers usually charge from 0.5% to 2% of the value of the merchandise for this service. Free Trade Agreements give competitive advantages to packaging machinery manufactured in member countries by eliminating or significantly reducing import taxes. México has various free trade agreements, the most important being the North American Free Trade Agreement (NAFTA) and the FTA with the European Union. Other treaties benefit products imported from Colombia and Venezuela (G3), Bolivia, Costa Rica, Chile, Nicaragua, El Salvador, and Israel. The Mexican government has initiated discussions with Japan toward negotiating a free trade agreement with that country. Most packaging machinery manufactured in the United States and Canada will continue to have an advantage over European equipment in regards to import duties in the short term. The agreement with Europe contemplates immediate tariff elimination for some machinery and a 4- to 8-year phase-out for most packaging machinery tariffs. The FTA with the European Union was signed in mid-1999. Currently, products and machinery manufactured in countries with which México has not signed a free trade agreement are charged a tariff of 10 to 20 percent. US and Canadian packaging machinery can enter México without tariffs due to the NAFTA.

9

II. México’s Packaging Machinery Market 2.1. Market Size and Potential Imported machinery dominates the Mexican market for packaging equipment, supplying close to 90% of the total demand. There is local production of packaging machinery, but it is mostly concentrated in complementary equipment such as conveyors and a few types of machines that are not highly automated; in some cases these are custom-built or produced for local medium and small-size companies. There are no official figures indicating the value of the packaging machinery market in México. Using import data and calculating the imported equipment’s share of the total market, it is estimated that the total market value for this equipment represented about US$422 million during 2000. Imports for packaging machinery during the six-month period from January to June 2001 reached US$223 million. It is estimated that the closing figure for the whole year was US$398 million, with a growth rate of 5% over the previous year. Total imports of capital goods into México reached US$22.5 billion during 2001. The Mexican packaging machinery market has registered constant growth since the 1994 economic crisis. As a result of that steep economic downturn, the market for packaging equipment had dropped significantly, first by 30% from US$355 million in 1994 to US$248 million in 1995, and dropping again by 15%, to reach a value of US$210 million by 1996. This market started to recover during 1997 and has maintained positive growth to date. By 1999 the market reached its pre-crisis value, and in 2001 official import figures, yet to be released, are expected to show that this market reached its highest historic level at close to US$400 million.

0 50

100 150 200 250 300 350 400

Million U

199 199 199 199 199 199 199 200 2001/

Packaging Machinery Imports 1993-2001

Source: HDC with data of PMMI and Bancomext.

10

Official figures for the last two quarters of 2001 are not yet ava ilable, but according to information obtained from packaging machinery distributors, sales were stronger in the first half of 2001 then cooled down, especially as a result of the international economic instability and the September 11, 2001, terrorist attacks, which caused some projects to be temporarily placed on hold. Despite these negative influences, falling interest rates and a robust peso were strong enough to enable the packaging machinery market to grow over the previous year. Other segments of the equipmnent market were severely affected, as imports of capital goods were decreasing by a rate that reached 13% in December. 2.2. Packaging Machinery Trends, 2002–2003 Imports of packaging machinery have grown steadily since 1997, and forecasts for the closing of 2001 anticipate a third consecutive record level. Forecasts for 2002 are difficult, as fiscal reform measures issued January 1, 2002, are charging significantly higher taxes to manufacturers of most beverages, some food products, and cosmetics. The reform is being criticized severely by the private sector, and some companies are planning to go to court requesting a stay order. The stability of the peso is another factor that remains in flux and makes it difficult to forecast packaging machinery growth. The peso has maintained basically the same level against the dollar over the past three years, and inflation has continued to be greater in México than in the United States. The average exchange rate is forecast at MXP10.10 per US$1, which means that the Mexican government is expecting the currency to lose more than 10% in value in nominal terms versus the dollar in the following months, making imported machinery slightly more expensive. We estimate that the market will at least maintain its 2001 value during 2002, and in a positive scenario, it could grow 5% to 15% during the year. The key factors driving this potential growth are low interest rates, a stronger economy, stability aided by healthier government finances, and the consolidation of several industries including food, beverages, and pharmaceuticals. Most of the companies interviewed are expecting to move forward with their purchasing plans for new packaging machinery, as they believe that they can take advantage of the prevailing exchange rate. Further, they expect the economy to change for the better in the coming years. The evolution of the local market for packaging equipment will depend on the general economic environment, which in all likelihood will perform better than in 2001. It is expected that the market for packaging machinery will grow by 5% and 10% during the next two years, reaching an import value of US$430 million dollars by the year 2003. The following table presents three possible scenarios for imports of packaging machinery in the coming years. The first scenario, defined as “realistic,” is based on a 2.5% market growth during 2002, as companies move forward conservatively with their purchasing plans. In this scenario, inflation will continue its downtrend to close 2002 at 4.4%, and the peso will depreciate a slight 5%. It also takes into consideration the potential of private business accepting the tax increases of the reform measures and a nationwide economic growth of 1% during the year. For 2003 and 2004, GDP growth is estimated at 4%.

11

Under the “optimistic” scenario, imports of packaging machinery grow 9% over the 2001 level. In this scenario, the exchange rate registers the same level of 2001; GDP grows 2.5%, and inflation reaches the government target of 4.5%. Under this positive scenario, companies will accept the fiscal changes, and the results will help the economy grow at rates higher than 5% in 2003 and 2004. The “pessimistic” scenario is predicated on the belief that a large number of companies will postpone plans for new equipment purchases due to the peso devaluation of close to 10% from its current level, leading to a rise in local interest rates. Further assumptions are that companies from the food, beverage, and personal care industries are adversely affected by the new taxes on consumption of their products and that the economy will continue to maintain a flat level with no growth. Under this scenario, imports drop by 12% during 2002, continue dropping by 2% during 2003, and experience a strong recovery during 2004 with 15% growth.

Packaging Machinery Forecasts

0

100

200

300

400

500

600

199 199 200 2001/ 2002/ 2003/ 2004/

Realistic Optimistic Pessimistic

Source: HDC with data of Bancomext. 2001 estimate based on imports Jan-Jun. Forecasts by HDC.

2.3. Best Prospects for Packaging Machinery Sales, 2000–2002 In general terms, types of machinery that represent the best sales prospects for the following two years are: 1. Carton form, fill, and seal machines. 2. Labeling equipment. 3. Filling machines for semi-viscous products. 4. Bottling lines for plastic bottles. 5. Coding equipment. 6. Palletizing machinery. 7. Conveyors. 8. Horizontal form, fill, and seal machines.

12

The mix of these best prospects varies by industry. For this reason we have listed the different types of packaging machinery to be purchased by companies interviewed in each of the chapters 3–6 under “Summary of Interviewed Companies.” 2.4. Domestic vs. Imported Machinery As has been described, close to 90% of the packaging machinery used in México is imported. There is some local equipment production, but these machines are not highly automated. Local equipment includes mainly bag form, fill and seal machines, machinery for packaging bakery products, tray dispensing machines, sealing machines, palletizing units, and auxiliary equipment such as conveyors and tape dispensing machines. During the research process for this report, some local packaging machinery companies were identified. The most important manufactures machines for packaging bakery products at Bimbo’s facilities. These machines, manufactured internally by Bimbo, are also being sold to third parties. Other companies include Env-A-Flex and Mapisa. Additionally, there are about 50 small workshops in México that manufacture custom-made machines or complementary equipment. Some European packaging machinery manufacturers have begun to produce some types of components and basic machines in México, either alone or in joint-venture partnership with Mexican companies. On the one hand, these companies intend to control a greater share of the Mexican market by assembling their machines in the country and thus being able to offer better price and service. On the other hand, they plan to enter the US market by taking advantage of the NAFTA benefits. México will continue to be an importer of packaging machinery. However, low labor costs and the advantages offered by several free trade agreements will attract investments from manufacturers of low-tech and simple machinery. Companies that require packaging of large product volumes and those that need precise packaging will continue to import their machinery. 2.5. Origin of Imported Machinery The United States is the largest exporter of packaging machinery into México, accounting for close to 38% of the imports in terms of value. This country’s machinery is especially strong in the food and beverage sectors where it controls approximately 50% and 45% of new equipment sales respectively. On the other hand, US equipment has made little penetration into the pharmaceutical and personal care industries, where Italian and German suppliers remain the most important players. In the past three years, Italy has significantly increased its share in the Mexican packaging machinery market. This has been achieved with more competitive prices than US manufacturers. Mexican equipment buyers perceived Italian equipment to be of excellent quality and highly automated. Italian equipment has become the leader in packaging machinery for the pharmaceutical and personal care industries and has also increased its market share in the food products sector.

13

EIGHT BIGGEST EXPORTERS OF PACKAGING MACHINERY TO MEXICO

050

100150200

250300350400

1995 1996 1997 1998 1999 2000 2001

US

$ m

illio

n

Spain

Australia

Japan

Sweden

France

Germany

Italy

United States

Source: HDC with data of PMMI and Bancomext. The countries with the highest growth of packaging machinery exports into México for the past two years have been Australia, Spain, Japan and Switzerland. However, those countries are still far from the top three exporters. France has registered continuous export growth to México over the last five years and has become the fourth largest exporter with US$14 million. From the top three exporters, the one with the highest compound average growth rate is Italy with an average yearly growth rate of 15% over the last five years. US packaging machinery exports to México decreased1 in 2001. This was caused primarily by the slowdown of both the US and Mexican economies and by the more favorable exchange rate of the euro versus the US dollar, which has made European equipment more affordable for Mexican companies.

1 Based on preliminary figures.

14

SHARE OF THE MARKET 2000

39.2%

24.0%

13.3%

2.7%

3.7%

1.2%1.6%

8.0%

2.1%

1.8%

2.3%

United StatesItalyGermanyFranceSwedenJapanAustraliaSpainNetherlandsSwitzerlandOthers

Source: PMMI

2.6. Customer’s Evaluation of Imported Packaging Machinery, Service Most of the packaging machinery buyers usually acquire their equipment directly from the manufacturers or their representatives in the United States. Very few companies indicated that they buy equipment from local representatives here in México. Despite this, almost all of the companies interviewed stated that it is very important to have adequate local equipment representatives, as they will be responsible for training and providing technical assistance as well as major maintenance and repairs to the equipment. If local representatives are not capable of offering training and repairs, it is unlikely that Mexican companies will maintain contact with them but instead will prefer to deal directly with the equipment manufacturers. Of the 50 companies interviewed during this study, 32 mentioned local service and support as one of the top three factors that influence their purchasing decisions, and some companies noted that they don’t purchase packaging machinery from those brands or manufacturers that lack local representatives. It is highly recommended for PMMI members to have local offices or service supply agreements with Mexican service providers. Many companies interviewed complained about the lack of operational manuals in the Spanish language. In many cases, plant engineers and operational staff are not English speakers, and they do not understand English manuals. Companies applying for ISO 9000 certification are required to have machinery guides in Spanish to comply with standards. It is highly recommended for PMMI members selling to México and other Latin American Markets to competently translate their manuals into Spanish. 2.7. Marketing Techniques and Product Exposure The best way to gain exposure for packaging machinery in México is by exhibiting at trade shows. Most end users attend these events to meet and select potential suppliers. According

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to the information obtained from companies interviewed for this report, the preferred trade shows are Expo Pack in México City, Pack Expo in Chicago, and Interpack in Dusseldorf, Germany. The second most popular method for researching packaging machinery is to “surf the web.” Mexican businessmen access cyber space to search the Internet for potential suppliers of specialized equipment. Most Mexican companies mentioned PMMI or the Mexican Association of Packaging (Asociación Mexicana de Empaque y Embalaje) as reliable sources for obtaining information on potential equipment suppliers. Manufacturers should consider the services of PMMI and AMME as very good tools for increasing product exposure in México. Another method for creating additional product exposure for packaging machinery is to advertise in trade magazines. Most companies indicated they review these publications regularly and use them to find and select new equipment suppliers. The most widely circulated trade magazines—relevant to packaging machinery—are, in addition to publications distributed by local chambers of commerce, the following: Industria-Monthly Published By: Confederacion De Camaras Industriales Tel: (5255) 5566-7822 Ext 161 Fax: (5255) 5535-6871 Contact: Lic. Mauri Sanchez, Editor. The Confederation of Industrial Chambers in México sponsors this publication. It circulates among all industrial sectors. Manufactura-Bimonthly Publisher: Expansion, S. De R.L. De C.V. Tel: (5255) 5511-1537 Fax: (5255) 5208-1265 Circulation: 35,000 Audience: Manufacturing companies. Reportero Industrial-Monthly Publisher: Reportero Industrial Mexicano, S.A. De C.V. Tel: (5255) 5605-9962 Fax: (5255) 5605-0056 Circulation: 27,000 Audience: Manufacturing companies. Transformacion-Monthly Published By: Canacintra (Mexican Chamber of Manufacturing) Tel: (5255) 5611-3227 Fax: (5255) 5598-5888

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A very successful technique used by some packaging machinery suppliers or representatives is to create constant communication by telephone, mail, or visits to potential customers. Some companies interviewed mentioned that European suppliers are the most noted for “being in touch” on a constant basis. 2.8. Equipment Financing Most large local companies or multinationals indicate that they use their own internal resources to purchase packaging machinery or that they would consider vendor financing when available. Bank credits have traditionally been extremely expensive in México with real interest rates in the 20–30% range. Instead these companies would have placed notes in the local and Eurodollar markets. However, in the last two years, interest rates have decreased significantly, reaching historically low levels, thus local loans have become a viable financing alternative for many companies. Most of the companies interviewed for this report indicated that they purchase packaging machinery using their own resources or credits from export credit agencies. It is highly recommended for packaging machinery suppliers to analyze which export credit alternatives are offered in their countries of origin and to exploit these options, which can become an important plus in winning a tender. US suppliers should consider the importance of providing equipment financing—ExIm Bank or other—to potential clients. With the help of US Export-Import Bank credit guarantees and other programs, US commercial banks can offer financing to small, medium, and large Mexican companies that purchase US equipment. ExIm is able to finance the following:

• Large or small repeat purchasing of raw materials, component parts machinery, or production equipment.

• Large or small one-time imports of production equipment. • Offer support to distributors of US products.

The terms of ExIm financing vary depending on product types and the frequency of imports to México. Usually terms are the following:

• Up to 180 days for raw materials, component parts, non-capital goods • Up to 365 days for quasi-capital goods or small equipment • Up to 2 years for distributors of capital equipment • Up to 5–7 years for capital equipment purchased by an end-user

The financing is provided by a commercial bank at US dollar rates. Costs include interest rates, which range from 7.25% to 12% per year depending on the size and complexity of the transaction(s), and banks fees, which can vary greatly. Please check with your bank. ExIm Bank credits are designed for end-users making multiple purchases of capital equipment over a 12-month period. They can be used for various purchases from multiple US suppliers. Purchase orders and contracts are not required at the time the facility is approved and terms can go out 5 to 7 years.

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2.9. Market Drivers—Factors That Influence Purchasing Decision During the course of this study, the 50 companies interviewed were asked to list the top five factors that influence their packaging machinery purchasing decisions. Of the 50 companies, 32 mentioned local service or technical support among its top three decision factors. The second most repeated factor among the top three was quality with 20 companies, and the third most-often repeated was price. The following chart shows the relative influence of purchasing decision factors within the sample of 50 companies.

0 10 20 30 40 50 60 70

Flexibility

Technology

Speed/ Productivity

Previous experience

Price

Quality

Technical support/service

Top Purchasing Decision Factors

Source: HDC with data of interviewed companies.

1. Service, including availability of local staff and spare parts. 2. Quality of the equipment (durability, materials). 3. Price in relation to its quality. 4. Previous experience with brand and/or corporate recommendations. 5. Productivity, speed and reliability. 6. Technology. 7. Flexibility. 8. Ease of operation. 9. Safety. 2.10. Regulatory Framework The present economic environment in México presents a big window of opportunity for the export of packaging machinery into the country. Additionally, NAFTA removed all previous trade barriers and duties for all types of packaging machinery imported from the United States and Canada. Imports from other countries still have import duties that range between 5% and 20%.

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Used packaging machinery and accessories can be imported into México under a special customs valuation method, which uses the replacement value of the equipment (A certification of the cost of new machinery of the same type is required.) less a discount based on the years of use of the machinery. Even though there are no import duties for packaging machinery, a 15% Value Added Tax (IVA) has to be paid when the machinery is imported. This 15% tax is assessed on the cumulative value consisting of the US plant invoice, plus the inland US freight charges. The importer will pay other IVA fees for such services as the inland México freight and warehousing. The IVA is a tax charged on all imported and domestic products and is recovered at the point of sale. Packaging machinery does not require import permits nor has any other special regulation with which it must comply. 2.11. Import Duties Due to NAFTA, most US and Canadian packaging machinery has a competitive advantage over packaging machinery imported from non-NAFTA countries. Current import taxes charged on packaging machinery manufactured in countries with which México has not signed a free trade agreement range from 10% to 20%. US and Canadian packaging machinery can enter México without tariffs due to the NAFTA. The Free Trade Agreement with the European Union, which entered into effect in July 1999, will eliminate all tariffs to products imported from Europe within the next five years. This represents a threat to US packaging machinery manufacturers in the medium term, since local prices for European equipment could decrease by 10% to 20%. This is independent of any fluctuation of the European currency. The following table shows base tariffs charged on European packaging machinery and the tariff elimination schedule: Harmonized

Code Description Current

Tariff Tariff

Elimination 84222001 For cleaning bottles and other containers, other than

those included in subheadings 8422.20.02 and 03 20 C

84222002 For washing glass bottles, having a capacity from 3 milliliters to 20l

15 C

84222003 Tunnel type washers, of continuous belt for metallic containers, with and output capacity exceeding 1,500 units per minute

10 C

84222099 Other Ex. A 84223001 For packing or packaging milk, butter, cheese, or

other dairy products, other than those included in subheading 8422.30.10

Ex. A

84223002 For packing, closing, capsulation, and/or packaging liquids, other than those included in subheadings 8422.30.01, 03 and 10

Ex. A

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84223003 For packing jams, tomato extracts, corn soup, and other thick or syrupy foods

10 C

84223004 For packing liquids in ampoules, whether or not perform other attached operations

Ex. A

84223005 For molding and/or packaging candy Ex. A 84223006 Metering-packaging machines, by volume or by

weight, for bulk products, in bags or other similar containers, whether or not provided with closing

15 B

84223007 For vacuum packing, in flexible containers 10 C 84223008 Rotary fruit packaging machines 15 C 84223009 Tea packaging machines, in pouches, labelers 10 C 84223010 For packing milk, juice, fruits, and other similar

products, and in addition, forming and closing their own disposable plastic or paperboard contain

Ex. A

84223011 Over capping capsule machines Ex. A 84223099 Other 10 B 84224001 Tying or strapping machines, including hand

operating 15 C

84224002 Of a unit weight not exceeding 100 kg, for encasing, metallic containers

20 C

84224003 For packaging confectionery products Ex. A 84224004 Box packing or unpackaging machines for bottles 10 C 84224005 Automatic machines for placing and wrapping

compact discs in a case Ex. A

84224099 Other Ex. A Tariff Elimination Calendar A) Tariffs were eliminated comple tely in July 1999. B) Tariffs will be eliminated in four equal stages, beginning July 1999 with a 25%

reduction of current tariff. Following reductions will take place on January 1 each year, being completely eliminated on January 1, 2003.

C) Tariffs will be eliminated in seven stages according to the following table:

Current Tariff 2000 2001 2002 2003 2004 2005 2006 2007 20 18 12 8 5 5 4 3 0 15 13 10 7 5 5 4 3 0 10 8 6 5 4 4 3 1 0 7 5 4 3 3 2 2 1 0 5 4 3 2 2 2 1 1 0

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III. The Food Industry 3.1. Industry Overview The total production of México’s food industry is estimated at a value in excess of US$32 billion per year. Consolidated total sales of the 36 most important food companies reached US$18.4 billion during year 2000. Average growth of this sector has been 5.7% per year over the past five years. 191 large companies represent only 1% of the total number of food companies registered in México, however, these companies control over 80% of the market in terms of sales. 3.2. Ranking of Companies by Size According to the national register of companies of the Ministry of Commerce and Industrial Production (SECOFI), there are 29,062 companies dedicated to the production of food products, which employ 541,000 people. The breakdown of companies by size is the following:

Type Employees No. Of Companies %

MICRO 0 to 30 26,796 92% SMALL 31 to 100 1,388 5% MEDIUM 101 to 500 687 2% LARGE 501+ 191 1% Total 29,062 100.00% Source: SECOFI- SIEM

The vast majority of these companies are located in México’s central region, with the most important areas being México City, the state of México, Querétaro, Guadalajara, San Luis Potosí, Puebla, and Morelos. In the northern region, the city of Monterrey, capital of the state of Nuevo León and México’s third largest city, also has an important base of food packaging companies, especially for cold cuts and dairy products. The food sector has seen an important consolidation in the last few years. Large corporations are growing by making acquisitions of other smaller companies, for example, Bimbo, which acquired a large manufacturer of cookies called Galletas Lara in 2001; Phillip Morris, which acquired Nabisco worldwide; and Conservas la Costeña, which in late 2000 acquired the operations of the large foods manufacturer Sabormex. This consolidation will continue, generating new investments in the sector. Currently there is talk about a possible alliance between Femsa and Herdez forming a major food industry conglomerate in México. Part of this deal might include the purchase of the bottled water company Electropura from Mr. Molina, one of the Pepsi’s largest bottlers. This consolidation phenomenon is resulting in greater market power going to large corporations, while the small companies must upgrade their technologies, define niche markets, and specialize in particular sub-segments in order to grow.

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3.3. Key Players

Top Food Producers in México (Figures in million US dollars)

Company Name Predominant

Business Sales 2000

Fixed Assets 2000

Grupo Industrial Bimbo Bakery, Box-bread 3,421 2,676 Nestlé de México Dairy products, Coffee 2,210 1,202 GRUMA Corn flour, Tortilla 1,978 2,372 Grupo Corvi Candies 1,296 421 Sabritas Snacks 1,234 N/A Grupo Industrial LALA Milk, Dairy products 1,119 N/A Industrial Bachoco Eggs, Chicken Meat 999 1,046 Sigma Alimentos Refrigerated foods 907 545 Corporativo Unilever de México Refrigerated foods 674 640 Ganaderos Productores de Leche Pura Milk, Dairy products 625 141 Grupo Industrial MASECA Corn flour, Tortilla 519 734 Grupo Herdez Canned products 425 403 Arancia Corn Products Corn flour, Tortilla 422 N/A Productos de Maíz Corn flour, Tortilla 312 220 Dulces y Chocolates Lexus Candies 282 N/A Leche Guadalajara Milk, Dairy products 247 193 Grupo Azucarero Mexicano Sugar 233 457 Alsea Candies 228 158 Grupo la Moderna Candies 225 275 Grupo VIZ Meat, Dairy products 219 107

Source: Expansion Magazine–Top 500 Mexican Companies. Figures in dollars using exchange rate of 9.2 MX pesos per US$1

3.4. Summary of Interviewed Companies Twenty-five food companies were interviewed for this study; six are huge corporations with sales of over US$500 million; eight are companies with revenues of US$499 million to US$100 million; five are in the US$99–50 million range in sales; and six are small companies with less than US$10 million in revenues. Based on information obtained trough interviews, these 25 companies anticipate spending close to US$46 million in packaging machinery during the following two years. Within the sample of companies, the United States has the largest packaging machinery installed base with 866 machines, equivalent to 60% of the total. Italy has the second largest share with 130 machines equivalent to 9%, followed by German machinery with 7%. Netherlands and México hold the fourth and fifth largest shares with 7% and 6% respectively.

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Installed packaging machinery shares by country

9%

7%

7%

6%3%

3%

1%

4%

60%

US

Italy

Germany

Netherlands

Mexico

France

Switzerland

Spain

Other

Source: HDC with data of interviews.

Combined packaging machinery purchasing potential for the years 2002 and 2003 within these 25 companies is US$46.7 million. Sabormex, Herdez, and Nestlé alone have packaging machinery purchasing plans of US$24 million, and Ricolino will build a new plant to manufacture candies, planning to spend US$2.6 million in new packaging machinery. Among the 25 companies interviewed, the equipment with the highest purchasing potential include: Automatic palletizer Bag form fill and seal machines. Blister machine Bottle filling machines Box form fill and seal machines Can cleaning machines Can closing machines Capping machine for plastic and glass jars Carton form fill and seal machine Case / tray form, fill and seal machines for marmalade, sauce, and vinegar Case forming machines Cellophane wrapping machines Closing machine for cans Coding machine Continuous sterilization machine Conveying systems Cooling tunnel lines Depalletizing machines

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Detectors for bottles incorrectly capped or with low content. Dossier for coffee bags of 200 and 400 gm Fillers (liquid and powders) Filling dry/ solid products Filling machine for semi-viscous liquids Filling machines for beans Flask cleaner Flow pack packaging machine Form, fill and seal (bag/pouch)-vertical High vacuum shrink wrap machine Hot melt system Ice cream stick machine Labeling machines Metal cap closing machine Metal detectors Palletizing machine Plastic bottle orienting machine Plastic cap closing machine Pneumatic transporter for fats Rotative wrapping machine Sachet filling machines Sealing machines Tetra pack formers Tray forming machines Vacuum packaging machines Volumetric filling machines Waste compactor Weighers Weight verification machines Wrapping machine for multi-packaging with thermoformed polyethylene film Wrapping machines for marmalade, sauce, and vinegar Yogurt packaging line Installed packaging machinery had an average age of 9.6 years and an average utilization of 85%. Overall automation is medium-high in large and most medium companies, and very low in small companies where many packaging processes are done by hand.

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3.5. Company Profiles

Axa / Kir Alimentos, S.A. de C.V.

Industry: Food Sub Industry: Cold cuts and cheese Location: Monterrey, N.L. Size: (sales) Over US $350 million Purchasing Potential: Over US $700,000 (2002) Specific Business Opportunities:

Vacuum packaging systems and conveying systems for frozen products into a refrigerator chamber.

A) Company Description Axa Kir is a subsidiary of Xignux, a Mexican holding company with seven different business units and 27,000 employees. The company operates 35 manufacturing plants and 50 distribution centers throughout México, the United States, Brazil, and Argentina. Xignux entered into the food business in 1976 and in 1994 entered into a joint venture with Sara Lee from the United States. Over half of the company’s production is currently exported into more than 40 countries. The company’s processed foods and cheeses division operates under the AXA / Kir name; its manufacturing plants are considered among the most modern in Latin America. This division produces cold meats and dairy products at three facilities in México, located in Monterrey, Nuevo León; Tepotzotlán, state of México; and Queretaro, Queretaro. B) Main Products Produced and How They Are Packaged

Product Brand Package Hams Kir, Duby Vacuum polyethylene film Salami Peperami Vacuum aluminum film Sausages Kir / Swan / Duby Tipper tie Paté Swan Shrieked polyethylene (Bag/Pouch) Bacon Kir / Duby Vacuum polyethylene film Franks Kir / Swam / D’Pavo Vacuum polyethylene film Turkey products Kir / Swan / Duby / D’Pavo Various Cheeses Caperucita / Creso Vacuum polyethylene film and

Plastic containers C) Installed Packaging Machinery The company has recently made important investments for the modernization and expansion of its production capacity. The company estimates it will need to further expand

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production by about 30% over the following couple of years and will have to purchase additional process and packing equipment. Their most representative packaging machinery includes the following:

Machinery Type Units Origin Average Age

Specification

Vacuum packaging/ Multivac 11 Germany 5 80% Vacuum packaging/ Rapid Pack 1 US 1 90% Vacuum packaging/ Tipper Tie 4 US 2 80% Pealing machine/ Apollo, Townsend 4

2 US US

21 6

90% 90%

Frankfurt and sausage loading machines/ Warwick Planet produc ts (out of operation)

2 1

US US

19 11

90%

- Cheese filling machine/ Drake 5 US 1 90% Coding machines/ Video Jet 11 US 5 90% D) Last Purchase of Packaging Machinery This company’s last purchase of packaging equipment took place in July 2001, when they invested US$170,000 on the purchase of a vacuum packing system, Multivac R230, which they purchased from a German supplier. An additional US$100,000 was invested to purchase another vacuum system from US Rapid Pack. They noted that this last purchase is a pilot project to evaluate this supplier as it is offering better pricing than Multivac. Other equipment included in this purchase were three cheese filling and sealing systems from US supplier Drake, for which they paid US$190,000.

Machinery Brand Country Cost Vacuum packaging Multivac R230 Germany US $170,000 Vacuum packaging Rapid Pack US US $100,000 Cheese filling machines Drake US US $190,000

E) Future Packaging Machinery Ordering Plans, 2002–2003 Due to this company’s expansion plans they are estimating they will invest US$350,000 in packaging machinery during 2002. The company will purchase an additional vacuum packing system and the potential supplier will depend on the results of their trial project with Rapid Pack. The company will in any case proceed with the purchase of an additional vacuum packing system from Multivac because of the growing demand for the products produced on that line. The company is also interested in improving its transport systems for its cold meat products and cheeses in refrigeratored chambers. The company would like to automate this process, as it currently is not automated.

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Machinery Units Origin Motive of purchase

Estimated Budget

Vacuum packaging/ Multivac 2 Germany Expansion US $370,000 Vacuum packaging/ Rapid Pack 2 Germany Expansion US $280,000 Conveying systems refrigerator chamber

1 T.B.D. Process automation

T.B.D

F) Purchasing Policies and Financial Arrangements AXA Kir purchases packaging machinery from equipment manufacturers or from their local distributors. Some of the factors involved in the purchasing decision include any previous working experience with a particular machine or supplier. If the company decides to proceed to purchase a type of equipment with which they have not had experience, they request proposals from at least three potential suppliers. All purchasing decisions are made by the company’s headquarters in Monterrey, where all manufacturing plants send their requests for the purchase of new equipment. The management and technical departments of each plant also get involved in their specific purchasing decisions. One of this company’s purchasing policies is that they make the final payment for the equipment once it has operated adequately for two or three months at their plant. In 2001 Axa Kir visited Pack Expo in Chicago, where they met with Rapid Pack. The company liked their vacuum packing equipment and made a decision at the trade show to purchase the equipment as they considered it offered good technology, technical support, and vendor financing. The company purchases new equipment with bank loans or vendor financing. The company is interested in receiving information from financial institutions offering equipment financing. G) Factors that Influence Purchasing Decisions

1. Production speed 2. Technical support and service 3. Price 4. Quality 5. Very clean packing process 6. Equipment safety

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Axa Kir indicated it prefers to purchase machines with which it has had previous working experience. This policy was waived in the case of the Rapid Pack purchase, which the company indicates is a trial case, and if the results do not meet expectation, the company

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will return to its previous supplier Multivac. The decision to try a new supplier was based on the offer of better price and financing. The company says that it still considers Multivac to be one of its preferred suppliers because its equipment has very good technology and is easy to operate. They also consider this machine to be very efficient and productive. The company evaluates equipment by country of origin as follows: Origin Technology Flexibility Service Price United States Good Good Good Good Germany Very Good Very Good Very Good Regular Spain Very Good Very Good Very Good Regular I) Specific Interest Axa Kir is interested in receiving information for high speed and large volume vacuum packing systems. It would also like to have information for transporting systems for cold meats and cheese products. This line is for transporting from production to the refrigerator chambers. J) Contact Information Company Name: Qualitia Alimentos (AXA / KIR) S.A. de C.V. Contact: Mr. Carlos de la Cruz Position: Purchasing Manager Address: Av. Conductores #600 Col. Lagrange 66490,San Nicolás de los Garza, N.L. Telephone: (52-81) 8305-0029 Fax: (52-81) 8305-0038 E-mail: [email protected] Web page: www.kir.axasa.com.mx

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Champiñones Monte Blanco, S.A. de C.V.

Industry: Food Sub Industry: Mushrooms Location: México City (D.F.) Size: (sales) US$35.8 million Purchasing Potential: US$200,000 Specific Business Opportunities:

Continuous sterilization machine, Can closing machines, Weight verification machine, Volumetric filling machines for solids and semi-viscous liquids

A) Company Description Champiñones Monte Blanco is the largest producer of mushrooms in México. It grows and packages its own products and also packages under private label. The company sells raw mushrooms to the largest producers of soups, such as Herdez and Campbell’s. The company believes it controls 70% of the total market for mushrooms in México and it is constantly growing in market share. Monte Blanco was founded in 1947 with 100% ownership. The company has exported to the US market, however, currently local demand is sufficient to utilize all of its production. Monte Blanco was located in México City until 1998 when it decided to build a larger facility in Toluca, state of México. According to the company, Monte Blanco’s new plant is considered one of the largest mushroom growing facilities in the world, while the México City plant is now being used only as headquarters and distribution center. B) Main Products Produced and How They Are Packaged Monte Blanco produces primarily mushroom and mushroom products such as soups. The company also produces “Huitlacoche” soups, a traditional Mexican dish made from corn fungus. The company packs its mushrooms in cans and glass flasks; soups are packaged mostly in cans; and a small part of the production is single-served packed in a cardboard flask.

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C) Installed Packaging Machinery

Current Machinery Used Units Origin Average Age

Specification

Weight verification machines for 300–350 cans per second

2 US 5 60%

Volumetric filling machines 4 US 3 90% Can closing machines / Canco 3 US 50 70% Can closing machines / Angelus 2 US 40 70% Continuous sterilizing machines / Rotomat

1 Germany 30 70%

Continuous sterilizing machines / Phoniz

3 Sweden 25 60%

Labeling machines / Burt 4 US 6 70% Coding machines / Videojet 3 US 6 90% Coding machines / Little Giant 2 US 2 80% Box closing machines / 3M 4 US Lease 90% Pneumatic palletizer 1 US 8 Out of order

Some of the equipment used by Champiñones Monte Blanco was acquired used from other food processors. D) Last Purchase of Packaging Machinery The company’s last purchase of packaging machinery took place in November 2001 when it acquired two new coding machines from Burt. They selected this supplier based on good past experience with its machinery and the price of the equipment. E) Future Packaging Machinery Ordering Plans, 2002–2003 The company plans to invest close to US$1 million for the acquisition of new packaging machinery during the following two years. A large part of their equipment is old, and the company is planning to modernize some of the older machinery and to incorporate new packaging lines in their new plant. In its 2002 budget the company included the acquisition of the following machinery:

Machinery Units Origin Motive of purchase Continuous sterilization machine 1 T.B.D. Increase production Can closing machines 2 T.B.D. Increase production Weight verification machines 2 T.B.D. Increase production Volumetric filling machine for solids 1 T.B.D. Increase production Volumetric filling machine for semi- viscous liquids

1 T.B.D. Increase production

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F) Purchasing Policies and Financial Arrangements The company uses credits from Citibank and pays following the policies of the suppliers, which generally are 30-50% advance payment and the remaining when the machine is installed and tested. G) Factors that Influence Purchasing Decisions In order of importance:

1) Local representative, spare parts, and service. 2) Price vs. efficiency. 3) Brand reputation and time in the market. 4) Flexibility. 5) Financing options offered.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company has no preference for any brand or origin of its packaging machinery. For process machinery 100% of the company’s equipment is Italian, however, in packaging they have a mixed selection. The company mentioned that the most important factor in selecting a supplier is its local presence, service, and supplies. I) Specific Interest The company is interested in receiving demonstrations from manufacturers of equipment to sterilize and package solids and semi-viscous products. They are also interested in labeling machinery for cans and glass flasks. J) Contact Information Company Name: Champiñones Monte Blanco, S.A. de C.V. Contact: Ing. Isaac Espinosa de los M. Position: Manager for Operations and Projects. Address: Priv. J.M. Castoreña #74 Col. Cuajimalpa 05000, México, D.F. Telephone: (52-55) 5813-4400 / 5292-0200 Fax: (52-55) 5812-2433 E-mail: [email protected] Web page: www.monteblanco.com.mx

Grupo CHEN, S.A. de C.V.

Industry: Food Sub Industry: Dairy Products, Meats Location: Saltillo, Coahuila Size: (sales) US$90 million Purchasing Potential: US$800,000 Specific Business Opportunities:

High vacuum packaging machine, Packaging line for cream

A) Company Description Chen is a private Mexican company founded in the state of Nuevo Leon over 40 years ago. The company is the leader in the sale of dairy products in Northern México. The significant sales growth seen by this company is based on expansion of its wide product line that includes butter, yogurt, cream, and milk in addition to its six varieties of cheese products, including American, “Manchego,” “Panela,” “Chihuahua,” and “Oaxaca.” The company also manufactures various lines of meat products. The company’s headquarters is located in the city of Saltillo in the state of Coahuila. Eight manufacturing facilities and distribution centers are located in México’s largest cities, including: México City, Monterrey, Guadalajara, Saltillo, Monclova, Torreón, Reynosa, Tampico, Aguascalientes, Chihuahua, and Ciudad Juárez. The company employs a total of 2,800 workers. B) Main Products Produced and How They Are Packaged

Products Brand Package Cheese Chen, Nor-Mex, Colonos, Norteño, Bugambilia,

Camelia, Virmar, Rosita, Dilasa, Capellania, Jazmín, Clavel, Lupita, Blue House.

Shrink wrap

Yogurts Camelia, Chen, Nor-Mex. Plastic cups Butter Chen, Lupita Waxed paper Margarine Lupita, Norteñita Plastic container Milk Nor-Mex, Norteñita Plastic bottle and Tetra

Rex type carton Sausages Supremo, Jamy Shrink wrap Spiced sausages (Chorizo)

Supremo, Jamy Shrink wrap

Bacon Supremo, Jamy Shrink wrap Bologna Supremo, Jamy Shrink wrap Ham Supremo, Jamy Shrink wrap Juices Nor-Mex, Norteñita Plastic bottle and Tetra

Rex type carton

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C) Installed Packaging Machinery The company did not provide information on their existing packaging machinery as they indicated this to be confidential information. The only information they provided is that their equipment is not standardized, so they have many equipment brands in each of the production processes. They indicated that each plant makes purchasing decisions for new machinery independently. D) Last Purchase of Packaging Machinery The company spent US$300,000 in packaging equipment during 2001. Their last purchase took place in mid-2001 when they acquired the following machine:

Machinery Brand Country Depalletizing machine Multiback US

E) Future Packaging Machinery Ordering Plans, 2002–2003 Chen plans to invest between US$800,000 and US$1 million in new packaging machinery in the following two years. The company has not developed a specific budget but their short-term requirements include the following machines:


Estimated Budget

Packaging line for cream 1 - New product - Carton form, fill, & seal machines (for the last part of the packaging process)

- - Automation -

High vacuum shrink wrap machine 1 - Replacement - F) Purchasing Policies and Financial Arrangements Each plant of the group develops a procurement plan for the following year and requests approval from the corporate offices in Saltillo. In some cases corporate makes recommendations on potential suppliers, but in most cases, once the procurement plant and budget is authorized, each plant is responsible for making its purchases. Chen prefers to purchase directly from the manufacturer, but they expect the manufacturers to provide service either locally or by scheduling maintenance visits from overseas. Chen also requires the manufacturers to provide training to the employees. The company funds most purchases with its own cash flow, and only in cases of major projects (such as new plants) does the company use foreign credits. The company adapts to the payment conditions required by the manufacturer; generally it uses letters of credit from local or foreign banks.

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G) Factors that Influence Purchasing Decisions

1. Technology 2. Flexibility 3. Quality 4. Service

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Most of the installed base of packaging machinery of Grupo Chen is American. The company mentioned that they don’t have a preference for any machine based on its origin, however, they have preferred US equipment due to the service offered by manufacturers. They believe that it is much easier to bring experts from the United States than from Europe and that US manufacturers have a better understanding of Mexican needs. They ranked packaging machinery as follows: Origin Technology Flexibility Service Price United States Very Good Very Good Very Good Good Germany Very Good Good Good Regular Italy Very Good Good Good Regular I) Specific Interest The company is interested in receiving information from packaging machinery suppliers specialized in cold cuts and dairy products. The company has special interest in information on packaging lines for creams and in machinery for Tetra Pack, as it is highly likely the company will begin packaging milk and juices in this type of container. J) Contact Information Company Name: Grupo CHEN TEL-LAC, Corportativo, S.A. de C.V. Contact: Ing. Sergio García Position: Purchasing Corporate Manager Address: Hector Saucedo #1824, Col. Avícola, 25290, Saltillo, Coahuila, México. Telephone: (52-844) 438-9900 Fax: (52-844) 438-9902 E-mail: [email protected] Web page: www.chen.com.mx

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DANONE de México, S.A. de C.V.

Industry: Food and beverages Sub Industry: Dairy products, bottled water, jellies,

ice cream, etc. Location: México City Size: (sales) US$280 million Purchasing Potential: Over US$4 million Specific Business Opportunities:

Conveying systems, Labeling sleeve machines, Case loaders for cartons, Yogurt packaging line, Coding machines, Carton form fill and seal machines, and other equipment

A) Company Description Danone de México has operated in México since 1973 and is the market leader in the manufacture of yogurt, milk-based desserts, and other dairy products. Its local business has expanded to include bottled water, which is sold under the Bonafont name. In May 2001, Danone purchased another company in the bottled water business called Pureza AGA. With this acquisition in addition to its Bonafont brand, Danone became one of the three top bottled water businesses in México, operating 17 production facilities. On the dairy business side, Danone has over 4,600 employees in México in two plants, one located in Irapuato in the state of Guanajuato and the other in Toluca in the state of México. Danone de México’s corporate headquarters is located in México City. B) Main Products Produced and How They Are Packaged

Product Brand Package Yogurt Danfrut Polyurethane container Custard dessert Dannet Polyurethane container Cheese dessert Danonino Polyurethane container Liquid yogurt drink Dan’Up Polyurethane container Yogurt DanVive Polyurethane container Jelly Gelatina Danny Polyurethane container Yogurt with cereal Gran’Día Polyurethane and plastic containers Milk-based beverage Licuado Danone Polyurethane container Yogurt Yogurt Natural Polyurethane container Bottled water Bonafont PET and polyurethane bottles of

300 and 600 ml, 1, 1.5 and 4 lt.

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Danone’s manufacturing is conducted in a continuous process line, beginning with the molding of resins into packages, followed by printing, coding, filling, and sealing, continuing until the products are palletized. For the Bonafont products, Danone manufactures its own thermoformed PET bottles. The company receives PET pellets as raw material and thermoforms the bottles using machinery imported from France. C) Installed Packaging Machinery

Machinery Type Units Origin Average

Age Specification

Yogurt and cheese packaging line / Arcil 6 France 5 100% Yogurt and cheese packaging line / Remi Sidell 4 France 5 100% Labeling machines/ Krones 10 Germany 4 90% End of line: Case forming / Aries Carton form fill and seal machines / Aries Case closing and sealing / Aries Case forming / Mead Carton form fill and seal machines / Mead Case closing and sealing / Mead

9 9 9 1 1 1

France

US

6 1

90%

90%

Coding machines: Image Video Jet

6 4

Italy US

4 4

80% 80%

Palletize / Depalletize / Satelem 2 France 6 90% Conveying systems / Tecmapack 3 France 6 80% The company did not provide information on their water bottling lines. D) Last Purchase of Packaging Machinery Danone’s last purchase of packaging machinery took place in 2000, with an investment of over US$4 million. This purchase included a complete filling system for yogurt from the French company, Arcil. This line produces Danone’s new multipack presentations that have two or more individual product containers made from a single molded container. The purchase also included two lines of multipacking equipment for their Huehuetoca plant, which are used to produce the new presentations for the Danet product.

Machinery Brand Country Cost Yogurt filling system (bi-pack) Arcil France US $3.5 million Multipacking equipment

Mead Aries

US France

US $350,000 US $400,000

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E) Future Packaging Machinery Ordering Plans, 2002–2003 The company had plans for the purchase of equipment during 2001, but these remain on hold waiting for approval by their corporate office. Once approved, they will purchase a new line for their yogurt products and other equipment needed to expand their production. In the second semester of 2002, the company will make additional purchases of packing equipment for new presentations for their products. The budget for the yogurt line and complementary equipment is about US$4 million. The suppliers for this purchase will be Arcil from France for the yogurt line and Krones from Germany for labeling machines. Suppliers have not been selected for the additional equipment they will purchase this year, which might include the following:

Machinery Units Origin Motive of purchase Estimated Budget

Conveying systems / Tecmapack 1 France Production Expansion T.B.D. Labeling sleeve machines / Krones 2 Germany Production Expansion T.B.D Case loaders for cartons 1 T.B.D. Production Expansion T.B.D. Yogurt packaging line / Arcil 1 France Production Expansion US $3.7 million Coding machines / Video Jet 2 US Production Expansion T.B.D. Carton form fill and seal machine 1 T.B.D. Production Expansion T.B.D. Cereal conveyor system 1 T.B.D Improve efficiency T.B.D

F) Purchasing Policies and Financial Arrangements The company in México makes purchasing decisions, but the investment budgets require the approval of Danone’s headquarters in France. New purchases are defined on a line-by-line basis, and equipment is selected considering its adaptability with existing lines. Most of Danone’s equipment selection is based on recommendations from other Danone facilities that have had experience with the proposed equipment. If a new supplier is selected, the facility will require the corporate authorization to proceed with the purchase. Purchases of auxiliary equipment, such as conveyors, labeling equipment, coding machines, and other smaller equipment, can be made by the local operation without authorization from headquarters. Most of Danone’s purchases are financed with their own cash flow. G) Factors that Influence Purchasing Decisions

1. Previous experience with the equipment at a Danone facility. 2. Equipment quality. 3. Technical service and local support. 4. Price. 5. That the equipment meets Danone’s manufacturing standards.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Danone indicated they have a preference for French equipment suppliers as they have had a long working relationship with companies like Arcil and Remi Sidell. The company has been using these brands in their yogurt and cheese lines since they started operations in México. The company also prefers French suppliers for packaging equipment. The company informed this survey that it is difficult to work with new suppliers for filling and other equipment, as most of their processes are standardized throughout all their manufacturing facilities worldwide. This has helped the company to get better equipment pricing and have a good availability of spare parts. The company’s evaluation of packaging machinery by country of origin is as follows: Origin Technology Flexibility Service Price France Very Good Very Good Very Good Good United States Good Good Not good Good Germany Very Good Good Very Good Good Italy Very Good Good Good Good I) Specific Interest The company is interested in receiving information on potential suppliers of accessory equipment for their yogurt and cheese lines, including such equipment as labeling, coding, case forming, carton form fill and seal, and transport systems. The company is interested in receiving information from suppliers of conveyor systems to transport cereals for their Gran’Día products where cereals are currently filled manually. J) Contact Information Company Name: Danone de México S.A. de C.V. Contact: Mr. Luis Ángel de la Rosa P. Position: Purchasing Manager for Technical Equipment Address: Guillermo González Camarena #333 Col. Santa Fé 01210, México D.F. Telephone: (52) 5258-7200 Ext. 7209 Dir. 5258-7209 Fax: (52) 5292-2629 E-mail: [email protected] Web page: www.juntoscondanone.com.mx

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Empacadora Bernina, S.A. de C.V.

Industry: Food Sub Industry: Cold cuts and meats Location: México City (D.F.) Size: (sales) US$6 Million Purchasing Potential: US$120,000.00 Specific Business Opportunities:

High vacuum machine to pack paté in pouch

A) Company Description Bernina is a Mexican company with 130 employees that manufactures cold cuts, paté, and meats. The company has grown quickly in recent years, and today Bernina manufactures over 80 products. In 1995 the company decided to build a new factory with state-of-the-art technology. This factory allowed Bernina to obtain T.I.F. norm and to begin exporting to the US market. Also in 1995 the company launched its own poultry farm with the idea of improving the quality of its turkey meats. Today this farm produces 35,000 high-quality turkeys per year. Bernina has plans to continue its expansion and to constantly launch new products to the Mexican and international markets. In 2002 Bernina plans to increase its production of paté and will purchase the needed machinery for this purpose. B) Main Products Produced and How They Are Packaged

Product Brand Package Sausage Bernina Pouch Bag and Thermoshrink Meat cake Bernina Pouch Bag and Thermoshrink Hot dog meats Bernina Pouch Bag and Thermoshrink Ham Bernina Pouch Bag and Thermoshrink Pork and cattle specialties Bernina Pouch Bag and Thermoshrink Chicken and turkey products Bernina Pouch Bag and Thermoshrink Paté Bernina Pouch Bag and Thermoshrink



Specification

Wrapping machine for thermoshrink film / Koch

4 Germany 7 90%

Roll stock machines with gas injection / VC999

3 Swiss 4 90%

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D) Last Purchase of Packaging Machinery The last purchase of packaging machinery took place in March 2001 when the company acquired a Rollstock machine RS 420 from VC999 from the United States. This machine was purchased through a distributor in México, and its total cost was approximately US$40,000.

Machinery Brand Country Rollstock Machine RS420 VC999 US

E) Future Packaging Machinery Ordering Plans, 2002–2003 Bernina has developed a budget of US$120,000 for the acquisition of a high vacuum-pouching machine to pack paté. The company has not decided on the supplier and is investigating the alternatives offered in the market.


Estimated Budget

Specialized pouching machine for paté 1 N/A New product US$120,000 F) Purchasing Policies and Financial Arrangements Bernina does not have an established procedure for the acquisition of new packaging machinery. When the company determines a need for new equipment, they contact the distributors who have supplied that particular type of machinery in the past. If Bernina requires a different type of equipment, they search for distributors using directories of packaging machinery and recommendations from clients and competitors. They also identify new potential suppliers by visiting ExpoPack in México City, IFA in Germany, and World Food Expo in Chicago. When acquiring packaging machinery, Bernina pays 40% down and the remainder when the machine is installed and set up. Bernina has used credits from the Mexican bank Banamex for the acquisition of new equipment. Usually they pay 50% with their own resources, and the balance is paid with a bank loan. G) Factors that Influence Purchasing Decisions

1. Characteristics of the machinery. 2. Technical Support. 3. Spare part and maintenance availability. 4. Price. 5. Brand recognition.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Bernina has no specific agreements with packaging machinery suppliers. The company mentioned the brand VC999 Packaging Systems as their preferred brand due to the quality of the service provided by the Mexican representative, the maintenance programs offered, and the ease of use, cleaning, and maintenance. Origin Technology Flexibility Service Price United States Very Good Very Good Good Average Germany Very Good Very Good Average Expensive Italy Good Good Average Average Spain Average Average Poor Expensive Switzerland Very Good Good Very Good Good I) Specific Interest The company is interested in receiving literature, videotapes, and other information from manufacturers of packaging machinery for cold cuts. J) Contact Information Company Name: Empacadora Bernina, S.A. de C.V. Contact: Lic. Enrique Cahero Limón Position: Chief of machinery and equipment Address: Poniente #44-2664 Col. San Salvador Xochimanca México D.F. Telephone: (52-55) 5396-9888 Fax: (52-55) 5396-0700 E-mail: [email protected] Web page: www.empacadora-bernina.com

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FABP Industrias Alimenticias, S.A. de C.V.

Industry: Food Sub Industry: Additives for meat products, flavor

enhancers, powdered consommé, gelatins, powdered drink flavors and colorants.

Location: México City Size: (sales) US$6 million. Purchasing potential: N/A Specific Business Opportunities:

Automatic filling and sealing machine for powders, Labeling equipment.

A) Company Description FABPSA is a Mexican company that was established in 1977. The founder of the company, Mr. Onésimo Martinez, is its current managing director. The company has two lines of business. The line that represents 95% of their sales is the supply of food additives and other ingredients to the meats and snack industries. The other line is the production of products to be sold directly to the consumers, which represents 5% of their business. The company exports 5% of its production, mostly to the Central American markets, selling into Guatemala, Nicaragua and Honduras. FABPSA is planning on moving its manufacturing facility to a new location in the Chalco area in the state of México. This will take place in the second half of 2002. Because of this, the company is interested in purchasing some new packaging machinery. B) Main Products Produced and How They Are Packaged

Product Package Additives for meat products (for various types of spiced sausages)

Sacks of 25 kg 1 kg. Metalized bags 1 kg. Plastic bags

Rubber band placing machine. Sack Metalized and plastic bags

Phosphates Sack Metalized and plastic bags

Consommé powders Metalized bag Plastic bag

Jellies Metalized bag Plastic bag

All of this company’s products are sold under the FABPSA brand.

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Current Machinery Used Units Origin Filling machine / Allfill 1 US Semiautomatic sealing machine/ Sealer Wealler

1 US

Weighing system / Mavi 1 Canada Weighing system / Torrey 1 México Labeling / Datamax Class 1 US

The machinery used at their manufacturing facility has an average age of six years. The oldest piece of equipment (10 years) is a weight scale from Mavi, and the newest is their most recent purchase, a labeling machine acquired in September 2001. The company estimates that their existing machinery operates with 95% efficiency. D) Last Purchase of Packaging Machinery The last purchase of packaging equipment was a labeling machine. The company does not develop an annual investment budget for the purchase of machinery. Purchases are made on an as-needed basis, which is the case for next year when they are planning to automate their new facility.

Machinery Brand Country Labeling machine Datamax Class US

E) Future Packaging Machinery Ordering Plans, 2002–2003 As mentioned, this company will move their manufacturing operations to a new facility in Chalco in the state of México by the second half of 2002. The company plans to automate their complete manufacturing process. For this purpose, they are considering the purchase of the following equipment:


Filling or feeding machine 1 Likely from a US supplier Automation Sealer of metallic or plastic bag and/or sack.

1 Likely from a US supplier Automation

Labeling machine 1 Likely from a US supplier Automation F) Purchasing Policies and Financial Arrangements Potential suppliers are selected from information obtained in trade pub lications and by visiting local and international trade shows. In some cases they seek the advice of the local representatives of some equipment suppliers from whom they have purchased equipment in the past. The company usually evaluates between two or three equipment alternatives. They

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have purchased all their machines from manufacturers’ representatives in México but are open to buying directly from equipment manufacturers. The company makes an economic feasibility study for the purchase of the equipment, and the final decision is reached by the company’s board of directors. The company finances the purchases of equipment with bank loans from Mexican banks. The company has a maintenance staff that replaces spare parts in their equipment. Preventive maintenance is out-sourced to the local representatives of their machine suppliers. G) Factors That Influence Purchasing Decisions

1. Price. 2. Flexibility to accommodate to the company’s product volumes (1, 3, 5, 25 kg). 3. Availability of technical information. 4. Post-sales service and technical support.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company has a preference for US equipment suppliers. They have not purchased equipment from European suppliers and are concerned about the level of support they could receive from those suppliers in México. They indicated that they be very satisfied with the equipment purchases they have made from Allfill, mentioning they are happy with the equipment’s reliability, ease of programming, and technical support they receive, but they complained about the delivery times for most spare parts. FABPSA indicated they do not have a preference for any particular equipment supplier and are open to evaluating all alternatives, as long as serious suppliers present them. FABPSA evaluation of packing machinery according to its country of origin: Origin Technology Flexibility Service Price United States Good Good Excellent High México Average Good Good Accessible I) Trade Show Attendance / Trade publication Information FABPSA uses the Internet to locate information on potential equipment suppliers. They also subscribe to various trade publications, including Reportero Industrial, NEI, Equipos Industriales, Manufactura, and Directorio Industrial Mexicano. The company also visits trade shows in México like ExpoPack and international shows in Chicago and Brazil.

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J) Specific Interest FABPSA is interested in receiving information on filling and sealing machines for powdered food products. K) Contact Information Company Name: Industrias Alimenticias FABP, S.A. de C.V. Contact: Ing. Julio Barcenas Position: Operations Manager Address: Sur 121 # 2295 Col. Juventino Rosas 08700, Iztacalco, México D.F. Telephone: (5255) 56 57 73 99 Fax: (5255) 5650 00 23 E-mail: [email protected] Web page: www.fabpsa.com.mx

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Grupo Warner Lambert México, S.A. de C.V. (ADAMS)

Industry: Food Sub Industry: Candies–Chewing gum Location: Puebla, Puebla Size: (sales) US$2 billion worldwide Purchasing Potential: US$2.5 million Specific Business Opportunities:

Labeling machines, Coding machines, Wrapping machines

A) Company Description Chicles Adams belongs to the group Pfizer-Warner Lambert. Over 100 years ago Adams began producing candies and chewing gum in México, being one of the first manufacturers of coated candies. Today, this Pfizer subsidiary is one of the largest manufacturers of chewing gums and mints in the world. Their most important brands include Trident, Certs, Dentyne, and Halls, however, the company also produces medicinal candies to aid breathing problems and sugarless candies for diabetics. Adams has over 60 manufacturing facilities worldwide. In México the company has one plant in the state of Puebla to supply the Mexican and export markets. Approximately 60% of the production of this plant is exported to Central and South America. B) Main Products Produced and How They Are Packaged

Product Brand Package Gum with liquid center Bubaloo Flow pack and Display* Tablets of caramel Halls Wrapped individually in cellophane and

wrapped in aluminum paper stick. Gum without sugar Trident Individual waxed paper packages and

wrapped in aluminum paper flow pack Coated gum Clorets Cardboard covered by cellophane. Coated gum Chiclets Cardboard covered by cellophane. Coated smooth caramel Crak Ups Plastic bags

*Adams uses “Display” to refer to cardboard boxes wrapped in cellophane plastic containing several candy packages.

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Specification

Box filling machines/ Eurocigma 11 Italy 4 80% Weighing machine / Ishida 1 Japan 3 80% Box form and fill machine/ TISMA 1 US 3 80% Wrapping machines/ GD 45 Italy 18 80% Box form machines / ACMA GD 4 Italy 6 80% Cellophane wrapping machines/ Redington

10 US 10 80%

Cellophane wrapping machines / ACMA GD

10 Italy 3 80%

Cutting and wrapping machines / Theegarten

6 Germany 5 80%

Wrap and seal machines/ Thervopharm

6 Netherlands 2 80%

Box form and fill machines/ Loesch 3 Germany - 80% Coding machines / Image 30 US 5 80% Coding machines/ Mark Point 30 US 5 80% Metal detectors/ LOMA 30 US - 80%

D) Last Purchase of Packaging Machinery This company mentioned that in the past three years it has spent over US$7 million in packaging machinery as it is continuously introducing innovative products. The most representative packaging machinery acquisitions in this period include the following machinery:

Machinery Brand Country Box filling machines Eurocigma Italy Metal detectors LOMA US Coding machines I MAGE US

E) Future Packaging Machinery Ordering Plans, 2002–2003 Packaging machinery purchasing plans are mostly based in the production volume forecasts of the company and in the introduction of new products. The company estimates it will spend close to US$2.5 million in the next two years for the acquisition of new machinery. Short- and medium-term procurement plans include the following machinery:

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Machinery Units Origin Motive of purchase Estimated

Budget Box form and fill machines 3 Germany Automation 750,000 Flow pack packaging machine 1 - New presentation - Carton form fill and seal machine 1 - Automation - Labeling machines 2 - New presentation 200,000 Coding machines 8 - Automation 80,000 Cellophane wrapping machines 10 - Renewal -

F) Purchasing Policies and Financial Arrangements The company has two different procedures for the acquisition of new machinery. When they have new presentation projects that will be implemented simultaneously in several countries, the corporate offices of Adams in New Jersey are fully responsible for the negotiation and acquisition of the machinery; they inform the plants about the machinery that will be acquired so they can prepare the space for the installation of new lines. For local replacements, process automation, or production increment projects, the México plant makes the purchasing decision and is in charge of the selection of the new equipment. However, they try to use the same suppliers that have provided good results in the past. Adams purchases nearly all its machinery directly from the manufacturers; only in a few cases have they purchased from Mexican representatives. Local representatives assist Adams with the import and installation of the machinery and with training but rarely with the sale of equipment. Adams purchases new equipment with its own resources; credits are used only when they build a new manufacturing facility. G) Factors that Influence Purchasing Decisions

1. Technology. 2. Capacity and speed. 3. Previous experience with brand. 4. Brand recognition in the candy market. 5. Technical support.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Although this company prefers to work with packaging machinery suppliers that have successfully supplied machinery in the past, they are not closed to analyzing new options. For suppliers new to Adams, the company likes to see machines functioning in a candy manufacturing facility; they request that the supplier make the necessary arrangements for a demonstration visit. They also ask suppliers to prove their experience in the candy market

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and to offer a comprehensive service program either by local representatives or by foreign technicians who can regularly visit Adams’ manufacturing facility. Adams has preferences for European packaging machinery and for American coding, metal detecting, and other auxiliary equipment. The company mentioned GD as its preferred brand, however, they consider offers from packaging machinery manufacturers that offer good technology with high capacity and speed. The following is Adam’s evaluation of packaging machinery according to country of origin: Origin Technology Flexibility Service Price United States Good Good Good Good Germany Very Good Regular Good Regular Italy Very Good Good Very Good Good Japan Very Good Very Good Good Good I) Specific Interest The company is interested in receiving information and visiting manufacturers offering solutions for the candy and chewing gum market. The company is specifically interested in new packaging machinery developments or new presentations. J) Contact Information Company Name: Grupo Warner Lambert México, S.A. de C.V. Contact: Ing. Jorge Olea Position: Project Manager Address: Carretera México-Veracruz #1028 Col. Parque Industrial Puebla 2000, 72220, Puebla, Puebla, México Telephone: (52-222) 223-6346 Fax: (52-222) 282-7374 E-mail: [email protected] Web page: www.pfizer.com

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Herdez, S.A. de C.V.

Industry: Food Sub Industry: Canned foods, sauces, honey,

mayonnaise, frozen vegetables, juice. Location: México City (D.F.) Size: (sales) US$400 million Purchasing Potential: Over US$6 million Specific Business Opportunities:

Machinery to pack in cans, glass jars and bottles, boxes, as well as auxiliary equipment

A) Company Description Established in 1914, Herdez is a local company and currently one of the largest food processing companies in México. The company operates nine manufacturing facilities throughout México. The company produces a wide variety of food products including: salad dressings, mustard, jellies, juices, spices, hot peppers, hot sauces, honey, canned fruits, and vegetables. Herdez packages products in over 500 presentations. Herdez also produces mayonnaise under the McCormick brand through a venture with McCormick in the United States. Herdez exports approximately 8% of its production to the United States and South America. B) Main Products Produced and How They Are Packaged Due to the wide range of products manufactured and packed by Herdez, it would be complicated to list all its products and packages. Most of Herdez’s products are canned or packed in glass and PET bottles. The company also has special machinery for packing tuna, consommé, and mole. This company sells all its products under the brands Herdez, McCormick, Bufalo, Doña María, Carlota, and Yavaros brands. C) Installed Packaging Machinery The information presented on packaging machinery refers to the company’s plant in México City, as this was the facility visited for this report. The plant in México City operates eight packing lines for mayonnaise, mustard, and sauces. Overall, the company stated that it has over 60 packaging lines throughout their nine production facilities.

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Specification

Filling-sealing machines for viscous Products/ Angelus, Pacific, Solvern, US Bottler

8 US/ Sweden

11 90%

Filling machine for powder (consommé)

1 Italy 2 100%

Capping machines/ various brands 8 US/ Taiwan

10 90%

Carton form fill and seal machines 7 US 13 85% Tape dispensing machines 6 US 12 100% Coding, dating machines 7 US 12 90% Printing/ Labeling machines/ Krones, Auxiemba, ABC, Mew Way, Burt

7 Germany, Spain,

Italy, US

9 100%

Case forming 3 US 8 90% Computerized systems 3 US 6 100% Conveying systems to dispense boxes, bottles, transport finished boxes, etc.

México 11 100%

Multipacking machines 3 US 9 80% Palletizers 3 US 11 90% Shrink packaging machines 3 US 9 80% Stretch packing machines 2 US 6 100% Weighers, Weighing systems 3 US 6 100% Wrapping machines 3 US 11 90% Specialty machinery / All Fill 5 US 7 100% Automatic carton form fill and seal machine / Cayat

1 US 1 90%

Filling machines for semi viscous/FMC 1 US 1 90% Cap sealing machine/ Startech 1 France 1 100%

Close to 90% of the packaging machinery being used was purchased from US suppliers, and the remaining equipment is mostly European and Mexican. The equipment has an average age of 9 years and operates at 90% capacity on average. D) Last Purchase of Packaging Machinery Herdez made its last purchase of packaging machinery for one of its México City plants on July 2001, when it acquired an automatic carton form fill and seal machine from the US manufacturer Cayat for close to US$135,000. During the same year they purchased a filling machine for semi-viscous liquids from FMC, a Belgian manufacturer; however, the machine was acquired from FMC in the United States. They also purchased two sealing machines for boxes and a cap-sealing machine from the French manufacturer Startech for US$145,000.

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E) Future Packaging Machinery Ordering Plans, 2002–2003 Herdez has developed a budget of US$6 million for new packaging machinery that will be required in the next two years. The budget includes requirements at each of the 12 facilities. To provide details on future acquisitions, we established contact with the people in charge of project development at each of the plants and also at Herdez corporate. The plants with large short-term procurement plans include Ensenada, San Luis Potosí Industrias Plant, San Luis Potosí La Paz Plant, and a large project in Guanajuato that is pending approval. The largest investment amount is destined for the Ensenada plant, which plans purchases of new packaging machinery for US$1.5 million for 2002 and 2003. Herdez San Luis Potosí La Paz Plant also has a major need for packaging machinery because volumes have increased dramatically and the existing packaging machinery is having trouble meeting production goals. A major plant renewal project will take place in the second half of 2002. In its Guanajuato plant, most of the packaging processes are manual. This plant supplies fruit and vegetables to most Herdez plants and the packaging process (in boxes) is done manually. Herdez is in the process of approving an automation project for this facility. The most representative acquisitions planned for 2002 and 2003 include:

Machinery Units Origin Motive of Purchase Estimated Budget Ensenada Plant

Closing machine for cans 1 T.B.D Expansion T.B.D Capping machine for plastic & glass jars

1 T.B.D Expansion/ Renewal T.B.D

Pasteurizing tunnel 1 T.B.D Expansion T.B.D Labeling machines for cans & glass bottles

2 T.B.D Renewal T.B.D

Coding machines for caps, cans, carton boxes, plastic containers

2 T.B.D Expansion/ Renewal T.B.D

Metal detectors 2 T.B.D Renewal T.B.D Conveying system 1 T.B.D Renewal T.B.D Volumetric filling machine for viscous liquids

1 T.B.D Expansion T.B.D

Palletizing machine (Jack Pallet) 1 T.B.D Renewal T.B.D San Luis Potosi Industrias Plant

Liquid filling machine 1 T.B.D Renewal T.B.D Viscous filling machine 1 T.B.D Renewal T.B.D Plastic cap closing machine 1 T.B.D Renewal T.B.D Metal cap closing machine 1 T.B.D Renewal T.B.D Labeling machine 3 T.B.D Renewal T.B.D Box sealing machines 2 T.B.D Renewal T.B.D Can capping machine 1 T.B.D Renewal T.B.D Palletizing machine 1 T.B.D Renewal T.B.D Coding machines 3 T.B.D Renewal T.B.D

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San Luis Potosí La Paz Plant Capping machine/ Pneumatic 1 USA Expansion T.B.D Filling machine for semi-viscous/viscous liquids

1 USA Expansion T.B.D

Depalletizing machine/ Sentri 1 USA Improve Efficiency T.B.D Palletizing machine 1 T.B.D Renewal T.B.D Labeling machine/ Krones 1 T.B.D Expansion T.B.D Carton form fill and seal machine/ Cayat

1 USA Expansion T.B.D

Guanajuato Plant Bag form fill and seal T.B.D T.B.D T.B.D T.B.D Carton form fill and seal machine

T.B.D T.B.D T.B.D T.B.D

Pallet machine T.B.D T.B.D T.B.D T.B.D Conveying systems T.B.D T.B.D T.B.D T.B.D F) Purchasing Policies and Financial Arrangements Each of the 12 plants produces a yearly report on new equipment requirements, which is sent to the corporate headquarters. There they evaluate the needs and decide between equipment transfers between facilities or the purchase of new machinery. Once the purchase of new equipment is decided, each plant selects the suppliers and informs the corporate office for final approval. Herdez purchases equipment with its own funds, usually utilizing letters of credit accepted by the equipment supplier’s bank as guarantee. Payment schedule is commonly 30% in advance and 70% upon delivery. Herdez’s plant managers continuously follow equipment trends and maintain communication with existing suppliers. They also attend trade shows and subscribe to trade magazines to learn about new potential suppliers. Herdez’s plant managers schedule regular visits with potential equipment suppliers so they will know first-hand about the company’s requirements. Meetings should be scheduled at each facility as equipment selection is made at that level. G) Factors that Influence Purchasing Decisions

1. Previous experience with a supplier and/or brand. 2. Machine’s precision and speed. 3. Price. 4. Service and spare parts availability in México.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Most equipment presently installed at Herdez came from US suppliers. The company considers US packaging machinery to be superior in quality and reliability as well as better priced than European. On the other hand, European labeling machinery is considered superior to US machines, which waste supplies and require frequent adjustment. As for their preferred brands, the company has been satisfied with Pacific for fillers as they are easy to operate, long lasting, and highly efficient. They also like Angelus filling and capping machines because they arehighly productive and have low maintenance cost. Herdez maintains their equipment regularly, bringing in technicians from the supplier only when a major repair is required. The company believes that most local representatives are well trained to sell but not to service the equipment they represent. Origin Technology Flexibility Service Price United States Very Good Very Good Good Fair Germany Very Good Good Poor High Spain Very Good Good Good Fair I) Specific Interest Herdez prefers to receive visits from potential equipment suppliers rather than receiving equipment literature; this enables suppliers to better understand the company’s particular needs. Herdez mentioned they are interested in packaging machinery for canned and bottled foods as well as for beverages. J) Contact Information Company Name: Herdez Corporate Contact: Ing. Rafael de Regil Position: Operations Director Address: Monte Pelvoux #215 Col. Lomas de Chapultepec 11000, México D.F. Telephone: (5255) 5201-5730 Fax: (5255) 5201-5791 Herdez México City Plant Contact: Ing. Armando Quintanilla Position: Plant Manager Address: Calz. San Bartolo Naucalpan #360 Col. Argentina Poniente C.P. 11230 México D.F. Telephone: (5255) 5576-3100/ 5576-3891 Fax: (5255) 5358-6789

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Herdez Chiapas Contact: Rafael Camacho Position: Plant Manager Address: Parque Industrial Fondeport

Francisco I. Madero s/n C.P. 30830 Puerto Madero, Chiapas

Telephone: (52-962) 1-09-95 Herdez Ensenada Contact: Ricardo Fuentes Position: Plant Manager Address: Carr.Transpeninsular No. 86

Col. Carlos Pacheco C.P. 22890 Ensenada, Baja California

Telephone: (52-6) 177-62-20 Fax: (52-6) 177-62-85 Herdez San Luis Potosí, La Paz Plant Contact: Eduardo Larraga Position: Plant Manager Address: Av. De la Paz No.216

Barrio de Santiago esq. 16 de Septiembre C.P. 78049 San Luis Potosí, S.L.P

Telephone: (52-48) 12-76-42/ 12-45-05 Fax: (52-48) 12-10-57/ 14-63-83 E-mail: [email protected] Herdez San Luis Potosí, Industrias Plant Contact: Carlos Velázquez Position: Plant Manager Address: Av. Industrias no.3815 Mz.29

Zona Industrial, 1a Sección C.P. 78090 San Luis Potosí, S.L.P

Telephone: (52-48) 24-52-82/ 24-52-84 Fax: (52-48) 24-60-67/ 24-73-56 Herdez Veracruz Contact: Ing. Luis DuSolier Position: Plant Manager Address: Domicilio Conocido, Los Robles, Ver.

C.P. 94280 Medellín de Bravo, Ver. Telephone: (52-29) 28-34-06 Fax: (52-29) 29-17-69

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Hérdez Yavaros Contact: Ricardo Nieblas Position: Plant Manager Address: Av. Central Poniente, s/n

Parque Industrial Fondeport C.P. 85251 Yavaros, Huatabampo, Sonora

Telephone: (52-648) 1-01-30/ 1-01-31 Fax: (52-648) 1-01-75 Hérdez Guanajuato Contact: Mario Flores Position: Plant Manager Address: Carretera Panamericana Km. 292 C.P. 38260, Villagrán, Guanajuato Telephone: (52-415) 5-11-07/ 5-13-22 Fax: (52-415) 5-24-17 E-mail: [email protected]

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Joyco de México, S.A. de C.V.

Industry: Food Sub Industry: Candies Location: México City (D.F.) Size: (sales) US$50 million Purchasing Potential: US$2 million Specific Business Opportunities:

PVC blister thermoforming machine, Flow pack-wrapping machine, Box form and fill machines

A) Company Description Founded in 1945 under the name Laboratorios y Agencias Unidas, this company was a manufacturer of candy medicines. In 1974 the company changed its main activity, leaving the production of medicines, to focus only on the production of candies. The company is part of the Gigante Group, one of the largest retail store chains of México. In March 1999 the company entered into a joint venture with the Spanish company General de Confitería, who acquired 50% of the stock, and the company changed its name to Joyco. Joyco has two plants in México with 600 employees; both plants are located in the state of México (México City). The company exports to the United States, Central and South American, and occasionally Spain and Africa. For the production of candies, Joyco uses sugar and natural sweeteners, which are their main raw materials. Most of the sugar used is Mexican, and close to 20% of their sweeteners come from the United States. B) Main Products Produced and How They Are Packaged

Product Brand Package Chocolate cream candy Duvalin PVC blister with aluminum foil cap. Candy-covered chocolate Lunetas Polypropylene bags Cookie bars covered in chocolate

Bocadin Aluminum foil covered with polypropylene

Caramel lollypop Pimpom Polypropylene bag Chewing gum Chiqule

promocional Waxed paper

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Specification

PVC blister forming, filling and sealing machines / Thermoforming

9 Italy 20 90%

Weighing and bagging machine / Martín 2 Italy 20 80% Weighing and bagging machine / Empacomatic

1 US 20 80%

Metal detectors / LOMA 3 US 6 70% Ink jet coding machines / Domino 5 US 6 90% Wrapping machine / SIG 14 Swiss 15 85% Wrapping and sealing machines / Aquarius 14 Netherlands 8 70% Weighing machine / Yamato 3 Japan 3 95% Weighing and bagging machine / Richareli Sacib

1 Italy 10 50%

Wrapping machines / Theegarten 2 Germany 10 90% Wrapping machines / Roseforgrove 3 England 10 90% Overwrapping / Marden Eduards 1 England 4 95% Overwrapping, flow type pack/ PFM 1 Italy 4 90%

D) Last Purchase of Packaging Machinery Joyco’s last packaging machinery purchase took place in December 1999 when they acquired a wrapping and sealing machine from Aquarius. The company could not provide information on the value of this purchase. They did indicate that they regularly spend between US$100,000 and US$250,000 per year on packaging machinery.

Machinery Brand Country Wrapping and sealing machine Aquarius Netherlands

E) Future Packaging Machinery Ordering Plans, 2002-2003 During the next two years, Joyco plans to modernize a key part of its packaging machinery to increase productivity and worker safety. The company has developed a budget of US$1.5 to US$ 2 million, which will be destined mainly to purchase the following machinery:


Estimated Budget

PVC blister form, fill and seal 3 - Replacement 800,000 Flow pack wrapping machines 4 - Replacement 900,000 Box form and seal machines 4 - Automation -

Note: The blister machines will have to be hydraulic and able to process a minimum of 72,000 pieces per hour. The flow pack wrapping machines must be able to process 500 pieces per minute.

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F) Purchasing Policies and Financial Arrangements Joyco makes the decision on which type and brand of machinery to acquire, however, all purchases are made by the parent company, General de Confitería, due to its international presence and experience in the packaging field and its capability to obtain better prices. The Spanish group has a “black list” of packaging machinery companies that have provided unsatisfactory service or results and that are not considered for purchases in any of their plants worldwide. For payment terms, the company prefers to obtain discounts from the manufacturer in exchange for cash or advanced payment. If discounts are not attractive, the company uses credit letters and makes payments as the order is placed, when the equipment is shipped, when the equipment is installed, and after the equipment has been used for a period of time. G) Factors that Influence Purchasing Decisions

1. Productivity 2. Quality 3. Service 4. Safety 5. Image and ease of operation 6. Technology

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company prefers US and Italian machinery, however, the origin of the equipment is not a decision factor. Joyco offered the following evaluation according to machinery origin: Origin Technology Flexibility Service Price United States Very Good Good Good Regular Germany Good Good Good Regular Italy Very Good Good Regular Very Good Spain Good Good Good Very Good Netherlands Very Good Good Regular Good Japan Very Good Good N/A Very Good I) Specific Interest Joyco obtains information about packaging machinery suppliers by attending Expo Pack in México and InterPack in Germany, through packaging machinery directories, and through the magazines Alimentos Procesados, Directory of Ingredients, Equipment and Packaging, and El Reportero Industrial. The company expressed interest in receiving information from packaging machinery suppliers that specialized in the candy and chocolate industries.

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J) Contact Information Company Name: Joyco de México, S.A. de C.V. Contact: Ing. Heriberto Hernández Roa Position: Gerente de Ingeniería Address: Av. Primero de Mayo #120 Col. San Andrés Atoto 53500, Estado de México, México. Telephone: (5255) 2122-1971 Fax: (5255) 2122-1905 E-mail: [email protected] Web page: www.joyco.com

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Conservas La Costeña, S.A. de C.V.

Industry: Food Sub Industry: Canned and bottled foods, sauces,

condiments, beans, olives, jellies, and others Location: México City Size: (sales) US $250 million Purchasing Potential:

Over US $3 million (2002 and 2003)

Specific Business Opportunities:

Labeling, Coding, Sealing, Capping, Filling plastic formers, Carton form fill and seal machines

A) Company Description Conservas La Costeña is a private Mexican company that started operations in 1922. The company’s main plant has a fully automated process. Its manufacturing facility is able to produce over 2 million products per day, mostly cans of Jalapeño peppers. The company divides its business into two segments: One is canned and bottled products, which include hot peppers (Jalapeños), sauces, beans, olives, tomato sauces, jellies, mayonnaise and others; the other segment is those product lines that are packed in plastic or glass bottles. Both segments include over 45 different product offerings. About 60% of the company’s business comes from the canned foods segment. For the past decade, the company has been working on the automation of their manufacturing processes at the Tulpetlac, D.F., and Guasave, Sinaloa plants. Conservas la Costeña is the only company in México that manufactures the cans for all its products. With the modernization of its facilities, the company has achieved a significant increase in its production levels, enabling it to increase its supply into the local and international markets. The company exports about 20% of its production to over 30 countries, mostly in the Americas but also to Europe and Asia.

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B) Main Products Produced and How They Are Packaged Among the company’s 45-plus products, the most important are:

Product Brand Package Hot peppers in vinegar La Costeña Can: 1/8, ¼,½, 1, and 3 Kg. Chipotle Peppers La Costeña Can: 1/8, ¼ ,½ and 3 Kg. Beans La Costeña Can: ½ and 3 Kg. Ketchup La Costeña Plastic and glass bottles: ¼,½, 1, and 3 Kg. Mayonnaise La Costeña Squeezable PET bottle of ¼ and ½ Kg, and glass

bottles of ¼, ½, and 3 Kg. Tomato sauce La Costeña Squeezable PET bottle of ½ and glass bottles of ¼,

½, and 1 Kg. Seasoning sauces Doña Chonita Combi Block (Carton) Olives La Costeña Glass bottles: ¼ and ½ Kg. Vinegar La Costeña PET bottles: 1 Lt. Apple puree La Costeña Can: ¼ Kg Marmalades La Costeña Glass bottles: ¼, ½, 1 Kg; plastic container, 25 Kg C) Installed Packaging Machinery Conservas la Costeña provided information on their most representative packing machinery at the Tulpetlac and Guasave plants. In the canned foods segment, the company operates 16 production lines and is about to finish the installation of an additional line. The non-canned segment of their production operates 13 lines and is considering the introduction of an additional line in 2002.

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D) Last Purchases of Packaging Machinery La Costeña’s last packing machinery purchase was in 2001 when they invested over US $4 million in a complete line for the hot pepper canned products and in wrapping and form machines. In 1999 and 2000, they spent an average of US $4 million per year in machinery.

Machinery Brand Country Cost (Approximately) Form, fill, seal, sterilize, transport, palletize and wrapping machines

Stork Holland US $3.5 million

Wrapping and form machines Cermex / Sidel France US $800,000 The company purchases machinery directly from manufacturers. In the cases of Stork, Angelus, and Ferrum, the company has signed technical support agreements with their local representatives in México and is satisfied with the service it is receiving. It is important to the company that their suppliers maintain an adequate inventory of spare parts in México. La Costeña’s employees receive training from the equipment manufacturers both for the operation and the maintenance of the equipment. The company uses technicians from the OEMs to provide maintenance only in those cases when the equipment is very complex and sophisticated, as is the case for their automated processes.

Current Machinery Used Brand Units Origin Average Age

Specification

Labeling machines New Way 8 US 8 85% Carton form machines Stork 12 Holland 6 90% Carton fill and seal machines Stork 10 Holland 6 90% Transporting box system Stork 17 Holland 6 90% Pallet forming machines Stork 17 Holland 6 90% AGV Automatic Guide Vehicle

Digitron 7 Switzerland 6 85%

Wrapping plastic film machines

Signode 1 France 6 85%

Wrapping plastic film machines

N/A 1 US 4 85%

Filling piston machines Elmar 25 US 10 80% Labeling machines Vshemba 12 Spain 13 80% Pallet forming machines Stork 13 Holland 6 90% Closing Machines Angelus 25 US 15 90% Wrapping and form machines Cermex/Sidel 2 France 1 90% Coding machines for cans Image 18 US 6 85% Coding machines for boxes Image 16 US 6 85% Filling machines Solberin 13 US 6 90% Filling machines Zacami 4 Italy 6 90% Closing cans machines Angelus 14 US 10 90% Closing cans machines Ferrum 3 Switzerland 6 90% Can making machines Ferrum 8 Switzerland 6 90% Sterilizing machines N/A 3 N/A N/A N/A

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E) Future Packaging Machinery Ordering Plans, 2002–2003 With the recent purchase of a complete line for canned products, La Costeña does not have any investment program for this business segment in the short term. Near-term purchases are planned for their other business “segment” and will include the following equipment:

Machinery Units Origin Motive of Purchase Estimated Budget

Case / Tray form (plastic), fill and seal machines for marmalade, sauces, and vinegar

3 T.B.D Expansion US $1 million

Wrapping machines for marmalade, sauces, and vinegar

3 T.B.D Expansion US $1 million

Filling machines for beans 2 T.B.D Expansion US $800,000 Capping machines 3 T.B.D Expansion US $300,000 Labeling machine 1 T.B.D Expansion US $50,000 F) Purchasing Policies and Financial Arrangements La Costeña purchases most of its equipment directly from manufacturers, but if they have an existing relationship with a local representative, they might purchase equipment locally, as they believe that this helps commit the local representative to offering better post-sale service. The company indicated they are open to analyzing new potential equipment suppliers who are able to meet the company’s standards and goals—the automation of all processes and requiring new equipment to be compatible with their existing lines. This company is very satisfied with its existing suppliers. However, if they cannot offer a specific application, La Costeña will work with alternatives. If the required equipment is not available from current suppliers, company practice is to evaluate three alternatives from other suppliers making sure that the equipment matches their specific needs. The company purchases equipment with its own cash flow, giving a 30% down payment, an additional 30% within 30 days, and a final payment once the equipment is operating at their facility. G) Factors that Influence Purchasing Decisions The most important factors that La Costeña considers when evaluating the purchase of new equipment is its compatibility with existing lines and the level of technical support that the supplier can provide. Other important factors that are considered include:

1. Previous working experience with the supplier. 2. Innovations developed by the manufacturers to upgrade existing machinery. 3. Brand recognition within the food industry. 4. Competitive pricing. 5. Country of manufacture.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers La Costeña has been focusing its investments on the automation of its manufacturing processes. At this time, La Costeña’s preferences are for European suppliers as they consider that this equipment is more flexible than the alternatives. Another key decision factor for selecting a supplier is the level of technical support it can offer in México. Most of the equipment installed in La Costeña at this time is European, followed by US machinery. The company has a preference for the following suppliers: Stork, Image, Cermex / Siedel, Vshembra, and Angelus and Solbern (US), among others. La Costeña mentioned that their goals are automation and increasing the productivity of the manufacturing process. They would consider working with new suppliers and would even consider replacing existing lines if they are shown more efficient manufacturing alternatives. La Costeña’s evaluation of packaging machinery according to its country of origin: Origin Technology Flexibility Service Price United States Good Good Low Good Spain Very Good Good Very Good Good Germany Very Good Very Good Good High Holland Very Good Very Good Very Good Good France Good Low Good High I) Trade Show Attendance / Trade Publication Information The company attends trade shows in México including PMMI’s Expopack. The managing director of the company visits other shows in the United States and Europe and conveys the information to his technical staff. The company subscribes to two trade publications focused on providing information on new machinery and technologies: Tecnica Industrial Alimentaria and Reportero Industrial Mexicano. J) Specific Interest La Costeña is interested in receiving information on the following packaging machinery:

• Case / Tray form, fill and seal machines for marmalade, sauces, and vinegar • Wrapping machines for marmalade, sauces, and vinegar • Filling machines for beans • Capping machines • Labeling machines • Fully integrated canned and bottled systems

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K) Contact Information Company Name: Conservas La Costeña, S.A. de C.V. Contact: Ing. Eduardo Ramón Jimenez Position: Director of Mechanical Maintenance (Canned Products) Address: Vía Morelos N° 268 Col. Tulpetlac 55400, México D.F. Telephone: (52) 5836-3636 Fax: (52) 5836-3687 E-mail: [email protected] Web page: www.costena.com.mx Company Name: Conservas La Costeña, S.A. de C.V. Contact: Ing. Bernardo Ramírez Position: Director of Maintenance (Other Products) Address: Via Morelos N° 268 Col. Tulpetlac 55400, México D.F. Telephone: (52) 5836-3600 Ext: 5304 Fax: (52) 5836-3683 E-mail: [email protected] Web page: www.costena.com.mx

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Helados Holanda

Industry: Food Sub Industry: Ice creams Location: Cuautitlan, state of México Size: (sales) US $140.4 million Purchasing potential: US $2 million Specific Business Opportunities:

Wrapping machine for ice-cream/cookie sandwich, Interbreak, Tetrapack SL 900, Coding machines, extrusion machine for ice-cream popsicles

A) Company Description Helados Holanda was established in1938 with the idea of creating a chain of ice cream parlors, where each store would manufacture its ice cream products. Ten years later, demand had increased dramatically and made it necessary to build a processing facility for the manufacture of ice cream products to supply the stores. In the late 1940s the company’s product line included ice, cheese, ice cream, and ice cream popsicles. In the late 1960s Beatrice Foods entered into a joint-venture with this company and financed the expansion of its manufacturing facilities. This expansion helped the company consolidate its leadership as the largest ice cream producer in México. In recent years, the company was purchased by Unilever and became part of Unilever’s ice cream division in México, which also includes the ice cream brand Bing. They are currently the leaders in México in the ice cream market, servicing more than 40,000 points of sale throughout México. Sales for this company are concentrated on the Mexican market. B) Main Products Produced and How They Are Packaged

Product Packing Ice Cream (bulk served by scoops) Bulk cylinders (carton exterior, plastic

interior or plastizised carton) Copa Holanda (ice cream cone in cup) PVC cup Vaso Holanda Plasticized carton container Cornetto (ice cream cones) Plastic wrap Vienetta (ice cream dessert) Carton box with cellophane Icesicles and ice cream bars BOPP bag

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C) Installed Packaging Machinery Some of the most important packaging machinery used in Helados Holanda includes:

Current Machinery Used Units Origin Average Age Specification

Filling machines/ Ventura 2 N/A N/A N/A Molds for ice cream bars with integrated wrapping / WCB Versaline

1 US 7 90%

Molds for ice cream bars with integrated wrapping / WCB Vitaline

2 US 1 90%

Molds for ice cream bars with integrated wrapping / Ria 14 GRAM

1 Germany 7 90%

Tetrapak SL9000 Hoyer 1 Denmark 3 95% Versaline filler WBC 2 US 7 70% Wrapping machine for ice cream / cookie sandwich / Interbreak

1 US N/A 100%

Stick dispensing machine / Storemax 4 US/Denmark N/A N/A Coding machines / VideoJet 8 US N/A 50% Palletizing units 1 US N/A 80%

D) Last Purchases of Packaging Machinery In 1999, Unilever made a very important investment for the modernization and upgrading of all their ice-cream manufacturing facilities in México. Because of this major investment in machinery, recent purchases have been minimal. The last purchase of packaging machinery took place in 2001, when they purchased a stick-dispensing machine for ice-cream bars from the US manufacturer Storemax. E) Future Packaging Machinery Ordering Plans, 2002–2003 The company has a US$2 million budget to purchase packaging machinery during 2002. This money will be used to purchase one mold for ice cream bars with integrated wrapping machine (Interbreak) and one Tetra Pack SL900. The company is also interested in purchasing an extrusion machine for their ice-cream bars. They are also interested in printers that are able to produce coding that will not fade with the condensation of the ice cream once it is packed. F) Purchasing Policies and Financial Arrangements Unilever’s ice-cream division reviews its budget for the purchase of packaging machinery every six months. The company purchases it equipment with its cash flow. Equipment with a price tag over US$500,000 is considered a CEP (capital expenditure proposal), and the decision process is complex because of the number of individuals

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involved. Once a machine has been selected, it requires the approval—at a local level—of the supply chain director, the manufacturing manager, the commercial director, and the managing director. From a corporate standpoint, they require the approval of the president of the company at their headquarters in London. The manufacturing manager can immediately approve smaller purchases. The company’s technical and maintenance staff receive training from their equipment suppliers. All major maintenance and repairs are handled by the technical staff of the equipment manufacturers, mostly by Interbreak from the United States and Tetrapac from Denmark. G) Factors That Influence Purchasing Decisions

1. Meets technical and manufacturing requirements. 2. Technical support. 3. Spare part availability. 4. Price. 5. Previous experience with the supplier.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers This company stated that there is one single technology for manufacturing ice creams and that all suppliers offer similar solutions. They mentioned that the equipment suppliers for their industry of which they are aware are Tetra Pack, WBC, Glacier, Gram, and Storemax. Helado Holanda noted that none of these machines are anthropometrically adapted to their needs in México. Origin Technology Flexibility Service Price United States Good Good Very Good Good Germany Good Good Denmark Very Good Very Good Very Good Very Good I) Trade Show Attendance / Trade publication Information: Company personnel attend Expopack in México and an additional trade show also in México that is focused on the ice cream industry. J) Specific Interests Helados Holanda is interested in receiving information on machinery for the manufacturing and packing of ice creams, ice cream bars, and icesicles.

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K) Contact Information Company Name: UNILEVER DE MÉXICO, DIVISION HELADOS Contact: Ing. Carlos Cabrera Position: Manufacturing Department Chief Address: Carr México-Querétaro Cuautitlan, Izcalli Telephone: (5255) 5899 0379 x 6637 Fax: (525) 58 99 03 79 x 6637 E-mail: [email protected] Web page: www.unilever.com.mx

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Laboratorios Griffith de México, S.A. de C.V. (MTY)

Industry: Food condiments Sub Industry: Solutions Location: Santa Catarina, Nuevo León Size: (sales) US $55 million Purchasing potential: US $0.8 to $1 million for 2002 Specific Business Opportunities:

Bottle filling machines, Portioning sachets fillers, Blister machine, Labeling machine, Coder and Capping machines.

A) Company Description Laboratorios Griffith de México, S.A. de C.V. began operations in México in 1944. It is a subsidiary of Griffith Labs in the United States. Today Griffith has 4 plants in México: one in Monterrey, one in San Luis Potosi, and two in México City. This company operates 32 facilities in 23 countries worldwide. Laboratorios Griffith manufactures dry blends designed to enhance flavor and texture either for topical or internal use, in all bakery applications, coatings, liquid condiments and sauces, functional ingredients, specialty ingredients, and bakery and dough systems. B) Main Products Produced and How They Are Packaged

Product Package Ingredient Mixers

Plastic bags Plastic containers Sack

Sauces, dressings, and dips

Portioning sachet Plastic bottles Plastic bags Plastic containers Blister

Anti-oxides Plastic barrels C) Installed Packaging Machinery Laboratorios Griffith did not reveal its installed base of packaging machinery as they consider this information to be confidential. D) Last Purchase of Packaging Machinery Griffith’s last packaging machinery purchase took place in July 2001 when they acquired two heat exchange machines, and one sachet dispensing and packaging machine. This equipment was acquired in the United States for an approximate cost of US$280,000.

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E) Future Packaging Machinery Ordering Plans, 2002–2003 Laboratorios Griffith was planning to spend between US$800,000 and US$1 million in packaging machinery in 2001, however, the economic slowdown and a significant decrease in sales prompted them to delay their investment plans. The company believes that during 2002 they will make the acquisitions placed on hold last year as in recent months they have been able to meet their sales goals. Most likely, the following acquisitions will be made in the second half of 2002:


Estimated Budget

Bottle filling machines 2 T.B.D Renewal T.B.D Sachet filling machines 1 T.B.D Expansion T.B.D Blister machine/ Uhlman or Cozzoli 1 Europe Renewal US $200,000 Labeling machines/ Trine 1 US Renewal US $17,000 Coding machine 1 T.B.D Renewal T.B.D Capping machines 1 T.B.D Expansion T.B.D F) Purchasing Policies and Financial Arrangements All new machinery acquisitions require authorization from the corporate offices in the United States. Supplier selection is based on corporate recommendations as Griffith has agreements with US packaging machinery manufacturer. In addition Griffith plants worldwide are following a standardization plan to offer the same quality in all their plants. After receiving recommendations from corporate, Griffith de México makes the final decision based not only on the equipment characteristics but also on the capabilities of the supplier to offer local service. Usually they request quotes from three different manufacturers and compare proposals. For major equipment Griffith prefers to pay 50% when the order is placed, 35% when the machine is installed, and 15% after 30 days of operation. For minor equipment, the company pays 50% upfront and 50% at delivery. G) Factors that Influence Purchasing Decisions

1. Quality. 2. Cost. 3. Service. 4. Brand recognition. 5. Spare parts availability

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Laboratorios Griffith de México prefers US and German equipment because they consider those to be the leaders for food products. For complementary equipment such as labeling machines and coding machines, the company has no particular preference and they look for those that offer the best cost-benefit. Origin Technology Flexibility Service Price United States Very Good Good Very Good Very Good Germany Very Good Good Very Good Average Canada Good Good Good Good México Average Average Average Good I) Specific Interest Laboratorios Griffith has plans to purchase bottle fillers and sachets fillers in addition to blister, labeling, capping, and coder machines. The company would like to receive information for these types of equipment, however, if the suppliers are new to Griffith, they recommend approaching the corporate offices in the United States prior to targeting Griffith in México. J) Contact Information Company Name: Laboratorios Griffith, S.A. de C.V. Contact: Ing. Enrrique Medina Position: Engineering Director Address: Carretera Monterrey Saltillo Km. 67.5 66350, Santa Catarina, Nuevo Léón Telephone: (52-8) 380-4400 Fax: (52-8) 380-4440 E-mail: [email protected], [email protected] Web page: www.griffithlabs.com

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McCormick Pesa, S.A. de C.V.

Industry: Food Sub Industry: Spices, seasonings, food colors, flavor

medleys, spice blends, conservatives, liquid flavors, additives, etc.

Location: state of México Size: (sales) N/A Purchasing Potential: N/A Specific Business Opportunities:

Vertical packing machine, Capping, fillers (liquids and powder), bagging and thermoforming machines.

A) Company Description McCormick Pesa is the local subsidiary of this global leader in the production, marketing, and distribution of spices, seasonings, and flavors for the food industry. Founded in 1889, McCormick has approximately 8,100 employees worldwide. Customers range from retail outlets and food service providers to food processing businesses. McCormick Pesa was previously known as Proveedores de Empacadoras, S.A., in which McCormick had a 10% stake and finally purchased the company in 1994. The company’s core business in México is to manufacture and distribute spices, ingredients, and food additives to the Mexican food industry and to export markets, including the United States, Central and South America, and Europe. McCormick Pesa’s headquarters, main processing plant, flavor plant, and main distribution center are located around the México City area. They operate another manufacturing plant in Monterrey, N.L., and have distribution centers in various regions including Guadalajara, Puebla, Celaya, Hermosillo, and Chihuahua. B) Main Products Produced and How They Are Packaged

Product Package Industrial food seasonings and condiments Plastic containers Food additives Polyurethane bags Flavors (natural and artificial) Paper BOPP Spices Variable Dehydrated vegetables Bag of Kraft paper Oleoresins and essential oils PET bottles Spice alternatives Polyurethane bags Marinades Carton boxes Coating systems Aluminum bags

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C) Installed Packaging Machinery The company indicated that specific details on their packaging equipment are considered confidential but provided general information on their packaging machinery base.

Current Machinery Used Brand Units Origin Average Age Specification Vertical packaging machine Neorton 9 US 6 90% Bag form fill and seal N/A 18 N/A 6 90% Portioning packaging machines N/A 2 US N/A 90% Filling dry/solid products N/A 6 Italy 8 90% Filling liquids machines N/A 9 N/A N/A 90% D) Last Purchases of Packaging Machinery This company’s last purchase of packaging machinery took place in 1999 when they invested US$1.4 million in a complete vertical line that forms, fills, and seals low-density polyethylene bags as well as BOPP aluminum foil.

Machinery Brand Country Cost (Approximately) Vertical packaging machine Neorton US US $1.3 million

E) Future Packaging Machinery Ordering Plans, 2002–2003 McCormick Pesa plans to concentrate all of its manufacturing in their main plant located in the Cartagena Industrial Park in the state of México. They expect this will make them more efficient and will free up resources for investing in new equipment to modernize their manufacturing and packing processes. This project, which will require physical expansion of the plant and the purchase of new equipment, is planned to begin in February 2002. For the near future, the company does not yet have a well-defined purchasing plan for new equipment but indicated that they will need to invest a significant amount of money in process and packaging machinery, which will include:

Machinery Form, fill, and seal bag/pouch / Vertical Transporters/ Conveyors Fillers (liquid and powders) Capping machinery Weighers

F) Purchasing Policies and Financial Arrangements McCormick Pesa uses a highly standardized equipment selection and purchasing process, which includes the identification of potential suppliers that are invited to visit their plant and to present proposals.

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The proposals are then evaluated by their engineering department and by management. Once equipment and a supplier are selected, the information is sent to corporate in the United States for final approval. Potential suppliers can be incorporated into the selection process by sending a letter indicating their interest and forwarding equipment information. The company usually purchases equipment with payment terms of 60 days, with a 40% down payment and a final payment once the equipment is in operation at their facility. G) Factors that Influence Purchasing Decisions

1. The equipment meets their exact production requirements. 2. The supplier can offer good technical support. 3. Brand’s reputation. 4. Equipment design. 5. Price.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers McCormick Pesa indicated they do not have a preference for machinery from any particular country. They have had more experience with US equipment, as it is most often recommended by their headquarters. The company has some corporate agreements with some machinery suppliers. The Mexican operation defines new equipment needs, makes an economic feasibility study of the proposed equipment, and sends the information to their headquarters, which is responsible for handling the purchase. The company purchases equipment directly from manufacturers. McCormick Pesa has a technical staff that can provide maintenance and repairs for their equipment. In case of a major repair, they contract the work with the local representative or directly with the equipment manufacturer. McCormick Pesa evaluation of packing machinery according to its country of origin: Origin Technology Flexibility Service Price United States Very Good Good Good Regular Spain Good Good Good Good Germany Very Good Good Good Regular Italy Good Good Good Regular France Very Good Good Good Regular

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I) Trade Show Attendance / Trade Publication Information McCormick Pesa receives information on many potential suppliers from their corporate offices in the United States. They attend trade shows like Expo Pack in México and IFT in Europe. Their current equipment suppliers also submit information on new equipment or technologies that they are developing. J) Specific Interest The company is interested in receiving information on complete vertical lines for packaging using BOPP paper and polyurethane as well as for for liquid and powder filling machines. If a piece of equipment interests them, they will help in sending this information to their US corporate office. K) Contact Information Company Name: McCormick Pesa, S.A. de C.V. Contact: Mario A. León Position: Purchasing Director Address: Av. 2 Lote 1-C Col. Parque Industrial Tultitlán 54918, Estado de México Telephone: (5255) 5888-1416 Fax: (5255) 5888-3862 E-mail: [email protected]

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Nabisco, S.A. de C.V. (Kraft Foods de México)

Industry: Food Sub Industry: Cookies, wheat flour, powdered

desserts (jellies, custard, etc), pasta Location: México City Size: (sales) N/A Purchasing potential: US $1.8 million Specific Business Opportunities:

Case forming machines, Tray forming machines. Furnaces.

A) Company Description Nabisco’s origins date back to 1898 when the National Biscut Company was founded in the United States. Operations in México began in 1945 when the company Nabisco-Famosa was established. Since that time the company has changed hands many times as it was part of the US company Purina and of the Mexican company Gamesa. Kraft Foods purchased the company in December 2000. The company sells a wide range of products in the Mexican market under various brands for each of their product segments. As for cookies, the company sells over 29 different products. It also sells pastas, pancake mixes, and various powdered gelatin-based products. B) Main Products Produced and How They Are Packaged

Product Brand Package Pasta Yemina Polypropylene bags Cookies Nabisco PET trays, metalized sheets,

polypropylene bags, and carton boxes. Wheat flour, pancakes, “churros” flour

Tres estrellas Carton box, polypropylene bags, bond paper

Jelly and custard powders Royal Microcorrugated polypropylene bags

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Current Machine ry Used Units Origin Average Age

Specification

Weighing, filling and closing machine/Envaflex.

3 México 15 85%

Horizontal filling machines/ Envaflex 3 México 15 85% Tape dispensing machines/ Devek 25 Various Mechanic coding machines/ Eurocodi 29 Electric coding machines/ Links 10 US 6–8 90% Bag form fill and seal machines/ Bartel 5 US 15–18 85% Carton form fill and seal machines 4 US 10 80% Press coder 2 US 5 90% Form weighing and sealing/ Envaflex 1 México 15 90% Carton form fill and seal machine 1 N/A Box form fill and seal machines/ Hesser 4 Germany 35 85% Polyethylene-metal roll forming machines/ Nexor

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Polyethylene-metal roll forming machines / Tebofarm

6 US 16 85%

Thermoforming 1 Italy 16 85% Multipack (for cookies) 5 Spain 7 90% Packaging pasta machine/ Triangle 5 US 15 90% Horizontal filling and sealing machine for pasta / Pavan

5 Italy 11 85%

D) Last Purchases of Packaging Machinery Nabisco has not acquired new machinery recently but has a yearly budget for equipment maintenance. The last purchase was 7 years ago, an investment of US $1.5 million. E) Future Packaging Machinery Ordering Plans Kraft Foods purchased the worldwide operations of Nabisco in December 2000. The company is still restructuring, but some needs have been defined for their operation in México. The company plans to purchase six case-forming machines and six tray-forming machines (for cookie trays) to replace existing machinery as well as new furnaces. F) Purchasing Policies and Financial Arrangements. The production department is responsible for defining their new equipment needs and for selecting potential equipment and suppliers. Equipment is selected considering its flexibility, ease of operation, quality, and ability to meet their sanitary requirements. The information is forwarded to the engineering department, which is responsible for conducting an economic feasibility study for the proposed purchase. Other departments get

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involved in the decision process as well, including maintenance, engineering, production, and quality control. Once a decision is reached, the information is sent to the corporate office for final approval. The company has a technical staff that provides maintenance to all their equipment. Spare parts are purchased from the equipment manufacturer, which should also be responsible for training this company’s maintenance crews. G) Factors That Influence Purchasing Decisions

1. Flexibility. 2. Sturdy construction. 3. Brand. 4. Technical support. 5. Price.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Nabisco indicated that they have a preference for European equipment, as they believe it is longer lasting than other options. They mentioned that as they do not purchase equipment regularly, they prefer equipment that will be operational for a long time. Origin Technology Flexibility Service Price United States Very Good Good Good Good Germany Very Good Good -- High Italy Good Good Good Good Spain Good Good -- Average I) Specific Interest Nabisco is very interested in receiving information on packaging machinery mostly for cookies and also for their flours and pasta products. J) Contact Information: Company Name: Kraft Foods de México–Nabisco Contact: Ing. Hector M. Sanchez Aguilar Position: Maintenance Manager Address: H. Congreso de la Union # 5840 Col. Tres Estrellas 07820, México City Telephone: (5255) 57 29 28 07 Fax: (5255) 57 29 28 81 E-mail: [email protected] Web page: www.nabisco.com.mx

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Nestlè México, S.A. de C.V.

Industry: Food and Beverages Sub Industry: Beverages, milk products, ice cream, prepared

dishes, cooking aids, pet care, chocolate, confectionery, biscuits

Location: México City Size: (sales) US $2 billion Purchasing Potential:

US $8 million for 2002


Powder filling machines, Tray packers / Kayat, Filling and capping machines for yogurts, ice-cream bar stick machine, Weighing systems, Metal detectors, Form, fill and seal (bag/pouch) horizontal and vertical among others.

A) Company Description This company is a subsidiary of Nestlè Switzerland. With a total workforce of approximately 224,541 people in some 479 factories worldwide, Nestlé is not only Switzerland’s largest industrial company, but it is also the world’s largest food company. Its products are available in nearly every country around the world. Nestlè began operations in México in 1950, with the construction of their first facility in México City for manufacturing soluble coffees and chocolates. It currently operates 13 manufacturing plants, where it produces products for the Mexican and export markets, including evaporated milk, chocolates, coffees, pet foods, and power bars. The Mexican operation exports into the United States, Central America, and the Caribbean. Nestlè’s global manufacturing policies have a direct impact on their operations in México. The company’s top objective over the past five years has been to improve manufacturing efficiency at all its plants. B) Main Products Produced and How They Are Packaged The strength of Nestlé’s brands has given the company an unparalleled global position across a wide range of product categories. Six worldwide corporate brands—Nestlé, Nescafé, Nestea, Maggi, Buitoni, and Friskies—contribute about 70% of the group's total sales, with the Nestlé brand by itself contributing 40%.

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A sample list of the company’s products includes:

Product Brand Package Soluble coffee Nescafé, Taster's Choice, Ricoré Glass jars, PP bags

and steel cans Roast & ground coffee Nespresso, Bonka Glass jars Water Nestlé Pure Life and Santa Maria PET bottles Other beverages (teas, chocolate powders, specialty milks, syrups)

Nestea, Nesquik, Milo, Carnation, Caro

Steel cans

Dairy products (shelf stable) Nestlé, Nido, Carnation, La Lechera, Gloria, Nestlé, Coffee-mate / (chilled): Nestlé, LC1, Svelty

Steel cans

Breakfast cereals Nestlé, Cheerios, Trix, Gold, Fibra Max, etc.

Polypropylene bag in carton box.

Performance nutrition PowerBar Aluminized bag Culinary products (bouillon, soups, seasonings, prepared dishes, canned food, pasta, sauces)

Maggi, Buitoni and Crosse & Blackwell

Glass jars and Polypropylene bag in carton box.

Ice cream cones and bars Nestlé, Frisco,Camy Sticks and plastic containers

Chocolate and confectionery Nestlé, Crunch, KitKat, Galak/ Milkybar, Smarties, Baci, After Eight, Baby Ruth, Butterfinger, etc.

Aluminum foil, plastic bags, and carton boxes.

Baby and infant foods Nestlé, Nestogen, Cérélac, Neslac, Nestum

Steel cans

Pet care Friskies, Alpo PP Bags C) Installed Packaging Machinery Because of the very large number of different packaging processes and machinery used by this company, we were able to identify just the most representative equipment used for the packaging processes at all their plants. Nestlè indicated that its installed packaging machinery is 60% European, 30% American, and the rest from countries such as Argentina, México, Japan, Korea, and others. The average operating capacity is 85%.

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Current Machinery Used Displacement filling machines Volumetric cup filling machines Form/fill/seal (bag/pouch) horizontal and vertical Level filling machines (powders) Heat sealing machines Weld sealing machines Screw capping machines Closing machines Labeling, coding, decorating, marking machines Inspection machines Carton form fill and seal machines Wrapping machines Case form, fill and seal machines Pallet forming, dismantling and securing machines Robotics Custom designed /Special machinery Can making Orienting systems Thermoform packaging Tape dispensing Multipackaging

D) Last Purchases of Packaging Machinery Nestlè México invested approximately US$5 million in the purchase of new machinery during 2001. These purchases were necessary to launch the new items in their ice-cream and dairy product lines. Other purchases replaced some labeling and coding machines. These most recent purchases have been motivated by the need to generate new packaging presentations.

Machinery Units Brand Country Cost (Approximately) Can making 2 N/A US US $700,000 Ice-cream stick machine 1 Serac France US $600,000 Bagging machine 2 Try Angle US US $300,000 Weighting machines 4 N/A Canada US $300,000 PP Bagging form machine 1 Eros Argentina US $200,000 Labeling machines 4 Fugi Film US US $50,000 Tetra Pack formers 2 N/A Italy US $1 million Laser code machines 8 N/A US Loaned

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E) Future Packaging Machinery Ordering Plans, 2002–2003 Nestlè de México has an estimated budget of US $6 million for packaging machinery for the year 2002. This investment will be used to modernize the current filling processes for coffees and powdered products like condensed powder milk. Other purchases will include a tray packer; filling and capping machines for yogurts; ice-cream packaging lines; weighing systems; metal detecting equipment; form, fill, and seal (bag/pouch) horizontal and vertical; among others.


Powder filling machines 2 T.B.D Modernization N/A Tray packers / Kayat 2 US Replacement US $350,000 Filling/capping machines for yogurts

1 T.B.D Expansion N/A

Ice cream stick machine 1 Serac France US $600,000 Weighing systems N/A T.B.D T.B.D T.B.D Metal detecting units T.B.D T.B.D T.B.D T.B.D Form, fill, and seal (bag/pouch) horizontal and vertical

T.B.D US T.B.D T.B.D

F) Purchasing Policies and Financial Arrangements Nestlé has a purchasing office in Glendale, California, which obtains financing and negotiates most machinery purchases for the group. This office consolidates purchases of various international plants and obtains preferential conditions and pricing. Additionally, Nestlé’s purchasing office in Switzerland has purchasing agreements with several packaging machinery manufacturers. When Nestlé México has a new packaging machinery need, it notifies its purchasing office in California. If agreements with this supplier already exist, they proceed with the purchase. When the proposed supplier does not have pre-existing agreements with Nestlè, the decision process is transferred to the Mexican operation. When Nesté México selects a machinery supplier, they evaluate at least three alternatives. Once the local operation selects a supplier, the purchasing office in California handles the purchasing negotiations. G) Factors that Influence Purchasing Decisions

1. Technology, efficiency, and production speed. 2. Quality and durability. 3. Delivery schedule. 4. Service and spare parts availability. 5. Cost.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company has some preference for suppliers of specific equipment, for example, Kayat for Tray Packing and Wrap Around Machines. Nestlé considers US filling machines to be particularly good for instant coffees and baby cereals, and British machines are considered the best for milk powders. The company considers European machinery to be more flexible than US equipment in many cases. The company also receives equipment recommendations from its headquarters in Switzerland or from other plants around the world. Some packaging machinery manufacturers develop special designs for Nestlé. Both the manufacturer and Nestlé patent these machines, and the manufacturer must request authorization from Nestlé Switzerland to sell the machine to third parties. Nestlé’s evaluation of packaging machinery by country of origin: Origin Technology Flexibility Service Price United States Average Average Good Good Germany Very Good Good Good Expensive Italy Very Good Good Good Average France Good Average Average Expensive Switzerland Very Good Good Good Expensive I) Trade Show Attendance / Trade Publication Information Nestlé attends most packaging machinery trade shows in the world. They consider the most important to be PackExpo in Chicago, Interpak and Metpack in Europe, and Expo Pack in México. The company receives information from potential suppliers and from other manufacturing facilities belonging to their group. They also subscribe to trade publications such as Packing Digest and Industria Alimenticia. When selecting a potential supplier, Nestlé uses PMMI’s directory, the Internet, and its own Intra-net. J) Specific Interest The Nestlé personnel feel that they are aware of most of the packaging machinery available from well-known manufacturers, so they are interested in receiving information of new developments only.

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K) Contact Information Company Name: Nestlé México, S.A. de C.V. Contact: Heinz J. Baeni H. Position: Deputy Director of the Packaging unit. Address: Av. Ejercito Nacional # 453 Col. Granada 11520 México D.F. Telephone: (5255) 5262-5052 Fax: (5255) 5262-5472 E-mail: [email protected] Web page: www.nestle.com

Organización La Corona, S.A. de C.V.

Industry: Food Sub Industry: Candies and Chocolates Location: México City (D.F.) Size: (sales) N/A (Over US$10 million) Purchasing Potential: US$ N/A Specific Business Opportunities:

Carton form, fill, and seal machines

A) Company Description This is a private Mexican company that has been in business for over 50 years. The company remains a family-owned business and is a well-known player in México’s chocolate market. Cocoas y Chocolates la Corona operates four manufacturing facilities and employs over 800 workers. Two of their four plants are located in México City, one in the state of México, and one in the state of Jalisco. The company’s production is sold in the interna l market, and some of its products are also exported principally to the US market. B) Main Products Produced and How They Are Packaged The company only manufactures chocolates and chocolate-based candies, which are sold under the La Corona brand. Their products are:

Product Brand Package Filled chocolate La Corona Wrapped, flow pack, and label. Solid chocolate La Corona Wrapped, flow pack, and label.


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The company’s installed base of packaging machinery at one of their manufacturing plants in México City serves as an example of the machines they have in all their facilities. The installed base at this plant includes the following equipment:


Specification

Vertical filling machines/ Envaflex 2 México 5 100% Vertical filling machine/ Triangle 1 US 5 100% Wrapping machines/ Sig CK 8 Switzerland 15 100% Wrapping machine/ Carle Montanari 3 Italy 5 100% Coding machines/ Enpack 6 US 2 100%

D) Last Purchase of Packaging Machinery The company is expecting delivery of their most recent purchase of packaging machinery, which took place in November 2001. The company provided no information on the cost of this investment, but it was acquired from the Mexican packaging machinery manufacturer Envaflex.

Machinery Brand Country Vertical filling and sealing machine Envaflex México

E) Future Packaging Machinery Ordering Plans, 2002–2003 Chocolates La Corona indicated they have no short-term plans for the purchase of new machinery. It is possible they will purchase new equipment in about 18 months, and this purchase may include carton form, fill, and seal machines to automate processes that are currently performed manually.


Carton form, fill, and seal machines

4 - Process automation -

F) Purchasing Policies and Financial Arrangements The company purchases equipment directly from the manufacturer. They select the equipment that best fits their production requirements and their budget. The company has no special preference for any equipment supplier but indicated a preference for European equipment. The company uses letters of credit drawn on Mexican banks for the purchase of new equipment due to its simplicity and cost. G) Factors that Influence Purchasing Decisions

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1. Price. 2. Technology. 3. Service. 4. Spare part availability.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company indicated that they have a prefe rence for European equipment but that they are open to purchasing from any supplier whose equipment satisfies their production requirements. They select their suppliers at ExpoPack and through information they receive; or in some cases they purchase used equipment advertised in a US publication called Union. This company evaluates suppliers according to their countries of origin as follows: Origin Technology Flexibility Service Price United States Good Poor Poor Very Good Italy Very Good Very Good Very Good Good Switzerland Very Good Very Good Very Good Very Good I) Specific Interest The company would like to receive information on carton form, fill, and seal machinery and on related equipment to help them automate the last parts of their packaging process. They are also interested in receiving information from suppliers specialized in machinery for candies and chocolates. J) Contact Information Company Name: Cocoas y Chocolates La Corona, S.A. de C.V. Contact: Mr. Mario Barrera Gardida Position: Planning and Projects manager Address: Nicolás Bravo # 16, Col. Magdalena Mixhuca, 15850, México, D.F. Telephone: (52-55) 5442-8896 Fax: (52-55) 5442-8887 E-mail: [email protected]

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Productos de Maiz, S.A. de C.V.

Industry: Food Sub Industry: Corn-based products Location: México City Size: (sales) US $600 million Purchasing potential: N/A Specific Business Opportunities:

Case packers, Carton form, fill, and seal machines

A) Company Description Productos de Maiz, S.A. de C.V. was established in 1930 to manufacture cornstarch-based food products. The Unilever group later purchased the company. Unilever and Bestfoods merged recently, so this company is still undergoing a restructuring process. It is currently manufacturing products under brands from both companies. Productos de Maiz, S.A. de C.V. has one plant in México City, where it manufactures various food products including additives, condiments, desserts, custards, soups, sauces, salad dressings, mayonnaise, mustard, chicken broth, cooking oils, corn starch, and soybean products. The company sells its products under various name brands including Hellmann’s, Knorr, Karo, and Maizena. B) Main Products Produced and How They Are Packaged

Product Brand Packing Powdered chicken broth Knorr Glass bottle / Aluminium foil, carton Mayonnaise Hellmann’s Glass and plastic bottle Mustard Hellmann’s Glass and plastic bottle Powders for custards Kremel Paper laminate, Carton Corn syrup Karo Glass and plastic bottle Atole Maizena Paper laminate Corn starch Maizena Carton Cooking oil Mazola Glass and plastic bottle Soups Knorr Paper laminate Sauces and “mole” Knorr Tetrabick Starch Niagara Aerosols Juices Tetrabrick

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C) Installed Packaging Machinery:

Current Machinery Used Origin Average Age

Specification

Depalletizer Italy 12 80% Air cleaning machine US 12 80% Filling machines US 12 80% Labeling machine Germany 12 80% Tray forming and closing machine Holland 12 80% Palletizer Italy 12 80% Pallet wrappers US 3 95% Filling machine for liquid products US 12 80% Capping machine US 25 90% Labeling machine US 12 80% Bottle handling equipment US 2 95% Cube forming machines (for chicken broth cubes)

Italy 5 to 20 75%

Form, fill, and seal machine US 15 95% Cap sorting machine México,

US 15 95%

Bottle level inspectors US 12 99% Box closing machine US 21 95% Carton machine “bag in box” Canada 5 to 10 80% Filling machine for corrugated board Canada,

Belgium 3 to 5 90%

Air cleaning machine US 3 90% Ink jet coder US 5 99% Horizontal filling machine US 20 80% Vertical filling machine Argentina 1 80% Vertical filling machine for zipped bag US 1 60% Case forming machine US 1 60% Case loaders for bags US 1 60% Box closing with glue machine US 1 60% Pouch packing machine Flow pak US 1 80%

D) Last Purchases of Packaging Machinery. During the year 2000, the company invested about US$7 million in packaging equipment, which was mostly purchased from US suppliers.

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The following is a partial list of the equipment that was purchased:

Machinery Country Vertical filling machine Argentina Vertical filling machine for zipped bag US Case forming machine US Case loader for bags US Box closing with glue US Envelope packing machine Flow Pak US

E) Future Packaging Machinery Ordering Plans, 2002–2003 As mentioned, the company is still going through the necessary adjustments of the merger between Unilever and Bestfoods. This, they indicated, makes it difficult to define specific upcoming purchases of packaging machinery. The company estimates that they will close some manufacturing facilities and that this will make used equipment available to be transferred to other facilities. In any case they will be needing additional packaging machinery including carton machines and case packers. F) Purchasing Policies and Financial Arrangements. It is still not clear how the merger will affect purchasing procedures. We have indicated that Unilever traditionally allows its individual operations to define their own equipment needs and later consult on those purchases with their corporate department called “Global Technology Center,” which operates two centers for Unilever, one in England and the other in the United States. These centers are constantly evaluating suppliers and equipment they could recommend to their manufacturing facilities worldwide. We have also mentioned that Unilever has a series of “worldwide” agreements with some suppliers that help them receive better pricing for machinery, spare parts, and service. G) Factors That Influence Purchasing Decisions.

1. Good previous working experience within the Unilever group. 2. Quality. 3. Price. 4. Adaptability. 5. Easily reconfigured to various process needs.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Origin Technology Flexibility Service Price United States Very Good Good Good Good Germany Very Good Average Average Average Italy Good Good Good Good Spain Good Average -- Very Good Canada Good Good Good Good I) Trade Show Attendance / Trade publication Information The company attends the Interpak Expo in Dusseldorf, Germany, and PMMI’s trade shows in México and Chicago. J) Specific Interest At this time, the company is focusing on solving the issues that have resulted from the merger process. They ask that information not be sent by suppliers until these issues are resolved. K) Contact Information: Company Name: Unilever de México, S.A. de C.V. Contact: Ing. Joaquín Macía Gómez Position: Engineering Director Address: Rio Consulado #721 Col. Santa Ma. Insurgentes México City Telephone: (5255) 52 37 10 07 Fax: (5255) 55 47 00 52

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Productos Gerber, S.A. de C.V.

Industry: Food Sub Industry: Baby food, cereals and juices. Location: Queretaro, Qro Size: (sales) US$N/A Purchasing potential: US$250,000 Specific Business Opportunities:

Thermo shrink packaging machine.

A) Company Description Productos Gerber, S.A. de C.V. is a baby foods company that is now part of the nutrition business unit of Novartis. This company manufactures a complete product line of foods for babies that includes fruits, vegetables, soups, meats, desserts, juices, and cereals. All of this company’s products are sold under the Gerber brand. B) Main Products Produced and How They Are Packaged

Product Brand Package Baby foods Gerber Glass jar / carton box Juices Gerber Glass jar / carton box Cereals Gerber Can or aluminium bag / carton box



Specification

Filling rotary machine Elmar 2 US 3 95% Filling rotary machine H&K 1 US 6 100% Vertical sterilization machines AllPax 12 US 7 100% Horizontal labeling machine Standard Knapp 5 US 10 75% Rotative labeling machine KRONES

Canmatic 1 Germany 3 90%

Wrap-around cartoner Standard Knapp 3 US 5 75% Ink jet coder IMAGE ML8 3 US 4 75% Stretch film wrapping machine MARKEM 1 US 1 100% Stretch film wrapping machine KAYAT 1 US 4 90% Cooling tunnel I&H / Fleetwood 2 US 7 75% Closing machine Continental-White

Cap 3 US 10 100%

Depalletizer Senry 2 US 10 80% X-ray inspection Ted Intraspect 2 US 8 75% Can inspection equipment TAP TONE 6 US N/A 90%

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D) Last Purchases of Packaging Machinery During the 1998–2000 period, the company invested US$700,000 in packaging machinery. Their last purchase took place in May of 2000. This last puechase included the following:

Machinery Brand Country Stretch film wrapping machine Standard Knapp US Rotative filler ELMAR US

E) Future Packaging Machinery Ordering Plans, 2002-2004 Gerber plans to purchase a rotative wrapping machine from Standard Knapp to replace an existing machine. The company estimates this equipment will cost approximately US$250,000. F) Purchasing Policies and Financial Arrangements Once the plant’s technical department has determined that there is a need for the purchase of new machinery, they produce an economic study that justifies the equipment purchase. This information is sent to their corporate office for approval. When the purchase has been approved, the company requests proposals from various potential suppliers and evaluates the different options based on price, brand recognition, service and support, and other factors. The purchasing decision process is a joint decision between the various departments that are responsible for the manufacturing process. The equipment is purchased directly from the manufacturer, and spare parts are purchased from the manufacturer or its local representative. G) Factors That Influence Purchasing Decisions

1. The equipment’s technical and operational characteristics. 2. Price. 3. Service and technical support. 4. Brand recognition. 5. Previous experience with the supplier; other client references.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company has no existing purchasing agreements with any packaging equipment supplier. Company personnel indicate that they do not have any special preference for any supplier. A previous positive experience with a particular brand is a plus for this supplier, but the purchasing decision is not limited to this variable.

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The company’s evaluation of packing machinery according to its country of origin: Origin Technology Flexibility Service Price United States Good Very Good Good Good Germany Very Good Good Fair Fair Italy Good Good Bad Fair Spain Very Good Good Good Good I) Trade Show Attendance / Trade publication Information: Gerber indicated that it attends Expopack México and PackExpo in Las Vegas and Chicago, the only shows they go to on a regular basis. The company also receives trade publications focused on the foods industry, processed foods industry, and manufacturing as well as PMMI’s directory. J) Specific Interests Productos Gerber is interested in receiving information on equipment for filling, control, and labeling of glass jars, cans, and aluminum bags as well as carton boxes. K) Contact Information: Company Name: Productos Gerber, S.A. de C.V. Contact: Ing. Alberto Flores Position: Project Manager Address: Epigmenio Gonzalez #59 Col. Industrial, 76150, Qureretaro, Qro. México Telephone: (52442) 211 83 00 Fax: (52442) 217 69 33 E-mail: [email protected] Web page: www.novartis.com and www.gerber.com

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Productos Lol Tun, S.A. de C.V.

Industry: Food Sub Industry: Sauces and condiments Location: México City Size: (sales) US $1.5 million Purchasing Potential:

US $150,000–$200,000


Liquids filling machine, Wrapping machine, Capping machine, Labeling machines, Code machine

A) Company Description Productos Lol Tun is a private Mexican company that was established in 1989. Their business is the production of hot pepper sauces called “salsas,” made from a special variety of peppers found in southeastern México called Habanero. The company has expanded their product lines to include other food products in addition to their successful hot pepper business. The company has six principal products, which are sold in the Mexican market and exported to Canada, Japan, Germany, and Italy. B) Main Products Produced and How They Are Packaged

Product Brand Package Habanero pepper sauce Lol Tun Glass bottle of 140 ml. Habanero pepper slices Lol Tun Glass bottle of 235 gr. Condiment (Achiote) Lol Tun Plastic bag, Corrugated carton box of 100 gr. Cherries Lol Tun Glass bottle of 304 gr. Olives Lol Tun Glass bottle of 250 gr. Capers Lol Tun Glass bottle of 80 gr.

C) Installed Packaging Machinery Lol Tun remains a small company so cost is a key factor when they decide on the purchase of new equipment. Because of this, they prefer Mexican suppliers, as their machines are less expensive than other options. However, they indicate that eventually they would like to purchase from international suppliers because they believe they offer better quality.

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Current Machinery Used Brand Units Origin Average Age Specification

Wrapping machine Camara 1 México 4 80% Filling machine Mapisa 1 México 8 80% Capping machine Mapisa 1 México 8 80% Plastic seal machine Kalish 1 Canada 6 90% Filling machine Macruz 1 México 10 90% Labeling machine Etitec 1 México 3 90% Code machine Dominos 1 US 4 80% Code machine Sanasi 1 US 4 80% D) Last Purchases of Packaging Machinery Their last purchase of packaging equipment was for a labeling machine, which was purchased from the local supplier Elitec. The investment was around US$10, 000.

Machinery Brand Country Cost (Approximately) Labelling machine Etitec México US $10,000

E) Future Packaging Machinery Ordering Plans, 2002–2003 Lol Tun has an ambitious investment program that consists of the construction of a new manufacturing facility with three times the production capacity of their existing plant. They expect this facility to be operational within two years, which will create a need to purchase new process and packaging equipment. They estimate that they will invest between US$150,000 and US$200,000 in packaging machinery for this facility. The purchases will include filling machines and equipment to automate their packaging of habanero slices, olives, capers, and cherries—a function that is currently performed manually. The company also has plans to introduce new products for larger product volumes. Following we present a list of the equipment the company estimates it will need for their new facility:

Machinery Units Origin Motive of Purchase Wrapping machine 1 T.B.D Expansion Filling machine 1 T.B.D Expansion Capping machine 1 T.B.D Expansion Plastic seal machine 1 T.B.D Expansion Filling machine 1 T.B.D Expansion Labeling machine 1 T.B.D Expansion Coding machine 1 T.B.D Expansion Coding machine 1 T.B.D Expansion

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F) Purchasing Policies and Financial Arrangements Lol Tun usually purchases its packaging machinery from local equipment suppliers. They have only purchased used foreign equipment, as in the case of their Kalish plastic seal machine. Lol Tun pays for its equipment in cash, usually a 50% down payment and the rest once the machine has been delivered. G) Factors that Influence Purchasing Decisions

1. The equipment meets their production needs. 2. Price. 3. Quality. 4. Technical support. 5. Easy, local purchse of spare parts.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Lol Tun indicated that they currently prefer Mexican equipment suppliers as their prices are low when compared to US or European suppliers. But the company also mentioned that Mexican equipment has created other significant costs: for adapting the machines to the company’s production volumes and for constant maintenance. The company is starting to discover that their most cost-effective solutions might come from foreign equipment suppliers. The company is satisfied with its Kalish machine but complained that it is difficult to get service and find spare parts in México. Lol Tun’s evaluation of packaging machinery according to its country of origin: Origin Technology Flexibility Service Price United States Very Good Good Regular Regular México Regular Regular Regular Good Germany Very Good Very Good Good Bad Canada Good Good Good Regular I) Trade Show Attendance / Trade Publication Information The company only attends one packaging machinery trade show—Expopack in México. They receive trade magazines such as the one published by the Mexican National Food Industry Chamber (CANAINCA).

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J) Specific Interest Lol Tun is interested in receiving information on packaging machinery that meets their production needs for a low-production volume. They will only consider those options that are the most affordable. The company is also interested in used or remanufactured equipment. K) Contact Information Company Name: Productos Lol Tun, S.A. de C.V. Contact: Ing. Felipe Arvizu G. Position: Production Director Address: Ricardo Flores Magón N° 486 D Col. Santa María la Rivera 06400, México D.F. Telephone: (52) 5541-7740 Fax: (52) 5541-2421 E-mail: [email protected]

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Ricolino, S.A. de C.V.

Industry: Food Sub Industry: Confectionery, candy, chocolates, chewing gum

and cajetas (burnt condensed goat’s milk) Location: México City (D.F.) Size: (sales) N/A Purchasing Potential: US$2.6 million Specific Business Opportunities:

Wrapping machines, Bagging machines, Net weighing machines, Carton form fill and seal machines, Labeling, Sealing, Coding, and Thermoforming machines, among others NEW PLANT

A) Company Description Ricolino is one of the largest candy and chocolate manufacturers in México. The company belongs to the large publicly traded, Mexican group called Grupo Industrial Bimbo, which is the largest manufacturer of industrialized bread products in México. Bimbo took a big step by opening the first Ricolino candy and chocolate plant in 1971. At that time it was called Barcel, a brand under which the lollipop "Paleta Payaso" appeared on the market in 1974. Currently Ricolino is one of the largest and better-recognized candy companies in México, while Barcel is the second largest manufacturer and distributor of snacks. At present, Ricolino has 7 plants and 2 distribution centers, which are:

Plant Location Productos Confitados Cholula, Puebla Ricolino México, D.F. Ricolino de Occidente San Luis Potosí, S.L.P. Park Lane Viena Vienna, Austria Park Lane Ostrava Ostrava, Czeck Rep. Productos de Leche Coronado San Luis Potosí, S.L.P. Productos de Leche Coronado Matehuala, S.L.P. Distribution Center US Distribution Center Germany

This company exports around 15%–20% of its production to the United States, Canada, South and Central America, and the Caribbean. The company also covers the European market through its plants in the Czech Republic and Vienna.

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B) Main Products Produced and How They Are Packaged

Product Brand Package Lollypop Paleta Payaso Aluminized bag Rice flakes covered with chocolate Kranki Aluminized bag Jelly covered with chocolate Bubulubu Aluminized bag Chewing Gums Rainbows Waxed paper Gummy bears Panditas Plastic bag Blackberry Moritas Plastic bag Rolled candy Pequitas Polyethylene tubes Cajetas (burnt condensed goat’s milk) Coronado Glass and PET bottles as well as

PVC containers C) Installed Packaging Machinery

Current Machinery Used

Brand Units Origin Average Age

Specification

Wrapping machines FMC 10 US 20–25 80% Wrapping machines Record /

Eurosigma 6 Italy 8–10 90%

Wrapping machines Kelpet 2 México 1 80% Wrapping machines Tecmac 10 México 8 80% Bagging machines Heyssen 12 US 8–10 80% Bagging machines Hishida 12 US 8–10 80% Bagging machines Woodman 60 US 8–10 80% Bagging machines Aquarius 6 Holland 3 90% Bagging machines Multipond 6 Germany 4 90% Net weighing machines Commander 60 US 8–10 80% Labeling machines Markem 76 US 4–10 90% Coding machines Domino 10 US 2–4 85% Carton form, fill, and seal machine

Pearson 1 US 2–4 90%

Thermoforming, gluing and carton form, fill, and seal line

Little David 12 US N/A 80%

Manual Sealing machines

Maquitec 12 México 8–10 80%

Palletizing machines IPM 3 US/México 8–10 80% All the manufacturing facilities of Ricolino operate 12 hours a day, and their machinery is working at 80%-90% capacity. Most of their installed machinery is from the United States as they’ve had good results with US equipment in the past. The remainder is from Europe. They seek out suppliers at the Expopack in México and Pack Expo in Chicago.

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According to company officials, European packaging machinery is becoming more popular in México as most manufacturers have established service offices and have spare parts available in the country. D) Last Purchase of Packaging Machinery Ricolino’s last purchase of packaging machinery took place in 2001, when they spent US $600,000 for the acquisition of 2 semiautomatic wrapping machines from Keplet, a Mexican company. Two other acquisitions were made in 1999, when the company invested US $2.8 million for 12 automatic bagging machines from Europe.

Machinery Brand Country Cost (Approximately) 2 Wrapping machines Kelpet México US $600,000 6 Bagging machine Aquarium Holland US $1.1 million 6 Bagging machine Multipond Germany US $1.7 million

E) Future Packaging Machinery Ordering Plans, 2002–2003 At present, Grupo Industial Bimbo and Ricolino are building a new facility in Guanajuato, expected completion during the first quarter of 2003. This project aims to increase Ricolino’s participation in the chewing gum and other candy markets in México and the Caribbean. The company plans to analyze proposals for process and packaging machinery during the first quarter of 2002 and to install the equipment in the last quarter of 2002. Ricolino has developed a budget of US $12 million to build and equip the entire facility; this company estimates that almost 20% of this budget will be designated to purchase new packaging machinery.

Machinery Origin Motive of Purchase Estimated Budget Wrapping Machines. Bagging Machines Carton form, fill, and seal machines Labeling equipment Sealing machines Coding machines Thermoforming machines Sealing machines (for aluminum foil)

T.B.D New Plant US $2.6 million

F) Purchasing Policies and Financial Arrangements Ricolino buys most of its equipment directly from the manufacturers. This company purchases spare parts from some distributors or representatives established in México as well as from a subsidiary company called Interrefacciones that is part of the same industrial group and provides maintenance for all of the group’s machinery.

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Ricolino also has its own specialized engineering staff in charge of the regular maintenance for each plant. When Ricolino purchases a new machine, they ask the supplier to train Ricolino’s and Interrefacciones’ technicians. If a major equipment problem occurs in one plant, the company asks the manufacturer to send specialized technicians to repair the machine. If the problem is repetitive and affects productivity, the company begins a replacement project. For the new plant in Guanajuato, Ricolino will request quotes from existing and a few new potential suppliers. Efficiency, price, delivery schedules, and payment terms will be key to the selection of suppliers. The final decision will be made at the corporate offices of Grupo Industrial Bimbo, following the recommendations of Ricolino’s engineering department. Companies interested in supplying packaging machinery for this large project should contact Ricolino first. Some companies may be asked to provide demonstrations to both Ricolino and Bimbo. Usually Ricolino purchases new equipment with its own resources. For the new plant in Guanajuato, they will use a combination of credit and funds from Grupo Industrial Bimbo and financing offered by the manufacturers. G) Factors that Influence Purchasing Decisions

1. Efficiency. 2. Technical support. 3. Capacity to scale production. 4. Cost. 5. Speed and volume of units packaged per hour.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Ricolino does not have any special agreements with any packaging machinery manufacturesr. They indicated that they are satisfied with Aquarium (Holland) and Woodman (US) for vertical bagging machines, due to their speed, solid construction, precision, and ease of use. Other preferences for machinery include FMC (US) and Record/ Eurosigma (Italy) for horizontal wrapping machines; they consider these machines to be flexible and to provide excellent service from the México representative. Ricolino’s evaluation of packing machinery according to its country of origin is as follows: Origin Technology Flexibility Service Price United States Very Good Very Good Very Good Regular Spain Good Good Regular Good Germany Very Good Very Good Very Good Regular Holland Very Good Very Good Very Good Regular Italy Good Good Good Regular

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I) Specific Interest Ricolino has a special interest in receiving information on manufacturers and advanced technologies for the chewing gum industry and any other information on equipment made especially for confectionery items, candy, chocolates, chewing gum, and cajetas (burnt condensed goat’s milk). J) Contact Information Company Name: Ricolino, S.A. de C.V. Contact: Ing. Ismael Peña Sánchez Position: Engineering Director Address: Calle 4 N° 320 A Col. Arenal 02980, México D.F. Telephone: (52) 5328-0400 Fax: (52) 5328-0403 E-mail: [email protected]

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Sabormex, S.A. de C.V.

Industry: Food, personal care, beverages Sub Industry: Canned beans, coffee, pasta, sports drinks,

powdered drink mix flavors, toasted tortillas, shampoo

Location: Puebla, Puebla Size: (sales) US $102 million Purchasing potential: US $10 million for 2002 Specific Business Opportunities:

Various machines for a complete plant modernization.

A) Company Description Sabormex is a privately held Mexican company established in 1964. At present they operate one plant located in Puebla, and their headquarters and distribution center is located in México City. The company makes seven different products in over 35 different versions. Their brands include La Sierra for canned beans, instant soups, and chilaquiles (tortillas soaked in hot pepper sauce); Legal for ground and soluble coffees; Buendia and Perk for refreshment-mix powders; Enerplex for Isotonic refreshments; and Magnaflex for shampoos. Sabormex exports primarily to the United States but also to El Salvador, Guatemala, Venezuela, Colombia, Panama, United Kingdom, Spain, and Germany. La Costeña acquired the company in late 2000 and the group has decided to upgrade the existing Sabormex plant to increase production and the company’s market share. B) Main Products Produced and How They Are Packaged:

Product Brand Package Beans La Sierra Cans Coffee Legal Plastic bags, cans and glass flask Sports beverage Enerplex PET bottle, glass bottle Flavored powders Buendia, Perk Metallic bags Shampoo Magnaflex PET bottle Soup La Sierra Styrofoam cups, metallic bags Chilaquiles La Sierra Plastic bags and cardboard box

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Specification

Tray erecting and filling machines / BREDA

3 Holland 5 80%

Tray stretch banding machine / Polipack-ARPAC, ADV (Douglas)

3 US 5 80%

Bag packing machinery / Triangle, Envaflex, Empacomatic, ENZO, SERPAC

35 US / México Argentina

Spain

8 80%

Can sealing machines / Angelus 5 US 12 80% Can filling machines / ELMAR 5 US 12 80% Tray wrapping machines / APV–Polipack 6 US 3 80% Pregummed label applicators / Newway 6 US 8 80% Pallet dismantling machines / Crown 2 US 10 80% Basket packing machines/STOCK 3 Germany 3 80% Cup filling machines / FEMC, Allsill 1 US 2 80% Conveying / SERV and some made by their own

32 México 5 80%

Bean cleaners / Cnippen–Mercator 3 US 10 80% Bean washing and rinsing machines / Olney

2 US 7 80%

Batch sterilizing machines / Jersa 2 México 5 80% Batch sterilizing machines / STOCK 8 Germany 5 80% Carton fill and seal machines / Econoconp New Way

2 US 15 10%

Triblock (rinsing, filling, capping) machine / BC

1 Italy 6 months 100%

Screw capping machines 4 US 10 90% Pallet dismantling and securing machines 2 US 7 100% Pallet wrappers (Lantech) 4 US 1 70% Labeling / TAXTA 1 Spain 6 months N/A Carton form, fill, & seal machine/ Samvi 1 Spain N/A N/A Labeling / B&H 1 US N/A N/A Pallet wrappers / Lantech 3 US N/A N/A Coding machines/ Marsh 1 N/A N/A Coding machines / Videojet 1 N/A N/A Tape dispensing machines / Little David 5 US N/A N/A Labeling machine/ AXXON 1 N/A N/A N/A Coffee roasting machine / Probat 1 N/A N/A N/A

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D) Last Purchases of Packaging Machinery Sabormex’s last purchase took place in October 2001. The following list shows their most recent acquisitions. They spent $1.1 million in 2001 and $1 million in 1999–2000.

Machinery Brand Country Triblock machine (rinsing, filling, & capping) BC Italy Labeling machine TAXTA Spain Carton form, fill, and seal machine Samovi Spain Labeling machine B&H US Pallet Wrappers Lantech Encintadora Little David US Labeling machine AXXON

E) Future Packaging Machinery Ordering Plans, 2002–2003 Sabormex recently approved the purchase of US$10 million in new machinery, mostly in packaging and palletizing machinery but also automation and general equipment to expand their canned bean line, La Sierra, which is facing growing demand. Among the most immediate purchases, Sabormex is considering the following:


Estimated Budget

Bag form, fill, and seal machines. 3 TBD Automation US $700,000 Carton form, fill, and seal machines 1 TBD Automation US $900,000 Pneumatic transporter for fats 1 TBD Material transport US $150,000 Palletizing unit with coder and code reader SAP R3 / STORK SCI

1 Holland Automation US $2,300,000

Continuous sterilizer 1 Holland Automation US $2,600,000 Peripherals: Conveyance cable, palletize-depalletize, storing tables/ STORK

1 Holland Automation US $800,000

Waste compactor 1 TBD Automation US $20,000 Coffee bag pouch, 200 & 400 gm 1 TBD Automation US $150,000 Flask cleaner 1 TBD Automation US $50,000 Capping machines for coffee flasks of 50, 100, and 200 gm

1 TBD Automation US $55,000

Can cleaning machines 1 TBD Automation US $17,000 Ink coding machines 1 TBD Automation US $10,000 Plastic bottle orienting machine 1 TBD Automation US $65,000 Detectors for bottles incorrectly capped or with low content.

1 TBD Automation US $25,000

Hot melt system / Nortson 1 US Automation US $9,000 Shampoo pouch, 900, 500, 250 ml 1 TBD Automation US $180,000

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F) Purchasing Policies and Financial Arrangements Sabormex takes into consideration two principal factors when developing their purchasing budgets for new equipment. The company is interested in improving and constantly updating their manufacturing process to remain a world-class manufacturer in its field. The company also constantly faces the need to expand their manufacturing capacity to satisfy the growing demand for its products. The company produces a list of the required equipment and attends trade shows to evaluate which particular machines and suppliers can satisfy their needs. In most cases they ask the supplier to arrange for a visit to see the equipment in operation at some facility. They regularly attend Expopack in México City, Las Vegas, and Chicago. Most of their closing machines are manufactured by Angelus. Sabormex is very satisfied with the performance and service they have received from this company and will continue purchasing this brand for their closing needs. When selecting equipment, they also consider the equipment recommendations they receive from their sister companies like La Costeña. The company gives the supplier a down payment and sets a payment schedule during the time before the delivery process. A final payment is made once the machine is operating at their facility. During the startup process for new machinery, the company expects the supplier to provide training to their maintenance staff. The training includes indications as to the correct operation of the machine and basic trouble shooting as well as how to replace the most commonly used spare parts. All major maintenance or service should be performed by the manufacturer. G) Factors That Influence Purchasing Decisions

1. Quality of the machinery. 2. Recommendations from other users of the proposed machinery. 3. Technical support. 4. Capacity and technology. 5. Price.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers When selecting new equipment Sabormex considers both North American and European suppliers. The company does not purchase Asian machinery as it considers that the materials used by these suppliers are of lesser quality than those of other machinery suppliers. The company said they are very satisfied with most of their current equipment.

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Sabormex´s evaluation of packing machinery according to its country of origin: Origin Technology Flexibility Service Price United States Very Good Good Very Good Good Spain Very Good Good Very Good Good Germany Very Good Very Good Good Very Good Italy Very Good Good Good Good I) Trade Show Attendance / Trade publication Information The trade shows they attend are primarily PMMI’s Expopack (México, Las Vegas, and Chicago). The company receives numerous equipment brochures from various suppliers and several trade publications that present information on new machinery. They indicate that they ignore these publications. J) Specific Interest Sabormex is interested in receiving information on packaging machinery for powders, drinks, foods, and cosmetics. K) Contact Information: Company Name: Sabormex, S.A. de C.V. Contact: Ing. Javier Segura Orive Position: Director of Manufacturing and Engineering Address: Calz. La Viga #1214 Col. Apatlaco 11570, México D.F. Telephone: (5255) 5448-2142 Fax: (5255) 5448-2100

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Sigma Alimentos, S.A. de C.V.

Industry: Food Sub Industry: Processed meats, yogurt,

cheese, and prepared meals Location: Monterrey, N.L. Size: (sales) Over US $720 million Purchasing Potential: Over US$1 million Specific Business Opportunities:

A) Company Description Sigma is the market leader in México in the production and distribution of processed meats, pre-cooked meals, and dairy products. Sigma Alimentos is a subsidiary of one of México’s largest industrial groups called Grupo Alfa. The company employs about 12,000 people and produced over 312,000 metric tons of processed food during year 2000. Sigma Alimentos is divided into different companies operating in the processed foods sector. The most important division is cold meats where they have a 60% market share in México. They have a dairy products division, which has a 20% share of the local market, followed by a pre-cooked meals company with a 10% share. The company has 10 plants for processed foods—7 for cold meats, 2 for dairy products, and 1 for pre-cooked meals. The company has 63 distribution centers throughout México. Sigma Alimentos exports meat products into the United States and other countries, including El Salvador and Guatemala. The company also has an exclusive distribution agreement to sell Oscar Mayer’s products in México. B) Main Products Produced and How They Are Packaged

Product Brand Package Sausages, hams, turkey ham, bacon, salami, cheese- or ketchup-stuffed franks, clown-face shaped bologna, mini hotdogs

FUD Vacuumed plastic, shrink thermoformed plastic, tripper tie

Prosciutto, Italian salami, pepper salami, Canadian loin, German leg of ham, spiced sausages (Chorizo), Frankfurt sausage, turkey products

San Rafael Vacuumed plastic, shrink thermoformed plastic, tripper tie.

Salami, ham, spiced sausages (Chorizo), sausages

Chimex Vacuumed plastic, shrink thermoformed plastic, tripper tie.

Salami, ham, bacon, spiced sausages (Chorizo), sausages

Viva Vacuumed plastic, shrink thermoformed plastic, tripper tie.

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Barcelona ham Iberomex Vacuumed plastic, shrink thermoformed plastic, tripper tie.

Hams San Antonio Vacuumed plastic, shrink thermoformed plastic

Sausages, bacon, hams (exclusive distribution in México)

Oscar Mayer Vacuumed plastic, shrink thermoformed plastic, tripper tie.

Hams, sausages, aged meats, salamis, other specialities

Tangamanga Vacuumed plastic, shrink thermoformed plastic, tripper tie.

Yogurt Yoplat, Yopli, Yopsi, Yop, Safari

Polyethylene containers, Tetra brick.

Cheese Chalet, La Villita

Shrink wrap

Mutton ( Barbacoa), spiced pork (Pibil), chicken in mole sauce, other typical treats such as Flautas, tamales, Dobladitas, etc.

El Cazo Mexicano

Plastic bags

Chicken nuggets, fish fingers, French fries, pizzas

Sugerencias del Chef

Plastic bags, carton boxes

Fried chicken, seasoned fried chicken, chicken wings, BBQ chicken breasts, chicken supremes, chicken and broccoli fettuccini, lasagna, mozzarella nuggets, and coconut, chocolate, banana, and lemon frozen pies

Banquet, Healthy Choice

Plastic bags, trays, carton boxes

Chicken nuggets, cheeseburger, pizza slices with vegetables, potatoes and dessert, as well as a dish for breakfast or lunch including waffle bars, syrup, potatoes, and dessert

Kid Cuisine Plastic trays, carton boxes

C) Installed Packaging Machinery This profile, obtained from the cold meats division, relates to its 7 plants and only represents the largest machinery.


Specification

Vacuum packaging/ Multivac 15 Germany 5 95% Thermoform packaging/ Horizontal/ Tiromat 15 Germany 5 95% Bag, form, fill, and seal/ Koch 15 Germany 5 85% Coding machines/ Video Jet 20 US 2 90%

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D) Last Purchase of Packaging Machinery This division’s last purchase of packing machinery took place in December 2001, when they invested US$1.4 million dollars to purchase two horizontal thermoform packing machines from the German supplier Tiromat.

Machinery Brand Country Cost

Thermoform packaging/ Horizontal Tiromat Germany US $1.4 million E) Future Packaging Machinery Ordering Plans, 2002–2003 Sigma Alimentos purchases equipment on a “manufacturing project” basis. Most purchases are related to production expansion in their various lines as a result of growing demand for their products. The cold meats division is developing a project to expand production in all of their manufacturing plants. This will entail the purchase of at least one new packaging line for each facility. It is likely that the equipment will be a combination of Tiromat and Multivac. They have not defined potential suppliers for other related equipment. The company is also planning the launch of a new product for which they will need additional packaging equipment from Case Ready. The company also has important purchasing plans for their dairy products division, which will also initiate production expansion program over the next three years. The programs also call for the renovation of existing equipment and automation of some processes.

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The processed foods division has also defined some equipment purchasing needs:


Estimated Budget

Processed Meats One new packaging line Case Ready with modified atmosphere (number can grow depending on product demand)

1 T.B.D. tentative ROSS,

Germany

New product line

US $350,000

Dairy Products Wrapping machine for multi-packaging with thermoformed polyethylene film

2 T.B.D. Expansion T.B.D.

Stretch label / Shrink label for polyethylene containers


Thermoform seal and plastic tray form for cheese products


Cheese filling 1 T.B.D. Expansion T.B.D. Automatic palletize 1 T.B.D. Expansion T.B.D. Cooling tunnel lines 2 T.B.D. Expansion T.B.D.

Prepared Meals Carton form, fill, and seal machine 1 T.B.D. Expansion T.B.D. Vacuumed packaging system/ Tiromat

1 Germany Expansion T.B.D.

Vacuumed packaging system/ Multivac

1 Germany Expansion T.B.D.

Product form 1 T.B.D. Expansion T.B.D. Pouch packaging/ Jaguar 1 USA Expansion T.B.D. Filling dry/ Solid products 1 T.B.D. Expansion T.B.D. Sealing machines 2 T.B.D. Expansion T.B.D. Coding machines 2 T.B.D. Expansion T.B.D.

F) Purchasing Policies and Financial Arrangements Sigma indicates they have a well-defined purchasing process. The company evaluates technical proposals from various potential suppliers, including proposed technology and servicing plan. Once the finalists are selected, the company purchases through a tender process. The company selects the supplier that presented the best technical proposal and offered better pricing. Sigma Alimentos requires that its investment budgets be approved by its parent company, Grupo Alfa. The parent company assigns internal resources or arranges for financing. The company also considers vendor-financing alternatives.

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1. Quality. 2. Cost. 3. Service. 4. Brand recognition. 5. Experience in the food business.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Sigma Alimentos has a strong preference for vacuum-packing equipment from two suppliers, Multivac and Tiromat. The company has a long term working relationship with both suppliers and is satisfied with the results including the service they are receiving in México, where these companies have dedicated technical staff to assist Sigma. As for other packaging machinery, the company does not have a special preference for any supplier as long as the proposed equipment meets their specific manufacturing requirements. The company is open to evaluating new equipment technologies for their particular manufacturing and packing applications. The company evaluated suppliers by country of origin as follows: Origin Technology Flexibility Service Price United States Very Good Good Very Good Very Good Germany Very Good Good Very Good Good Italy Good Good Good Good Japan Very Good Regular Regular Good I) Specific Interest One of the most important equipment purchases Sigma is considering is for Case Ready with modified atmosphere packing line. The company has gathered information from potential suppliers, but the tender process is expected in March, once their technical department indicates which technical proposals can satisfy their needs. The company is soliciting information on equipment for their dairy and processed foods divisions. The company’s objective is to make its production more efficient.

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J) Contact Information Company Name: Sigma Alimentos, S.A. de C.V. Contact: Mr. Santiago Sanpayo Position: Purchasing Manager for Imported Equipment and Supplies Address: Av. Vasconcelos #203 Ote. Col. Residencial San Agustin 66260, Garza García, N.L., México Telephone: (52-81) 8152-5100 Fax: (52-81) 8152-5174 E-mail: [email protected] Web page: www.sigma-alimentos.com Company Name: Sigma Alimentos, S.A. de C.V. Contact: Mr. Leonel Guajardo Position: Packaging Superintendent for the Processed Meat Products Div. Address: Av. J. Cantú #1320 Col. Buenos Aires 64800, Monterrey, N.L., México Telephone: (52-81) 8748-1000 Fax: (52-81) 8152-5126 E-mail: [email protected] Web page: www.sigma-alimentos.com Company Name: Sigma Alimentos Lácteos, S.A. de C.V. Contact: Mr. Daniel Chávez Position: Packaging Superintendent of Dairy Products Div. Address: Av. Gómez Morín #1111 Col. Carrizalejo 66254, Garza García, N.L., México Telephone: (52-81) 8748-9000 Fax: (52-81) 8748-9075 E-mail: [email protected] Web page: www.sigma-alimentos.com Company Name: Sigma Alimentos Congelados, S.A. de C.V. Contact: Mr. Carlos Merino Position: General Manager for the Prepared Meals Division Address: Ave. Industrial Alimenticia # 760 Col. Parque Industrial 67735, Linares, N.L., México Telephone: (52-821) 2126-099 Fax: (52-821) 2125-625 E-mail: [email protected] Web page: www.sigma-alimentos.com

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Sky Chefs, S.A. de C.V.

Industry: Food Sub Industry: Food preparation for the airline

industry. Location: México City Size: (sales) US $2 million Purchasing Potential:

US $80,000


Vacuum packaging machines and Volumetric filling machines

A) Company Description LSG Sky Chefs is the world’s largest in- flight catering alliance with combined revenues of US $3.5 billion. This company produces 427 million meals a year and serves over 260 airline customers from over 200 units worldwide. LSG Sky Chefs in México is a subsidiary of LSG International, meals for the air line industry in México. LSG Sky Chefs operates 8 industrial kitchens in México’s largest airports. All of this company’s meals are sold locally to the airline industry. B) Main Products Produced and How They Are Packaged

Product Package Breakfasts Aluminum tray (Vitafilm)/Thermo shrink plastic Lunches Aluminum tray (Vitafilm)/ Thermo shrink plastic Dinners Aluminum tray (Vitafilm)/ Thermo shrink plastic

C) Installed Packaging Machinery Because of the nature of the company’s business in México, its packing needs are not very sophisticated. The company also indicated that the nature of their business is changing and now they face sudden unexpected demand that they cannot meet. Because of this, they are interested in developing a high vacuum packing process to give their products a longer shelf life. This project is important for them, as they have lost market share to other local suppliers with a larger production capacity.

Current Machinery Used Brand Units Origin Average Age Specification Tableware washers Hobart 10 US 6 years 90% Thermoform wrapping machines Triangle 20 US 6 years 90%

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D) Last Purchases of Packaging Machinery The last purchase of machinery by this company took place in 1999, when they invested US$600,000 on a dishwashing system by US supplier Hobbart. In the same year they purchased 4 thermo shrink-wrapping machines they purchased from US supplier Try Angle.

Machinery Brand Country Cost (Approximately) Tableware washers Hobart US US $600,000 Thermoform wrapping machines Try Angle US US $18,000

E) Future Packaging Machinery Ordering Plans, 2002–2003 LSG Sky Chefs in México is interested in developing a process that will produce, pack, and store its food products to increase shelf life and be able to meet unexpected demand. The company has a US$80,000 budget to purchase two volumetric filling machines. They are interested in automating part of the process for placing food on the trays, a process that is now done manually. They are also interested in purchasing a high vacuum packing system as this will help increase the shelf life of their prepared foods.


Vacuum packaging machines 1 T.B.D. New project US $10,000 Volumetric filling machines 2 T.B.D. New project US $70,000 The recent reduction in air travel may put this project on hold for a few months. F) Purchasing Policies and Financial Arrangements The company purchases its equipment from the manufacturers but expects the suppliers to be able to offer maintenance and service locally. LSG Sky Chefs defines its equipment purchasing needs in México and selects potential suppliers. Once a supplier is selected the information is sent to their corporate offices for the purchase to be approved. The company requests that the suppliers provide 90 days credit for small purchases. For purchases in excess of US$200,000, they apply for a bank loan from a local institution like Bancomer or Banamex.

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1. Need satisfaction. 2. Ease of installation. 3. Ease of operation. 4. Price. 5. Brand’s reputation. 6. Technical support and spare part availability in México.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company has almost no packaging machinery. Their most important equipment is a dishwashing machine, for which they prefer the Hobart brand, who offers reliable product service in México. LSG Sky Chefs mentioned that their perception is that European packaging machinery is of a higher quality than other suppliers, but that prices for the equipment are high. I) Trade Show Attendance / Trade Publication Information LSG Sky Chef attends PackExpo in Chicago and ExpoPack in México City. They also attend food processing trade shows in Germany. The company receives trade publications for the food industry and noted that they have PMMI’s directory on CD ROM. J) Specific Interest LSG Sky Chefs is interested in receiving information on potential suppliers for high vacuum packing equipment as well as volumetric filling machines for solid foods and filling machines for sauces and purees. K) Contact Information Company Name: LSG Sky Chefs, S.A. de C.V. Contact: Ing. Víctor Burgoa Position: Customer Service Team Address: Francisco Sarabia S/N Aeropuerto Internacional Benito Juárez 15590, México D.F. Telephone: (5255) 5786-0116 Fax: (5255) 5785-6414 E-mail: [email protected] Web page: www.skychefs.com.mx

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Unifoods, S.A. de C.V.

Industry: Food and Beverages Sub Industry: Dairy products, cheeses, fruit

juices. Location: México, D.F. Size: (sales) N / A Purchasing Potential:

US $400,000


Carton form, fill, and seal machines.

A) Company Description This is a Mexican private company that has been in business for over 40 years. The company changed its name from PROLESA to Unifoods three years ago. The company manufactures dairy products including cheese, yogurts, and flavored milk drinks. The company also has a line of orange juice. Unifoods sells its products under the Chipilo and Bonafina names, which are very well positioned in the Mexican market. The company sells all its production in the Mexican market and imports powdered milk from Switzerland, which is one of their basic raw materials. Unifoods México has 200 employees and operates two manufacturing facilities in the México City area. B) Main Products Produced and How They Are Packaged As indicated the company sells dairy products under the Chipilo brand and orange juice under the Bonafina brand. The products they produce are the following:

Product Brand Package Orange juice Bonafina Plastic bottle, Purepack carton Cheese Chipilo Plastic wrapping Yogurts Chipilo Plastic bottles Milk Chipilo Purepack (carton) Cream Chipilo Glass bottles

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Specification

Packaging line for juices/ Purepack 3 US 10 100% Packaging line for yogurts / Cherry Burel

2 - 10 90%

Bottle filling, capping, and sealing / Hambar

3 US 12 100%

Bottling line/ Prepack 5 US 12 100% Labeling machines/ B&H 5 US 10 100% Coding machines/ Lins 2 - 5 100% Coding machines / Video Jet 3 US 5 100% Palletizing machines 2 US 2 100%

D) Last Purchases of Packaging Machinery Unifoods invested US$100,000 dollars on packaging machinery over the past three years. Their last purchase took place in January 1999 when they purchased two palletizing machines from a US manufacturer. E) Future Packaging Machinery Ordering Plans, 2002–2004 The company has developed a US$900,000 budget to purchase packaging machinery over the next three years. The company is still in the process of defining the equipment they will need. It has already been decided that they will purchase the following equipment:

Machinery Origin Motive of purchase Bottling line for carton containers Most likely US Increase production Bottling line for plastics -

F) Purchasing Policies and Financial Arrangements The purchasing process for new machinery begins with an evaluation of new equipment needs that is developed by the engineering department. These requirements are forwarded to the department’s technical area that analyzes equipment options. The company usually pays for equipment purchases by obtaining credit though banks. The payment schedule is negotiated on a case by case basis with the supplier.

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G) Factors that Influence Purchasing Decisions The company ranked the factors that affect their purchasing decisions as follows:

1. Service. 2. Technology. 3. Equipment quality. 4. Price.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company indicated they have usually worked with US suppliers as this equipment has satisfied their production requirements. The company is open to evaluating new suppliers from any region as long as the equipment meets their specific needs. The company evaluates packaging machinery based on country of origin as follows: Origin Technology Flexibility Service Price United States Good Good Good Good I) Trade Show Attendance / Trade Publication Information The representatives from this company attend Expopack every year. The company receives the local trade publication El Reportero Industrial and also information from potential suppliers. J) Specific Interest The company is interested in receiving information from potential suppliers of bottling lines in general as well as information on packaging machinery to package cheese. K) Contact Information Company Name: Unifoods, S.A. de C.V. Contact: Mr. Fernando Guzmán García Position: Coordinator for Engineering Projects Address: Poniente 122 #497 Col. Industrial Vallejo 02300, México, D.F. Telephone: (52-55) 5333-1200 ext. 2134 Fax: (52-55) 5333-1200 ext. 2165

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UNILEVER Margarinas De México, S.A. de C.V.

Industry: Food Sub Industry: Margarines, sauces, and dressings Location: Tultitlan, Estado de México Size: (sales) N/A Purchasing potential: US $300,000 Specific Business Opportunities:

Case packers

A) Company Description Unilever–Bestfoods de México, S.A. de C.V. started its operations in México under the name of Anderson Clayton & Co. in the 1950s. Unilever purchased this company in 1986. At present, Unilever de México comprises the following divisions: foods, personal care, ice creams, and products for the food services industry. Unilever is one of the most important suppliers of food products in México. They have a strong understanding of the local market and their product offerings react to continuous changes in demand. Their manufacturing plant in Tultitlan in the state of México was opened in 1974 and currently has 146,000 square meters. This facility houses the manufacture of cooking oils, margarine, and lard. At this site, they also manufacture a line of food products under the Clemente Jacques brand. This plant produces 140,000 tons of cooking oil per year. B) Main Products Produced and How They Are Packaged

Product Brand Package Cooking oil Capullo Plastic bottle Lard Inca Plastic bag Margarine Primavera

Iberia PVC contained Waxed paper and carton box

Ketchup Clemente Jacques Glass bottle, Plastic bottle (squeezable) Vinegar Clemente Jacques Plastic bottle

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C) Installed Packaging Machinery The machinery base installed at the Tultitlan facility includes the following:

Current Machinery Used Units Brand Origin Average Age

Specification

Filling and sealing for plastic container of margarine

1 Autoprod US 2 100%

Fill and cap machine for cooking oil 2 Ausere Spain 10 80% Labeling machine 2 Krones Germany 6 80% Filling machine for semi-viscous 1 Bosch Germany 8 80% Capping machine 1 Ghery Italy 8 70% Cooling machine 1 FMC Italy 8 100% Labeling machine 1 Krones Germany 8 80% D) Future Packaging Machinery Ordering Plans, 2002–2003 For year 2002 the company has plans to purchase two case packers from a Dutch supplier. The estimated investment for this purchase is US$300,000. This company purchases an average of US$1 million in machinery per year. E) Purchasing Policies and Financial Arrangements The local operation defines its equipment needs and consults on potential equipment and suppliers with a corporate department called Global Technology Center, which operates two centers for Unilever, one in England and the other in the United States. These centers are constantly evaluating suppliers and equipment they could recommend to their manufacturing facilities worldwide. Once recommendations are received from the Global Technology Centers, a final decision is reached by the facility in México. They mentioned that Unilever has a series of worldwide agreements with some suppliers that help them receive better pricing for machine ry, spare parts, and service. F) Factors That Influence Purchasing Decisions

1. Good previous working experience with Unilever. 2. Equipment quality.

G) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The people from the Tultitlan facility mentioned that they have a preference for European equipment, especially from Italy and Germany, finding it to be very sturdy and long lasting.

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They particularly like the machinery from Bosch in Germany because of its precision and ease of cleaning. H) Trade Show Attendance / Trade publication Information: The company attends international trade shows like Interpak in Germany and local shows, including Expopack in México. I) Specific Interests The company is interested in receiving information from potential suppliers that are already approved by their headquarters in Holland. They are especially interested in receiving information on case packers. J) Contact Information Company Name: Unilever de México, S.A. de C.V. Contact: Ing. Donaciano Gonzalez Position: Plant Manager Address: Av. Tepalcapa # 2 Cuautitlan Izcali Estado de México Telephone: (5255) 58 99 03 00 Ext. 1509 Fax: (5255) 58 99 05 15 E-mail: [email protected] Web page: www.unilever.com.mx

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IV. The Beverage Industry 4.1. Industry Overview México is the largest consumer of refreshment beverages per capita in the world with an estimated average annual consumption of 155 liters per capita. México consumes 43% of all of Coca-Cola’s production in Latin America, followed by Brazil with 23%. Coca-Cola bottlers, who estimate their share of the soft drink market at more than 50%, followed by Pepsi with close to 30%, dominate the Mexican refreshment industry. Other important refreshment bottlers in México include Cadbury, which produces the brand Peñafiel, Jugos del Valle, which makes juice-based beverages, and Pascual Boing. Other important players in this market are bottled water producers like Danone’s Bonafont, Nestlè’s Santa María, Pepsi’s Electropura, and the recent entry in this niche of Coca-Cola with Ciel. The beverages market has registered continuous growth since the 1995 economic recession, and forecasts are positive for the next two years. México’s refreshment industry continues the changeover from returnable to nonreturnable containers. This switch requires bottlers to change their current machinery to new or adapted machines. According to the National Association of Refreshments and Carbonated Water Producers (ANPRAC), PET and plastics have surpassed glass containers. Currently, 65% of carbonated drinks are packaged in plastics. ANPRAC predicts that glass containers will completely disappear from the Mexican carbonated drinks market before 2010. ANPRAC states that, in México approximately US$1.6 billion is invested in bottling equipment for refreshments, and the bottlers invest on average US$175 million in bottling and packaging equipment per year. The Mexican refreshments market has also seen important consolidation in the last few years. One of the most traditional local soft drinks companies, Mundet, was recently purchased by the giant FEMSA, the largest Coca-Cola bottler in the country. Mundet’s assets were not included in the transaction. It is unknown if the brand was purchased to finally be “put to rest,” or if FEMSA will generate competition between its apple soft drink brands Manzana Lift and Mundet. Beer The second largest beverage market in México is beer. In financial terms, the Mexican beer market reached US$4,120 million in 2000 and for 2001 it is expected to have grown by 4%. For 2000, domestic sales of beer of Grupo Modelo accounted for US$2,159 million representing a 54.2 percent of the total value, FEMSA's domestic sales accounted for approximately US$1,961 million with a 44.7 share, while imported beers accounted for US$30.2 million, which represents only 1.1%. Measured in per capita consumption, the Mexican population (legal drinking age) consumes 50 liters per year.

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By 1985 a long process of consolidation in this industry concluded with the emergence of two dominant companies: Grupo Modelo S.A. de C.V. and FEMSA Cerveza, which control 54.2% and 45.1% of the market respectively. Imported beers represent a small fraction of this market with only a 0.7% share. Grupo Modelo’s main brands are Corona, Modelo, Victoria, and Pacifico. Control of this company has remained in local hands despite the growing importance of the Anheuser-Bush Companies, Inc., which by late 1998 owned a 50.2% stake in the company. Anheuser-Bush has indicated no interest in managing the company. The Corona brand is the single most important brand in México accounting for 32.2% of the domestic beer market in 1998, and representing 58.7% of total sales for Modelo. It is important to note that Corona has surpassed Heineken as the number one imported beer in the United States. The other company, FEMSA, operates six different breweries in México, with the most important being Cuauhtemoc in northern México and Moctezuma breweries in central and southern México. FEMSA produces and distributes 15 different brands, the most important of which are Tecate, Carta Blanca, Superior, Sol, and XX (Dos Equis). These five brands, which are distributed nationally, accounted for approximately 97% of FEMSA’s domestic shipments and 44% of the total domestic beer shipments during 1998. Tecate, Carta Blanca, and Superior are the second, third, and fourth most popular brands in México respectively. 1999 represented a record volume year for the Mexican beer industry. Production reached approximately 56 million hectoliters. This number represented a 5.9% increase in volume over 1997. For the period 1988–1999, this industry has sustained an average compound annual growth of 4.3% for domestic shipments and 4.9% for total shipments. The most popular container in the Mexican beer market is the returnable bottle, which accounted for approximately 67% of domestic beer shipments in 1999, excluding kegs.

Beer Shares by Presentation

Returnable. Bottle67%

Non Returnable

Bottle16%

Can16%

Barrel1%

Source: AMEE (Mexican Association of Packaging)

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Experts in the sector estimate that the popularity of the returnable bottle is attributable to its lower price to the consumer. While returnable bottles generally cost approximately twice as much to produce as nonreturnable bottles, returnable bottles may be reused as many as 30 times before being recycled. Therefore, beer producers are able to charge lower prices for beer in returnable bottles. Other Beverages In this group we include all other beverage products: water, juices, alcoholic beverages (Tequila, brandy, rum, etc.), and still others. These subindustries combined are estimated to represent over US$8.5 billion in sales per year. México has over 150 Tequila manufacturers located in the state of Jalisco. Over the past 10 years, Tequila has evolved from being a local, low-quality liquor to an international and well-recognized high-quality alcoholic beverage. This transition of the industry has resulted in large investment flows destined to production and bottling equipment. Another subindustry that has registered large growth over the past 10 years is the bottled water industry. Ten years ago, it was difficult to obtain bottled water in the Mexican market because most brands were imported and their prices were higher than refreshment prices. In the last decade, over 100 brands of bottled water have appeared in the Mexican market. Large companies such as Danone and Cadbury have also started to produce bottled water, and their brands are well positioned in the Mexican market. 4.2. Ranking of Companies by Size The Mexican beverage sector is formed by 2,737 companies, which employ over 120,000 people. The breakdown by size is as follows:

Type Employees No. of Companies %

MICRO 0 to 30 2,297 84% SMALL 31 to 100 183 7% MEDIUM 101 to 500 164 6% LARGE 501+ 93 3% Total 2,737 100.00% Source: SECOFI- SIEM

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4.3. Key Players Top Beverage Producers in México (Figures in millions of US dollars)

Company Name Predominant

Business Sales 2000

Fixed Assets 2000

Grupo Modelo Beer 3,188 4,924 Femsa Cerveza Beer 2,004 2,308 Coca-Cola FEMSA Coca-Cola, water 1,803 1,388 Cervecería Cuauhtemoc Moctezuma Beer 1,401 1,465 Panamco México Sodas 1,041 783 Pepsi–GEMEX Pepsi Cola, water 1,038 1,171 Grupo Continental Carbonated beverages 981 850 Embotelladora Argos Carbonated beverages 511 433 Jugos Del Valle Juices 321 370 Casa Cuervo Tequila 305 311 Grupo Embotelladora Unidas Carbonated beverages 243 216 Embotelladora La Favorita Carbonated beverages 233 88 Industrias Envasadoras de Queretaro Carbonated beverages 225 64 Embotelladora Del Valle de Anahuac Carbonated beverages 196 122

Source: Expansion Magazine–Top 500 Mexican Companies. Figures in dollars using exchange rate of 9.2 MX pesos per US$1.0

4.4. Summary of Interviewed Companies Eight beverage companies were interviewed for this report of which two have sales of over US$1 billion, one has sales of US$700 million, three have revenues of between US$500 million and US$100 million, and one is a small company with revenues of US$ 15 million. These eight companies have combined purchasing potential for packaging machinery for 2002 and 2003 of US$23 million. Of the installed base of packaging machinery, the United States has the largest share with 37%, Italy has the second largest installed base with 31%, and Germany holds 9%. Installed packaging machines have an average age of 9 years, and their average utilization is 90%. Overall automation is very high in all companies except for the last part of the packaging process, which is not highly automated in medium- and small-sized companies. Beverage companies interviewed mentioned local service and quality of the equipment as their most important purchasing decision factors. Previous experience with brand and brand reputation were also important factors considered when selecting packaging machinery suppliers.

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Installed packaging machinery shares by Country

37%

31%

15%

6%5% 1% 5%

US

Italy

Germany

Sweden

Mexico

Spain

Other

Source: HDC with data of Interviewed Companies.

The following list includes some of the packaging machinery planned for purchase in the following months among the eight interviewed companies:

Machinery Units CompanyFilling liquids/ Gasti 1 AlpuraUltra pasteurizing Tetra Laval 1 AlpuraFilling liquids/ Tetra Brick 1 AlpuraThermo shrink sleeve machine 1 BacardiCleaning machine 1 BacardiFilling machine 1 BacardiCapping machine 1 BacardiLabeling machine 1 BacardiCartooning machine 1 BacardiBottling Line for Water 1 Derivados de FrutaPET recycling machine 1 Derivados de FrutaCartooning machine 1 Derivados de FrutaPacking machine / Kisters 1 FRUGOSAPacking machine for tetra wedge 4 FRUGOSACan filling line 1 FRUGOSAPlastic bottle filling line 2 FRUGOSACoders / Domino 6 FRUGOSAFilling, closing and packing system /Combiblock 1 Jugos del ValleFilling machine 1 Jugos del ValleTray forming and packing 1 Jugos del ValleCoding machine 1 Jugos del VallePalletiz machine 1 Jugos del VallePasteurizing machine 1 Jugos del ValleBox form and seal machines/ RA Pearson 5 Grupo ModeloBox form fill and seal machines for 12 pack presentations 6 Grupo ModeloEvaporating Unit 1 Parmalat de MéxicoNew lines for packaging cans 5 Parmalat de MéxicoFilling machines for Glass. 2 Pascual BoingAir cleaning machines. 2 Pascual Boing

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Alpura

Ganaderos Productores de Leche Pura, S.A. de C.V.

Industry: Beverages Sub Industry: Milk, dairy products, desserts,

juices, bottled water. Location: Cuautitlán, state of México Size: (sales) US$700 million Purchasing potential: US$2.1 million Specific Business Opportunities:

Filling machine for liquids, Ultra pasteurizing system

A) Company Description This is a private Mexican company that was established in 1973. At present it is one of the undisputed leaders in México’s milk and dairy products industries. Alpura operates four facilities. Two process milk and dairy products, one processes fruit juices, and the last is a plastic molding and injection facility where they produce containers for their products. Most of the company’s products are sold under the Alpura brand, and most of the production is sold in the Mexican market. The company does export some fruit and dairy products, but exports remain a marginal business for the company. The company also sells some products under the Lacel and Fortileche brands. B) Main Products Produced and How They Are Packaged:

Product Package Ultra pasteurized milk Tetra brick Pasteurized milk Tetrarex Cream Plastic cup and plastic container Yogurt Plastic cup and plastic container Deserts Plastic cup Powdered milk Tin containers

Flexible container Cheese Flexible container

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Specification

Filling liquids/ Brick 24 Sweden 6 90% Filling liquids/ Rex 3 Sweden 6 90% Filling liquids/ Gasti 8 Germany 10 70% Filling liquids/ Federal 1 US 10 90% Filling liquids/ Angelus 2 US 12 75% Labeling machine / CCL Label 1 US 5 Labeling machine / D&H 1 US 10

D) Last Purchases of Packaging Machinery The company’s recent equipment purchasing budgets were US$1 million for 1998, US$1.2 million for 1999, and US$3 million for 2000. Their last purchase of packaging machinery took place in September of 2001, when they purchased:

Machinery Brand Country Filling liquids/ Brick Tetra Pack Sweden

E) Future Packaging Machinery Ordering Plans, 2002–2003 The company’s future equipment purchasing budgets are estimated to be US$1 million for 2002, US$1 million for 2003, and US$1.5 million for 2004. The company is considering the purchase of aseptic Tetra brick filling machines in addition to the following equipment:


Estimated Budget

Filling liquids/ Gasti 1 Germany Production Expansion

US$500,000

Ultra pasteurizing / Tetra Laval 1 Sweden Production Expansion

US$600,000

Filling liquids / Tetra Brick 1 Sweden Production Expansion

US$1 million

F) Purchasing Policies and Financial Arrangements Alpura develops an annual budget for the purchase of new machinery, which is based on forecasts of expected growth in the demand for their products and the additional capacity that will be required to satisfy such demand. As the company tries to anticipate demand, one of the important factors for selecting a supplier is machinery delivery times.

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It is company policy to standardize their equipment to help simplify their operations, ensure good spare part availability, and derive better service from their suppliers. The company generally purchases equipment directly from manufacturers and only rarely from local representatives. Alpura requires new suppliers to have adequate technology, to manufacture their own equipment, and to have the capacity to provide local technical support and assistance. It is also important for the company to have a good reputation in the Mexican market. The company purchases equipment with its own cash flow, rarely on credit. The company has an existing agreement with Tetra Pack for the purchase of equipment and packing materials. G) Factors That Influence Purchasing Decisions

1. Knowledge and experience in their specific packaging applications. 2. Technical support. 3. Technology. 4. Equipment’s reliability. 5. Price.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Alpura prefers suppliers with whom they have worked in the past, as this advances their objective of standardizing their equipment. Further, they have had good experience with existing equipment, adequate spare part availability, and good local service. New suppliers should have a recommendation from other beverage industry manufacturers or from an expert in machinery for dairy products. Company personnel have noted a growing trend for the use of plastic, PET, and poly-carbonate in packaging dairy industry products and say that most of this packaging equipment comes from Europe. They are interested in receiving information on North American suppliers that can offer this type of packaging machines. Alpura works closely with Tetra Pack and is satisfied with its technology, service, and technical support. They also use Gasti equipment for its precision, construction, and reliability but indicate that it is expensive and spare parts are difficult to obtain. Origin Technology Flexibility Service Price United States Bad Bad Bad Expensive Germany Good Bad Not good Expensive Italy Bad Bad Not good Average Sweden Good Not good Good Average

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The company’s internal staff provides maintenance to all their machines; this staff is trained by the equipment supplier. If a machine requires major maintenance or repairs, they contract the service with the equipment manufacturer. Most spare parts are purchased from the equipment manufacturer or from spare part manufacturers in the local market. I) Trade Show Attendance / Trade publication Information: Alpura personnel attend packaging industry trade shows, including Expopack and Interpak. The company subscribes to trade publications and receives information on equipment from interested suppliers. J) Specific Interests The company is interested in receiving information on packaging machinery for the dairy industry. K) Contact Information: Company Name: Ganaderos Productores de Leche Pura S.A. de C.V. Contact: Carlos A. Acosta Ariza Position: Engineering Director Address: Km. 37.4 Autopista México-Queretaro Cuautitlan Izcalli 54730, México D.F. Telephone: (5255) 5899-2035 Fax: (5255) 5873-0083 E-mail: [email protected] Web page: www.alpura.com

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BACARDI y CIA., S.A. de C.V.

Industry: Beverages Sub Industry: Rum, Alcoholic Beverages Location: México City Size: (sales) US$N/A Purchasing potential: US$3 million Specific Business Opportunities:

Packaging machinery for a new line: Labeling, plastic blowing, filling liquids, and Capping machines.

A) Company Description: Bacardi and Company was originally established in Cuba in 1862. During the 1930s the company launched an international expansion, which included the opening of a bottling facility in México City. The existence of manufacturing assets outside of Cuba allowed the company to survive after the communists seized its property in 1960. These assets included facilities in Puerto Rico, México, and Brazil. The company experienced tremendous growth during the 1970s and its success has continued, being currently recognized as one of the world’s top 10 international brand names. In México, the company owns several distilleries and one bottling plant located in México City, which is totally automated. The company also has its Mexican headquarters at this facility. The company has 250 workers at their bottling plant and 150 at their headquarters. B) Main Products Produced and How They Are Packaged:

Product Brand Package Rum Bacardi Glass bottles, plastic caps, labels. Tequila Camino Real Glass bottles, plastic caps, labels

and artisan Mexican hat and serape

The company sells its rum and tequila products in glass bottles, which are labeled and packed into carton boxes.

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Automatic depalletizing A-B-C Packaging Machine Corp

4 US 5

Automatic depalletizing OCME 1 Italy 3 Procomac 1 Italy 3 Horix AB 1 US/Italy 4

KRONES, Inc 2 Germany 1 GAI 1 Italy 7

Rinsing machines:

US Bottler 4 US 6 Air cleaning machine US Bottler 5 US 7

Horix 3 US/Italy 16 KRONES 1 Germany 1 Horix AB 2 US/Italy 4

Filling machine

Zalkin 7 France 3 Capen 1 US 13 Alkoa 1 US 25 Arol 1 Italy 4

Closing Machine (Caps)

KRONES 6 Germany 5 JB 1 US 5

GAI 1 Italy 12 Cold glue labeling machine

Hoppmann 7 US 3 Labeling machines Videojet 7 US 5 Ink code printers Videojet 8 US 5 Ink jet printers OCME 7 Italy 7 Wraparound case packing machine Akron 2 US 11

Meyer 1 US 14 Drop packing machine OCME 7 Italy

Automatic palletizing Foxjet 4 US 6 Cartoon coding machine Marsh 4 US 1

Bacardi’s packaging line operates with excellent efficiency. They operate a 600-meter-long chain conveyor line and 90 packing machines. D) Last Purchases of Packaging Machinery In the period 2000–2001 Barcardi spent US$3.6 million on packaging machinery. Their last major purchase took place in July 2000, when they acquired a depalletizing transporter from Krones.

Machinery Brand Country Depalletize transporter Krones Germany

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E) Future Packaging Machinery Ordering Plans, 2002–2004 Bacardi is in the process of expanding their rum-based “coolers” line called Breezers. For this product they plan to install a new line, which they estimate will cost about US$3 million. The most important component in this line will be a thermo-shrink sleeve machine, at an estimated cost of US$450,000, which they intend to purchase from a US supplier. The rest of the budget will be used for the remainder of the line, which will incorporate a cleaning machine and filling, capping, labeling, and carton form, fill, and seal machines. F) Purchasing Policies and Financial Arrangements Bacardi’s worldwide headquarters in Monte Carlo gets involved in equipment purchasing decisions as they have some worldwide agreements with equipment suppliers, but the final purchasing decision is reached in México. The company is open to purchasing equipment from new suppliers but will compare the proposed equipment with that of existing suppliers. The company evaluates new suppliers by verifying their existing client base and their sales penetration into major manufacturers. Once a purchasing decision has been reached, the Monte Carlo headquarters negotiates the price and payment terms with the suppliers. The company usually gives a 60% down payment on equipment, and final payment is made once the equipment is in operation at their facility. As for machinery from US or German suppliers, purchases are usually made directly from the equipment manufacturer. When the company purchases new equipment, the supplier is responsible for installing the machine and providing training to Bacardi’s employees. The training process for Bacardi’s technical staff usually lasts between one and two months. This staff will be responsible for equipment maintenance and will also change some spare parts. The company has had good results with custom manufacturing some spare parts in México. This has given the company savings of up to 70% on some components. G) Factors That Influence Purchasing Decisions

1. Quality of the equipment. 2. Technology. 3. Reliability. 4. Service and technical support. 5. Price.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Bacardi indicated a preference for European machinery suppliers for most of its processes, as they believe that European equipment has better quality and superior technology. The company indicated that some of their biggest problems include finding adequate service for major maintenance and equipment repair. They also noted that the operation of European equipment is difficult in México because of different equipment voltages; problems include PLC, drives, and power sources. They indicate that the major strength for US equipment is related to voltage, as their power specifications are closer to the power supply available in México. México has 127 volts ±10 % and in the United States it is 110 volts ±10%. I) Trade Show Attendance / Trade publication Information: Bacardi personnel attend the Expopac trade show in México every year and trade shows in the United States, Germany, and Italy. They subscribe to trade publications like Packaging World and Control Engineering; they also receive information from various equipment manufacturers. J) Specific Interests Bacardi is interested in receiving information in general on the production and packaging of alcoholic beverages. The company has a special interest in a thermo-shrink labeling machine. K) Contact Information: Company Name: BACARDI Y CIA. S.A. DE C.V. Contact: Ing. David Muñoz Alcantara Position: Engineering and maintenance Manager Contact: Ing. Pablo Ismael Martinez Position: Packing maintenance Manager Address: Autopista Mex-Qro # 4431 Tultitlan, Estado de México Telephone: (5255) 58 99 09 00, (5255) 5899 09 92 Fax: (5255) 58 99 09 27 E-mail: [email protected] [email protected]

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Derivados de Frutas, S.A. de C.V.

Industry: Beverages Sub Industry: Carbonated and noncarbonated refreshments,

Bottled water. Location: México City (D.F.) Size: (sales) US$15 million Purchasing Potential: US$N/A Specific Business Opportunities:

Filling machines for Tetra-Pack, Air cleaning machines, Pallet dismantling machine

A) Company Description Derivados de Frutas was founded in 1946 as a subsidiary of the Mezgo Group; this group is 100% Mexican and has 4 divisions:

a) Glass Manufacturing, with a plant in Guadalajara. b) Grape Mill, with a plant in Aguascalientes. c) Bottling Company, Derivados de Frutas, located in México City; and d) Distributor, Distribuidora Mezgo, which manufactures grape concentrates and

distributes all products of the group. In addition to its own infrastructure, the group has granted 20 franchises to other Mexican companies that bottle their beverages. The beverage brands of the group are well recognized in México and have very good acceptance among the low and middle social classes. The company exports beverages to the United States, mainly to cities that have large Latin and Mexican populations. B) Main Products Produced and How They Are Packaged

Product Brand Package Grape beverage Sangría Señorial Can, PET 2lt. and 1.5lt.,

Glass, Polyethylene 1lt. and 600ml.

Grape beverage (Light) Sangría Light Same containers Carbonated fruit beverages (four flavors)

Trebol Glass 330ml & 405ml, PET 600ml, 1.5lt., and 2lt.

Noncarbonated fruit beverages (no pulp)

Chaparrita Glass 220ml., PET 250ml, 200ml, 600ml

Water Agua Pura OASIS PET 1,600 and 600ml

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C) Installed Packaging Machinery Derivados de Frutas has five bottling lines, two for glass, two for PET, and one mixed. In addition to these lines, the company has a line to manufacture PET bottles. The company manufactures internally approximately 10% of all the PET bottles it uses; the remaining 90% is acquired from third parties.


Specification

Bottle orienting machine/Lafranki 1 Italy 6 75% Filling machines /Alfil 1 Germany 6 80% Filling machines / BC Flex 1 Italy 6 75% Mixer and carbonator / Alfil 1 Germany 6 80% Rinse and fill machine/ Alfil 1 Germany 6 75% Capping machine/ Alcoa 1 Germany 6 75% Coding machines / Image 4 US 6 75% Coding machines / Domino 1 US 6 75% Labeling machines / Langus 1 Germany 6 75% Labeling machines / Triam 2 US 1 75% Wrapping machines / Smith 1 Italy 6 75% Wrapping machines / Dimac 1 Italy 6 75% Line for blowing PET bottles /Dina Block 1 Switzerland 6 75% Line for bottling in glass /Crown 2 US 6 75% Line for bottling in glass and PET/ Meyer 1 US 6 75% Line for bottling in PET/ Alfil 1 Germany 6 75% Line for bottling in PET/ BC 1 Italy 6 75% Automatic palletizing machine 1 US 3 N/A

D) Last Purchase of Packaging Machinery The last purchase of packaging machinery took place in 1999 when Derivados de Frutas acquired two Triam labeling machines from a distributor in México. This was a minor purchase of US$28,000 since the plant was practically renewed six years ago.

Machinery Brand Country Labeling Machines Triam USA

E) Future Packaging Machinery Ordering Plans, 2002–2003 In 2002 Derivados de Frutas plans to expand its México City plant by adding one bottling line. Most likely the machinery for this line will be purchased from the German manufacturer Alfil since they have had good results with this brand in the past. The line they are seeking is to bottle water in 1.5 ltr, 1 ltr, and 600ml sizes, with a bottling capacity of 500–800 bottles per minute. This acquisition will be made in the second half of 2002.

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In addition the company plans to acquire a PET recycling machine and a carton form, fill, and seal machine to assemble cardboard boxes.


Estimated Budget

Bottling line for water 1 Germany Expansion N/A PET recycling machine 1 N/A Expansion N/A Carton form, fill, and seal machine 1 N/A Expansion N/A

F) Purchasing Policies and Financial Arrangements Derivados de Frutas purchases machinery directly from the manufacturer, dealing with representatives and distributors in México only for minor purchases. The engineering director visits potential suppliers and personally evaluates the machines. At least three brands are assessed. When a decision is made, the manufacturer installs and sets up the equipment and trains the employees. During the first year of operation of a new line, the company requests that the manufacturer visit the plant two or three times to ensure that everything is functioning correctly. Purchases are the responsibility of the company’s engineering and purchasing departments, which decide which brand they will acquire, however, the decision to expand capacity is originated by the general director and the engineering department. Their procurement plan is based on product demand estimates and on the financial capacity of the company. Derivados de Frutas prefers European machinery based on good results in the past. For acquisition of new machinery the company has used export credit lines offered by the manufacturers and international lines. For the acquisition of one Italian line, the company paid cash and received a discount for doing so. The company finance department determines the most convenient way to pay for the machinery and modifies their yearly budget based on expansion or investment plans. G) Factors that Influence Purchasing Decisions

1. Efficiency. 2. Price. 3. Quality. 4. Brand recognition. 5. Origin.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers. Derivados de Frutas has no arrangements with packaging machinery manufacturers, however, they prefer to purchase from those suppliers that have provided good results in the past. The company mentioned Smith, Dimac, Alfil, and BC as its favorite brands, but they are open to receive proposals from other manufacturers.

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The company gains awareness of new potential machinery suppliers by attending ExpoPack in México and Chicago and the packaging expo in Monaco, Italy. They also obtain information from manufacturers that advertise in El Reportero Industrial and Bebidas magazine. Origin Technology Flexibility Service Price United States Very Good Good Average Good Germany Very Good Very Good Very Good Good Italy Very Good Very Good Very Good Good I) Specific Interest The company would like to receive information on new machinery for bottling. They are interested in growing their capacity within the next few years, and they are open to proposals from new manufacturers offering state-of-the-art technology. J) Contact Information Company Name: Derivados de Frutas S.A. de C.V. Contact: Mr. Angel Lara Hernández Position: Production Manager Address: Calzada de Tlalpan #3222 Col. Sta. Ursula Coapa 04910, México D.F. Telephone: (52-55) 5677-1522; 5677-0022 ext. 3022 Fax: (52-55) 5677-0022 ext. 3027 E-mail: [email protected]

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FRUGOSA, S.A. de C.V. (Grupo Jumex)

Industry: Beverages Sub Industry: Fruit juices, nectars, sports drinks,

kids’ drinks, flavors Location: Ecatepec, state of México Size: (sales) US $400 million Purchasing potential: US $5 million Specific Business Opportunities:

Tetra wedge packing machine, Filling line for cans, Filling line for plastic bottles, Coding machine

A) Company Description Grupo Jumex is a Mexican company that has been in the market for 40 years. The company introduced its main product brand Jumex in 1964. The company has continuously introduced new products into the market over the past 20 years, which has made it the leader in various market segments including kids’ drinks with their brand Pau-Pau. Some of this company’s other brands include Ami, Choco-loco, Jumex Light, Frutastica, and Vigor Sport. Grupo Jumex is a holding company that controls several subsidiaries including: Frugosa S.A. de C.V.; Botemex, S.A. de C.V. (can manufacturer); Jugomex, S.A. de C.V.; Alijumex, S.A. de C.V.; Corporativa de Servicios Vilore; Vilore Servicios; and Vilore Foods Inc. B) Main Products Produced and How They Are Packaged:

Product Brand Package Juices and nectars Jumex Cans of 250, 300, 370, 2800 ml and 1

liter; Tetra brick of 200 ml. and 1 lt.; glass bottle of 250 ml and 1 lt.

Nectars Vigor Can of 370 ml. Citrus beverage Ami PET bottle of 500 ml and 4 lt. Energetic beverage Extasis Can of 230 ml Children beverage Pau-Pau PET bottle of 250 ml Milk-based beverage

Choco- loco Tetra brick of 200 ml

Orange beverage Chupi Frut Plastic bottle Fruit beverage with little gas

Frutastica Can of 280 ml.

Fruit shake Mi desayuno Tetra Prism of 250 ml. Sports beverage Jumex Sport PET bottle Concentrates Jumex Aseptic bag

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Current Machinery Used

Brand Units Origin Average Age

Specification

Wrapping and packing machine

Klisters 6 Germany 4 100%

Wrapping and packing machine

Ovest Condittonment

9 France 5 90%

Palletize SASIB 3 Italy 3 100% Palletize Stork 2 Netherlands 3 100% Filling machine Solbern 5 US 4 90% Filling machine Sanchelima 6 US/ South

Africa 5 80%

Filling machine Simonazzi 4 Italy 5 85% Filling machine Alfill 3 Germany 4 85% TBA-8 Tetra Pack 3 Sweden 7 80% TBA-19 Tetra Pack 8 Sweden 2 80% TBA-9 Tetra Pack 1 Sweden 4 80% TBA-21 Tetra Pack 1 Sweden 1 80% Conveying systems Stork 6 Netherlands 5 100% Air cleaning machine Graham 10 US 8 90% Coding machines Domino 8 US 2 90% Coding machines Videojet 8 US 8 60% Coding machines Image 8 France 6 90%

D) Last Purchases of Packaging Machinery Frugosa’s last equipment purchase in August of 2001 included the following:

Machinery Brand Country Packaging machine Cermex / Ouest France Coder Domino US

The company spent about US$6 million in 2000 and US$12 million in 2001 to purchase packaging equipment. E) Future Packaging Machinery Ordering Plans, 2002–2004 Grupo Jumex continuously upgrades their machinery to operate with state-of-the-art technologies. This goal is reflected in their purchasing budgets for new equipment. Besides technological improvement, a key factor that defines their level of investment is demand growth for their products and the introduction of new products into the market. Because of this, economic growth in México is an important variable when they develop their purchasing budgets.

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The company’s investment plans fo r the next two years include the purchase of new equipment for processing, filling, and packaging. They have approved a US$5 million budget for the purchase of packaging machinery during 2002. Purchases will include the following equipment:

Machinery Units

Origin Motive of purchase

Estimated Budget

Packaging machine / Kisters

1 Germany Production Expansion

US $400,000

Packaging machine for Tetra wedge

4 US / Europe

Expansion US $900,000

Can filling line 1 TBD Expansion US $1.5 million Plastic bottle filling line 2 TBD Expansion US $1.5 million Coding machines / Domino

6 US Expansion US $120,000

F) Purchasing Policies and Financial Arrangements Grupo Jumex’s selection of new equipment is focused on the equipment’s brand, specifically, their previous experience with the brand, its efficiency, and its technologies. Equipment quality is more important to this company than price. The company requests information, including pricing, directly from the manufacturer or its representative in México. They usually analyze three equipment options. The company’s president makes the final purchasing decision. The company offers a down payment for the equipment, and the final payment is made once the equipment is in operation at their facility. The company does not use letters of credit. G) Factors That Influence Purchasing Decisions

1. Equipment’s efficiency. 2. Sturdiness of construction. 3. Price. 4. Service.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Grupo Jumex indicated that they prefer European machinery especially from Germany and Holland. They consider that Europe offers better technology, but US suppliers offer better service in general.

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I) Trade Show Attendance / Trade Publication Information The company attends Expopack in México, Pack Expo in Chicago and Las Vegas, and Interpack. They also attend Drintek and Amiga in Germany. The company subscribes to several trade publications and receives information from numerous potential suppliers. J) Specific Interest Grupo Jumex welcomes information on state-of-the-art packaging machinery for the foods industry. K) Contact Information Company Name: Jugomex, S.A. de C.V. (Grupo Jumex) Contact: Ing. Roberto Fernández Bravo Position: Director for Projects and Engineering Address: Km. 19 ½ Antigua Carretera a Pachuca 55400 Tulpetlac, Edo. De México Telephone: (5255) 58 36 99 99 Ext. 2175 Fax: (5255) 58 36 99 99 Ext. 2174 E-mail: [email protected] Web page: www.jumex.com.mx

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Jugos del Valle, S.A. de C.V.

Industry: Beverages Sub Industry: Fruit juices and nectars, Soft drinks, Sports

drinks, other beverages Location: Cuautitlan, state of México Size: (sales) Over US $350 million Purchasing potential: US $3 million Specific Business Opportunities:

Complete filling line: Filling liquids, multi packing, tray form, coding, shrinking tunnel, and Palletizing machines.

A) Company Description Jugos del Valle is a Mexican company that has been in the market for over 50 years, with manufacturing operations in México, the United States, and Brazil. The company has one of the fastest growing brands of nectars and fruit juices on the continent. The company operates several facilities in México including those in Xochimilco, México City, the state of México, Monterrey, Zacatecas, Veracruz, and Ensenada. It also has manufacturing facilities in Brazil though a joint venture. The company exports its products to 26 countries. B) Main Products Produced and How They Are Packaged

Product Brand Package Juice Del Valle Glass bottle, combiblock,

minibrick, aluminum can Nectar Del Valle Glass bottle, combiblock,

minibrick, aluminum can Beverage Barrilito PET and glass bottles Beverage Apreton Volpak O.J. concentrate Florida 7 Plastic can Kids’ beverages Frutsi Plastic bottle Sports beverage Frutsi Sport Plastic bottle

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Combiblock (filling, closing, and packing) 5 Germany 4 Coding machine / Image 15 US 4 Depalletize / ABC 1 US 8 Fill and cap machine / Simonazzi 6 Italy 6 Labeling machine / B&H 6 US 15 Tray forming machine / ABC 6 US 7 Shrink tunnel / ARPAC 6 US 12 Palletize / Columbia 7 US 7 Bottle handling equipment / Posimat 2 Spain 5 Filling machine / Federal 5 US 10 Capping machine/ Fords 5 England 10 Packaging equipment / Zambelli 5 Italy New Labeling machine / Auxiemba 5 Spain 2 Wrapping machine / Lantex 2 US 9 Filling machine / Solbern 1 US 6 Can sealers / Angelus 1 US 6 Nitrogen injector / VBS 1 US 6 Bottle level inspector machine / Tap Tone 1 US 6 Shrink tunnel / I&H 1 US 6 Forming and packing system / Standard Knapp 1 US 6 Tunnel / Arpac 1 US 6 Glass bottle filling machine / Horix 1 US 6

D) Last Purchases of Packaging Machinery The last equipment purchase at this company took place in June 2001.

Machinery Brand Country Form and pack system Zambelli Italy

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E) Future Packaging Machinery Ordering Plans, 2002–2004 Jugos del Valle has a US$3 million budget for the purchase of packaging machinery during 2002. Their purchasing plans include the following equipment to expand its production:

Machinery Units Origin Estimated Budget

Filling, closing and packing system / Combiblock

1 Germany

Filling machine 1 TBD N/A Tray forming and packing 1 TBD N/A Code machine 1 TBD N/A Palletizing machine 1 TBD Pasteurizing machine 1 TBD

F) Purchasing Policies and Financial Arrangements At Jugos del Valle, two departments are involved in the decision process for the purchase of new equipment: one for the packaging process, the other in overall plant engineering. Once the company has defined the type of equipment required, they request information from at least five potential suppliers and analyze which machine presents the best option. A final decision is reached by the director responsible for projects. This information is sent to the finance department, which manages the purchase. With a new supplier, they arrange for a visit to see the equipment in operation. The company is very satisfied with the Combiblock technology and will continue to purchase this equipment to standardize this process throughout all their facilities. Because of the growing demand for their products, Jugos del Valle must sometimes make fast purchasing decisions to expand their lines. In these cases, delivery time becomes a critical factor in the decision. The company pays for the equipment through bank loans or letters of credit. As for equipment maintenance, they expect the equipment supplier to train their technical staff. About 80% of their maintenance needs are satisfied internally, while only in about 20% of the cases do they require support from the equipment manufacturer. G) Factors That Influence Purchasing Decisions

1. Experience with supplier / brand recognition 2. Technical support. 3. Price. 4. Delivery schedule

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Jugos del Valle was the first company to bring the Combiblock technology into México. They are very satisfied with this technology. The company likes Italian equipment, but they say that it takes too long to receive spare parts. Jugos del Valle’s evaluation of packaging machinery according to its country of origin: Origin Technology Flexibility Service Price United States Good Good Average High Spain Good Good Good Good Germany Very Good Good Good High Italy Very Good Good Good Good I) Trade Show Attendance / Trade Publication Information The trade shows they attend are Expopack and Expobeber, both in México City. They also receive information from equipment manufacturers. They prefer to receive information on CD-ROM as this allows them to see the equipment in operation and gives a better sense of the proposed machine than a brochure does. J) Specific Interests Jugos del Valle is interested in receiving information on packaging machinery specializing in the beverage industry. K) Contact Information Company Name: Jugos del Valle, S.A. de C.V. Contact: Ing. Oscar Medrano Horta Position: Jefe de compras, proyectos, refacciones y miscelaneos (head of the

purchasing department) Address: Insurgentes #30 Barrio Texcoaca, Tepotzotlan 54600, Edo. De México Telephone: (5255) 5899-1000 ext. 1039 Fax: (5255) 5899-1043 E-mail: [email protected] Web page: www.jvalle.com.mx

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Grupo Modelo, S.A. de C.V

Industry: Beverages Sub Industry: Beer Location: México City (headquarters) Size: (sales) US$2.22 billion Purchasing potential: US$1.6 million. Specific Business Opportunities:

Box form, fill, and seal machines

A) Company Description Grupo Modelo, a pub licly traded company that was established in 1925, is currently the leader in beer production in México with a 54.2% market share. Managerial control of this company has remained in local hands despite the growing importance of the Anheuser-Busch Companies, Inc., who by late 1998 owned a 50.2% stake in the company. Anheuser-Busch has indicated no interest in managing the company but controls 6 of the 11 seats on their board of directors. The company has 8 plants in México with 56 beer-bottling lines. The ir annual production reaches 4.6 billion liters of beer. Grupo Modelo produces over 10 different beer brands. Their most important brands are Corona, Modelo, Victoria, and Pacifico. The Corona brand is the single most important brand in México, accounting for 32.2% of the domestic beer market in 2000 and representing 58.4% of total sales for Modelo. It is important to note that Corona has surpassed Heineken as the number one imported beer into the United States. The company exports five beer brands to around 150 countries and imports Anheuser-Busch’s Budweiser and Bud Light into the Mexican market. B) Main Products Produced and How They Are Packaged

Product Brand Package Beer Corona, Corona light, Negra

Modelo, Modelo Especial, Modelo light, Victoria, Estrella, Pacifico, Leon, Montejo

Glass bottles with 190, 325, 940 ml capacity for local market, Glass bottles with 7, 12, 24 oz. capacity for export, 340 ml Aluminum cans, 30 and 60 lt. kegs

C) Installed Packaging Machinery In 1993 Grupo Modelo initiated a major investment program to purchase packaging machinery for the new plant in Zacatecas and to standardize equipment in the other 7 facilities. The company has 56 bottling lines with 1–4 machines of each type per line. The

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following table lists machines currently being used by Modelo. An asterisk (*) indicates new brands that are being introduced to standardize the lines at all their facilities.

Current Machinery Used Brand Total units Origin OCME Italy Meyer US Barry US

Depalletizing machines

Hartness*

100

US Simonazzi* Italy Barry US

Bottle cleaning machines

SEN-K45

Germany SIG- Simonazzi* Italy Meyer Germany Cemco / Fran Corp N/A

Filling and closing machine

Hansa

1–2 per line

N/A Simonazzi* Italy Barry US

Pasteurizer

SEN

56

Italy Alfa-SIG Italy Krones Germany

Labeling machines

JAGENBERG

1–3 per line

Germany Wiring machine Angelus* 56 US Keg filling machine Comak US

Meyer US Barry US

Case packers

Hartness*

US OCME Italy SEN Italy

High speed palletizing units (120 boxes / minute)

Courrier

1–3 per line

FILLTECH US Omnivision* US

Bottle inspection machines

Optiscan (Barry)

US Ejector machine Stratech 1–4 per line Germany

Lumonic US Box coding machines Videojet

3–4 per line US

Box forming, cleaning, dispensing machine

Dexter* México

Box forming machine / Cosedora x grapa

RA Parson US

Tray forming machine SWF Machinery US Tray forming machine / Thermo-shrink

OCME Italy

Lantec US Robopack* Italy

Wrapping machines

ITW

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D) Last Purchases of Packaging Machinery Their most recent equipment purchase took place in December 2000, when they introduced a complete depalletizing line purchased from OCME. E) Future Packaging Machinery Ordering Plans, 2002–2004 Grupo Modelo’s investment program to standardize their packaging machinery at all their facilities began in 1993 and continues today. Other investments will include expansion of their production capacity at their Tuxtepec, Oaxaca, facility. The company does not develop long-term equipment purchasing plans but purchases on an as-needed basis. They constantly evaluate the productivity of each line, and depending on the results and cost/benefit analysis of new equipment alternatives, they make decisions regarding the purchase of new machinery. Modelo’s recent purchases show a clear preference for Italian machinery for depalletizing, washing, filling, pasteurizing, labeling, and palletizing, and a preference for US equipment for bottle inspection, coding, and tray-forming machines. Near term purchasing plans will include the following equipment:


Estimated Budget

Box form and seal machines/ RA Pearson

5 US Expansion $60,000

Box form, fill, and seal machines for 12-pack presentations

6 US To purchase the machines instead

of leasing

$1.1 million

F) Purchasing Policies and Financial Arrangements The company’s corporate engineering department continuously visits all their production facilities and evaluates the performance of each line. The engineering director decides which new equipment is needed. The cost of maintenance is a major factor in the decision for replacing existing equipment. This department also makes a cost / benefit analysis of proposed new equipment, and purchasing decisions are made at the board level. To select new equipment and potential suppliers, the company obtains information by visiting packaging machinery trade shows and by consulting with other manufacturers that use the machines they are interested in buying. During the selection process, they evaluate previous experience with the supplier and, in the case of new suppliers, that the brand is well recognized and that the equipment meets Modelo’s specifications. The company usually purchases the equipment with their own cash flow; in some cases it has rented machines with an option to purchase.

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G) Factors That Influence Purchasing Decisions

1. Equipment quality 2. Ease of operation 3. Low maintenance 4. Price

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Grupo Modelo personnel indicated that their packaging lines are operating with excellent efficiency. For equipment dealing with glass bottles, the company prefers Italian machinery specifically from Simonazzi. They are very satisfied with this supplier especially because of the post-sales service they have received. Regarding their carton boxes, they are using OCME equipment, which enables them to reuse the carton boxes. The technology for these machines was specially developed for Modelo in 1995. The company believes that this technology may now be somewhat dated, and it is not completely satisfied with the post-sales service from this supplier. They are open to new suppliers for wrapping machines, as they are not satisfied with their previous supplier ITW. The company has a special maintenance crew at each facility, which has been trained by each equipment supplier. They maintain an inventory of the most commonly used spare parts, which they purchase from the equipment manufacturers. They manufacture some spare parts for noncritical components. They request the equipment manufacturers’ assistance when equipment needs major repairs. I) Trade Show Attendance / Trade publication Information Grupo Modelo keeps up with new technology developments in their industry by attending trade shows in Germany, specifically Interbrau and Drintek. They indicate that because this show takes place once every 4 years, they really see a technological evolution from one show to the next. They feel that shows in México and the United States are not specialized to their industry. The company receives trade publications, but they are more interested in the information sent to them by potential suppliers. J) Specific Interests Grupo Modelo is interested in receiving information on state-of-the art technologies for beer bottling.

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K) Contact Information: Company Name: Grupo Modelo, S.A. de C.V. Contact: Ing. Jesús Falcón Aguilar Position: Direccion de operaciones de envasado (Bottling Operations) Address: Campos Eliseos #400, 14th floor Col. Lomas de Chapultepec 11000, México, D.F. Telephone: (5255) 52 81 01 14 ext. 2113 Fax: (5255) 52 81 10 40 Web page: www.gmodelo.com

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Parmalat de México, S.A. de C.V.

Industry: Dairy Sub Industry: Milk, concentrated

juices, cookies Location: México City Size: (sales) US$80 million Purchasing potential: US$3.5 million Specific Business Opportunities:

Evaporating systems, Can filling lines.

A) Company Description Parmalat is an Italian company with a presence in 28 countries through 162 processing plants. The company has over 40,000 employees worldwide. Parmalat de México was founded in 1995 when they built a large milk processing facility in Lagos de Moreno, Jalisco. Parmalat employs 350 people in México and has been growing since its incorporation. Currently they process milk, milk derivatives, and juices; other products such as diced tomatoes, cookies, and condensed milk are imported from Italy. Parmalat intends to continue to grow its production in México, as they perceive the country as a strategic location from which to target the Central American and North American markets. B) Main Products Produced and How They Are Packaged

Product Brand Package Milk Parmalat Tetra Brick Light milk Parmalat Tetra Brick Low-fat milk Parmalat Tetra Brick Lactose-free milk Parmalat Tetra Brick Milk with vitamins and iron Parmalat Tetra Brick Flavored milk Parmalat Tetra Brick Juices, Nectars Parmalat Tetra Brick Tea Parmalat Tetra Brick Diced tomatoes Pomi Tetra Brick Cookies Premium Terta Brick Condensed milk Parmalat Aluminum can Light condensed milk Parmalat Aluminum can

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Specification

Filling machine / TBA 8 3 Italy 6 80% Filling machine / TBA 9 3 Italy 5 85% Filling machine / TBA 9 slim 1 Italy 5 85% Filling machine / TBA 8 slim 1 Italy 5 85% Packaging line for cans 1 Italy 3 90% Straw dispensing machines 4 Italy 5 90% Carton forming machines/ Tetra Pack 8 Italy 5 90% Tray forming/dispensing machines 3 Italy 4 90% Palletizing machines 5 Italy 4 90% Colocadora Abre-facil 1 Italy 5 90%

Complementary equipment includes coding machines, conveyors, palletizing machines, and tray dispensing machines. Brands were not provided. D) Last Purchases of Packaging Machinery Parmalat de México invested over US$3 million in packaging machinery over the last three years. Their latest acquisition in December 1999 expanded their TetraBrick packaging capacity.

Machinery Brand Country Filling machine TBA 8 Tetra Pack Italy

E) Future Packing Machinery Ordering Plans, 2002–2004 Parmalat de México has investment plans of over US$6.5 million in the next three years. The company intends to begin producing and packaging teas and condensed milk, as well as increasing their juice production capacity. Can filling and sealing machines and one evaporating unit are the most representative equipment for these projects.


Estimated Budget

Evaporating unit 1 Netherlands Expansion US$3 million New lines for packaging cans 5 US/Italy Expansion US$500,000

F) Purchasing Policies and Financial Arrangements Parmalat de México selects packaging machinery suppliers based primarily on recommendations of the Italian corporate offices as they seek standardization among all Parmalat’s plants. By doing this, Parmalat can exchange machinery from one country to another based on local demand and plans. Although most machinery is recommended and acquired by the Italian headquarters, Parmalat de México can request authorization to acquire equipment locally. Most of the complementary equipment is purchased locally.

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For the acquisition of packaging machinery in México, the company performs a cost/benefit analysis, which is presented to corporate in Italy. If approved, Parmalat de México makes the purchase with its own resources. Parmalat pays for its purchases following policies established by the suppliers, which usually are 30–50% down payment and the remainder when the machinery is installed and running. G) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Parmalat prefers Tetra Pack as this type of packaging is safe and meets high sanitary standards. The company believes that the Tetra Pack package has earned Parmalat the trust of its customers and it is part of the image of the company. For canned products, Parmalat has no preference for any particular brand. They believe that both the United States and Europe have good suppliers for this canning equipment so they have more freedom to select suppliers than in their milk or juice projects. H) Specific Interest This year Parmalat de México will acquire an evaporating machine system and can filling systems. The company is interested in meeting with suppliers that can propose solutions for their future offerings of concentrated juices and teas packed in cans. Brand recognition, training, post- sale service and capabilities are very important to Parmalat. I) Contact Information: Company Name: Parmalat de México, S.A. de C.V. Contact: Ing. Jorge Gordillo / Ing. Adriana Becerra Position: Operations and Manufacturing Director / Purchasing Manager Address: Av. Manuel Avila Camacho # 1 piso 8 despacho 804 11560, México D.F. Telephone: (52-55) 5387-9902 Fax: (52-55) 5580-1103 E-mail: [email protected], [email protected] Web page: www.parmalat.com.mx Company Name: Parmalat de México, S.A. de C.V. Contact: Mr. Vincenzo Borgogna Position: Financing Director Address: Av. Manuel Avila Camacho # piso 8 despacho 804 11560, México, D.F. Telephone: (52-55) 5387-9902 Fax: (52-55) 5580-1084 E-mail: [email protected] Web page: www.parmalat.com.mx

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Pascual Boing, S. de R.L.

Industry: Beverage Sub Industry: Juice, Bottled water, Noncarbonated

drinks, Carbonated beverages Location: México City (D.F.) Size: (sales) US$100 million Purchasing Potential: US$5 million Specific Business Opportunities:

Filling machines for Tetra Pack, Air cleaning machines, Pallet dismantling machine

A) Company Description Pascual Boing was founded in 1940 as a private company. In 1985 it became an employee-owned company. Today the company is the third largest juice manufacturer in México after Jumex and Del Valle. Pascual Boing has three production plants located in México’s central region. The company also owns a distribution system with 19 warehouses and over 800 vehicles. The company owns eight beverage brands that are distributed throughout México and exported to the United States and Central America. B) Main Products Produced and How They Are Packaged

Product Brand Package Fruit beverage (50% pulp) Boing Tetra Pack, Glass, Can. Carbonated fruit drinks Pascual, Lulú PET, Glass, Can. Juices Pascual,Woopy PVC, Cardboard. Water Pascual PET Fruit beverage (100% nectar) Nectasis Glass Milk Pascual Cardboard

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Specification

Filling machines for cardboard and Tetra Pack/ Tetra Pack

24 Sweden 15 90%

Filling machines / Meyer 8 US 45 60% Filling machine / Simonazi 1 Italy 8 90% Filling machines for polyethylene package / Filler Specialties

1 US 1 95%

Rotary liquid filling system/ Filler Specialties

1 US 1 95%

Rotary liquid filling system/ Nissey 1 Japan 8 85% Coding machines/ Domino 8 US 5 90% Labeling machines/ BYH 5 N/A 4 80% Capping machines / Alcoa 5 N/A 6 70% Air cleaning machine / Sidel 1 France 1 90% Bottle grouping machines/ River 4 US 5 90%

D) Last Purchase of Packaging Machinery The company’s last purchase of packaging machinery took place in October 2000, when they spent US$2 million to upgrade one of their plants. Some of the machinery acquired included:

Machinery Brand Country Air cleaning machine Sidel France Filling machines Filler Specialties US Bottle washers Barry-Wehmiller US

E) Future Packaging Machinery Ordering Plans, 2002–2003 Pascual Boing has developed a budget of US$5 million to purchase packaging machinery during the next two years. The company has two simultaneous acquisition programs, one to increase production and another to increase production capacity. For early 2002 Pascual Boing plans to invest US$2.7 million for the acquisition of two rotary liquid filling systems and two air cleaning machines for bottles.


Estimated Budget

Filling machines for glass 2 US Replacement US$1.5 million Air cleaning machines 2 France Increase capacity US$1.2 million

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F) Purchasing Policies and Financial Arrangements For the acquisition of new machinery, the infrastructure division of the company issues machinery requests, which include technical specifications and, in some cases, the brand. Once financial approval is granted, the purchasing department contacts potential suppliers and requests quotations. Usually Pascual Boing purchases from Mexican manufacturer representatives or distributors; in only a few cases, they buy directly through the manufacturer. After receiving proposals from different potential suppliers, the company selects the one offering the better price and post-sale service. Pascual Boing believes it is very important for the potential supplier to have knowledge of the Mexican juice market. Purchases are made with Pascual’s own resources, and payment terms usually include 40% down payment and 60% when the machine is operating. G) Factors that Influence Purchasing Decisions

1. Local technical support. 2. Post-sale service. 3. Guarantee. 4. Price. 5. Technology.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Pascual Boing indicated they have no particular preference for specific brands of packaging equipment but they do prefer to use those machines that have proven good results in their plants. The company mentioned that they only purchase machinery that offers good technical support locally. Their favorite machine is Simonazi due to its capacity and technology as well as its presence and service in the Mexican market. Origin Technology Flexibility Service Price United States Good Average Good Average Germany Good Average Good Expensive Italy Very Good Good Good Good France Good Poor Good Average I) Specific Interest Pascual Boing is interested in receiving information related to new technologies for packaging all type of beverages. Of particular interest is information on filling machines, plastic and PET injection machines, air cleaning machines, and pallet dismantling machines.

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J) Contact Information Company Name: Sociedad Coopertativa de Trabajadores de Pascual Boing, S. de R.L. Contact: Sr. Alfredo Rivera Position: Purchasing Manager Address: Clavijero # 75 Col. Tránsito 06820, México D.F. Telephone: (52-55) 5741-0882 Fax: (52-55) 5741-0842 E-mail: [email protected]

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V. The Personal Care Industry 5.1. Industry Overview In México there are approximately 400 companies that manufacture cosmetics, perfumes, and other personal care products. The great majority of these are small-and medium-sized companies, which manufacture products under diverse little-known brand names and which are targeted to the low- and medium-income levels. According to the National Chamber of Perfumery and Cosmetics, México produced US$2.13 billion of cosmetics and personal care products in 2000. Local production is estimated to cover only 60% of total demand, so the market is estimated at US$3.5 billion. It is unclear what impact the new tax laws will have on this sector, as a portion of its production is defined as a “luxury” product and will be subject to an additional 5% sales tax. We predict that the sector will not be affected by these measures, and production volumes will continue to grow as the result of strong demand fueled by increases in real wages taking place in México over the past and current years. It is also important to note that the manufacturing base for these products in México has also become an important supplier for other markets in countries with which México has enacted free trade agreements, especially in the Latin American region. 5.2. Ranking of Companies by Size


MICRO 0 to 30 275 68.57% SMALL 31 to 100 87 21.69% MEDIUM 101 to 500 19 4.74% LARGE 501+ 20 4.99% Total 401 100.00% Source: SECOFI- SIEM

5.3. Key Players Key players in the personal care industry are mainly multinational companies, with some of the most important being Procter & Gamble, Unilever, Warner Lambert, Johnson & Johnson, Revlon, Fuller, Avon, and Palmolive, among others. 5.4. Summary of Interviewed Companies Ten companies were interviewed for this report; most are large to medium subsidiaries of large international personal care companies. Data indicate that US machinery dominates the packaging machinery base, followed by Italian and German equipment. Combined purchasing potential for these 10 companies is US$38.2 million, with the two largest budgets being those of Procter & Gamble at US$13.5 million, and Industrias Alen, which plans to construct a new manufacturing facility with close to US$18 million in new packaging machinery.

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Avon Cosmetics, S.A. de C.V.

Industry: Personal Care Sub Industry: Cosmetics Location: México City (D.F.) Size: (sales) Over US$50 Million Purchasing Potential: US$600,000 for 2002 Specific Business Opportunities:

Filling and capping machine.

A) Company Description Avon Products is the world’s largest direct seller of cosmetics and beauty products. Besides direct sales, it also has a large presence in supermarkets, kiosks, and retail stores. The company’s products include cosmetics, fragrances, jewelry, toiletries, apparel, and home products. Avon has a presence in 136 countries and has been in business for 116 years. In México Avon Cosmetics S.A. de C.V. began operations in 1956, offering 59 products for women and 9 for men. Today Avon manufactures over 900 products in México. In addition to their México City plant, they inaugurated a new state-of-the-art facility in 2000 in Celaya, Guanajuato. This new plant is the company’s most modern plant in the world.

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B) Main Products Produced and How They Are Packaged Of the 900-plus products manufactured in México, Avon’s most important products are:

Product Brand Package Lipstick Avon Color, Perfect Ware,

Beyond Color Cardboard box.

Liquid lipstick Glazewear Flexible plastic bottle Lipstick maximum duration Avon Color Glass bottle, cardboard box. Eye liners Avon Colors Cardboard box. Mascara Avon Colors Plastic container, cardboard box Eye liner pencil Avon Colors Cardboard box Liquid eye liner Color Trend Aluminum bottle Foundation Beyond Color Glass bottle Anti-stress base Calming Effects Glass bottle Humectant base Face Lifting Glass base, cardboard box Makeup base Clear Finish Glass bottle, cardboard box Powder Avon Plastic base, cardboard box Corrector Avon PVC tube, cardbard box Manicure Avon Glass bottle Nail Polish Strong results Glass bottle Nail Colour Color last plus Glass bottle Skin cream Avon Glass bottle Masks Avon Plastic container Anti Acne Avon Plastic container Sun block Avon Sun Plastic bottle Tan lotions Avon Sun Glass and plastic bottles Hair treatment Advance Techniques PVC tube Shampoo Advance Techniques Plastic bottle Gel and hair fixing products Zip PVC tube Spray Zip Plastic bottle Hair Color Beautiful Reflections Plastic container, aluminum tube,

plastic bag and cardboard box Fragrances Far Away, Woman of Earth,

Perceive, Millennia, Prowl, Incandescence, Anew

Glass bottle

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C) Installed Packaging Machinery In their México City plant, Avon has the following packaging machinery:


Specification

Labeling machines / Acroplay 6 US 6 80% Screw capping machines / Resina Screw Cappers

18 US 7 80%

Bottle feeder and orienting/ Posimat 1 Italy 2 80% Filling machine / Posoli 2 Italy 7 80% Filling machine/ Robomat 1 Germany 4 80% Capping machine/ Robocap 1 Germany 4 80% Screw capping machines / Resina Screw

10 US 7 80%

Filling and capping machine / MAR 1 Italy 9 80% Labeling machine/ Acroplay 1 US 9 80% Filling machine/ Vetraco 2 Italy 4 80% Capping machine/ Kemwall 1 England 4 80% Labeling machine/ Arenco Alite 3 US 4 80% Coding machines/ Jaime 1000 30 US 3 100% Filling machine/ Diehi Matter 2 Germany 7 80% Taponadora / Krones 1 7 80% Filling machines / Cabala 1 7 80% Filling machines / Selladora, Arenco 1 US 7 80% Filling machines / IWKA 1 Germany 7 80% Filling machines / Norden 1 US 7 80% Filling machines / MRM 9 US 7 80% Box form, fill, & seal machine/ Jones 9 US 7 80%

D) Last Purchase of Packaging Machinery The company’s last packaging machinery purchase took place in 2000 when they acquired all the machinery for the new plant located in Celaya. For the México City plant, the last acquisition took place in 1999 when they acquired a bottle feeder and orienting machine from Postimat and one filling machine from Posoli.

Machinery Brand Country Bottle feeder and orienting machine Posimat Italy Filling machine Posoli Italy

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E) Future Packaging Machinery Ordering Plans, 2002-2003 Avon plans to acquire an integrated filling and screw capping machine to increase production of shampoo. While the purchase of this machine has not yet been approved, the company expects to buy it in the second half of 2002.


Filling and capping machine 1 - Increase production US$600,000 The company has plans to close its México City plant in late 2002 and move all but the oldest machinery to the new plant in Celaya, located 250 miles away. In late 2002 the company will assess its needs to see if replacements will be required for the old equipment. F) Purchasing Policies and Financial Arrangements Avon de México is a subsidiary of Avon in New York state. For major purchases, such as introduction of new lines, selection of the equipment and the supplier is made jointly by Avon de México and Avon in New York. For replacements or additions of small equipment, Avon de México handles them directly. Supplier selection is based on an information exchange between Avon US and Avon de México. Avon Inc. recommends suppliers that have provided good results within the group, while Avon de México suggests suppliers with local presence and good local service. After discussing the potential suppliers, the company requests proposals and performs a technical and economic evaluation to select the most suitable option. Avon usually follows the payment conditions established by the suppliers. G) Factors that Influence Purchasing Decisions

1. Recommendations of Avon, Inc. 2. Brand recognition. 3. Quality. 4. Flexibility, the capability to be used for different products. 5. Service.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers

Avon personnel said they do not have a preference for any particular brand. Based on origin, the company believes Italian equipment provides a better cost-benefit relationship. Origin Technology Flexibility Service Price United States Very Good Good Good Average Germany Good Average Good Expensive Italy Very Good Good Good Good

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I) Specific Interest Avon is interested in learning about machinery for personal care products that is highly flexible and easily adapted. J) Contact Information Company Name: Avon Cosmetics, S.A. de C.V. Contact: Ing. German Huerta Position: Gerente de Proyectos Address: 5 de Mayo # 75, Col. Tepepan Xochimilco, 16020, México, D.F. Telephone: (52-55) 5420-2216 Fax: (52-55) 5420-2205 E-mail: [email protected] Web page: pr.avon.com.mx

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Grisi Hermanos, S.A. de C.V.

Industry: Personal Care Sub Industry: Soaps, shampoos & conditioners, body

lotions, dental care products, baby lotions and ointments, pet products, pharmaceuticals

Location: México City Size: (sales) US$60 million Purchasing potential: US$1 million Specific Business Opportunities:

High-speed filling machine for micro- spheres (specialized product)

A) Company Description Grisi Hermanos, S.A. de C.V. is a Mexican company in the chemical-pharmaceutical field that manufactures and distributes products made from natural ingredients for the personal care, health, and nutritional supplement markets. The company was founded in 1863, by Mr. Jose Grisi who introduced an anti- infection ointment to treat superficial skin wounds. This product was very successful and served as the foundation for this company’s growth. The company employs 550 workers, 130 at their manufacturing facility and the rest in sales and product distribution. The company sells in the Mexican market and exports to the United States and Central and South America as well various countries throughout Europe. B) Main Products Produced and How They Are Packaged:

Product Packing Shampoos, Conditioners, Gel, Body lotions

PET bottles, PVC bottles, Low and high density polyethylene

Soap PVC permeable stretch (exported products), Carton box or plastic case

Toothpaste Plastic and box Garde tablets Blister pack, Carton box Specialty pharmaceuticals Blister pack, Carton box

All of this company’s products are sold under the Grisi Hermanos brand. In addition to their own production, Grisi Hermanos distributes imported brands of cosmetics and other products. The sale of these products represents 40% of their income. Of the remaining 60%, 30% comes from exports.

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C) Installed Packaging Machinery Grisi Hermanos has one fairly automated manufacturing facility with 8 production lines. Four lines are for manufacturing and packing soaps, two lines for body creams and lotions, one line for Garde tablets, and one line for toothpastes and ointments. The company has additional production and packing lines for their pharmaceutical products. The soap lines are completely automatic up to the palletizing stage, which is done manually with Brumen equipment (US). Most of their machinery is Italian from Mazoni, Marchesini, Ronchi, and Mar. They also have German machinery from Weaver Sea Lander and Leman Gloum.

Current Machinery Used / Brand Units Origin Average Age

Specification

Soap cutting machines / Weaver Sea Lander

Germany 90%

Soap cutting machines / Leman Gloum

Germany 90%

Monoblock / Mazoni 10 Italy 5 90% Carton form, fill, and seal machine / Cam

4 Italy 5 85%

Carton form, fill, and seal machines / Marchesini

2 Italy 2 90%

Soap wrapping machine / Guerze 2 Italy 3 100% Monoblock for viscous product (filling, capping, labeling) / Ronchi

2 Italy 5 90%

Monoblock for viscous product / Mar 2 Italy 10 90% Labeling machine / Termostabile 8 Italy 5 90% Labeling machine / Etipack 3 Italy 6 90% Palletizer / Brumen 1 US 2 90% Blister fill and seal machine / Famar 1 Italy 11 100% Carton coder / Marsh 2 US 5 90%

Grisi Hermanos has identified the need for new machinery because of the introduction of new product lines into the market. One of the new products has a viscous consistency and has micro-spheres. They will require machinery for the manufacture and packaging of these products. Additional equipment under consideration will include filling and sealing machines for aluminum tubes and laminated plastic for their toothpastes and ointments. They will also purchase filling machines for other viscous products and creams.

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D) Last Purchases of Packaging Machinery The last machinery purchase occurred in March 2001 when they purchased an Italian carton form, fill, and seal machine from Marchezini. The company has an average annual budget of US$1 million for the purchase of new machinery.

Machinery Brand Country Carton form, fill, and seal machine Marchezini Italy

E) Future Packaging Machinery Ordering Plans, 2002-2003 Grisi Hermanos is in the process of evaluating alternatives for the purchase of new equipment. The company’s priorities include two filling machines for viscous and cream products, two filling machines for aluminum and laminated plastic tubes for their toothpastes and ointments, and one-high speed filling machine for their new viscous products with micro-spheres. They estimate that they will spend about US$ 1 million on the purchase of these machines. For the first group of machines they have already evaluated some equipment from Italian and Canadian suppliers. For the second set of machines they are considering Italian suppliers. They have not reached any decision regarding the high speed-filling machine. The company indicates that most of their packaging equipment is Italian, but that they are open to evaluating new potential equipment suppliers.


Filling machine for viscous product (body cream)

2 Italy / Canada

Filling for new product

US$150,000

Aluminum or depreciable plastic tube fill and seal machine

2 Italy Process automation, capacity expansion

US$110,000

High-speed filling machine for viscous product with micro-spheres

TBD TBD New specialty product

US$200,000

Blister machine TBD TBD TBD F) Purchasing Policies and Financial Arrangements. New equipment purchasing decisions are made by this company after considering potential growth in demand for their products and new packaging needs—both for marketing purposes and for the introduction of new products. When the company selects potential suppliers, they consider the previous experience they have had with the manufacturer and the level of local technical support that the supplier is able to provide in México.

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Price is always a decision factor, of course. And Grisi Hermanos prefers equipment that is flexible and can accommodate their production levels. They mentioned that Italian equipment is more suitable for their production volumes. Once the company makes an initial decision for a specific machine, they send product and packing samples to the machine supplier to determine if the proposed equipment will meet their specifications. They also visit a facility to see the proposed machine in operation. Company personnel said they are open to new suppliers. Recently, they bought a cooling product machine from Wauquesha Cherry-Burrel (WCB de México). This is the first purchase they have made from this company, and they are very satisfied with the results. They purchase their equipment directly from the manufacturer or their representatives in México. The company finances their purchases with bank loans from Mexican and international banks. They indicate that they work closely with Banco di Roma. G) Factors That Influence Purchasing Decisions

1. Price. 2. Technical support. 3. Equipment flexibility. 4. Equipment that fits their production levels. 5. Previous experience with brand.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Grisi Hermanos has no pre-existing agreements with any equipment supplier. They mentioned that they have a preference for Italian and Spanish equipment as they feel that they offer good prices and their machinery integrates well with their existing equipment. They are also satisfied with the service support they have received but note that European spare parts have a long delivery cycle, especially for major components. Grisi Hermanos’ evaluation of packaging machinery by country of origin: Origin Technology Flexibility Service Price United States Very Good Average Good High Germany Very Good Poor Poor High Italy Very Good Very Good Very Good Very Good Spain Very Good Very Good Very Good Very Good France Very Good Very Good Very Good High I) Trade Show Attendance / Trade publication Information Grisi Hermanos attends various national and international trade shows for packaging machinery, including Expopack in México, and other trade shows in Germany, France, Spain, and the United States.

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The company subscribes to trade publications like AOCS, which focuses on their sub-industry, and they receive materials from potential suppliers. J) Specific Interests Grisi Hermanos is interested in receiving information from potential suppliers of packaging machinery that can assist them in automation of their lines as well as for the implementation of machinery for new products. They are very interested in machinery for their newest product, viscous and semi-viscous micro-spheres shampoo. K) Contact Information: Company Name: Grisi Hermanos, S.A. de C.V. Contact: Ing. José Romero Position: Technical Resources and Normalization Manager Address: Amores # 1746 Col. Del Valle México, D.F. Telephone: (5255) 56 29 99 02 Fax: (5255) 55 34 43 14 E-mail: [email protected] Web page: www.grisi.com

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House of Fuller, S.A. de C.V.

Industry: Personal Care Sub Industry: Cosmetics, lotions, creams, deodorants (roll-on),

shampoos, other personal care products Location: México City Size: (sales) US$150 million Purchasing potential: US$1 million Specific Business Opportunities:

Transport systems, Filling for powders, liquids, and viscous, Cooling tunnel and wiring machines

A) Company Description House of Fuller is a subsidiary of the US company Sara Lee, which is involved in the food, beverages, intimate apparel, household, and personal care industries. This Mexican subsidiary was established in 1982 and currently manufactures personal care products such as lotions, creams, deodorants, shampoos, lipsticks, eye liners, and various other products. The company operates a manufacturing facility in México City. House of Fuller produces and distributes over 3,000 different products from this one plant and exports about 10% of its production to various markets including Argentina, Uruguay, the Philippines, South Africa, and Indonesia. This company develops new products and formats every two weeks. This is part of the company’s business model, designed to differentiate the company and its products from their competitors. B) Main Products Produced and How They Are Packaged

Product Brand Package Perfumes and fragrances Fuller and Armand Dupree Glass bottles, Carton box Shampoos Fuller and Armand Dupree PET and polyurethane bottles Creams Fuller and Armand Dupree Plastic containers Lipsticks Fuller and Armand Dupree Plastic containers, Blister,

Carton box Deodorants (roll-on) Fuller and Armand Dupree Plastic containers Facial mask Fuller and Armand Dupree Plastic containers, Blister,

Carton box Eye liners Fuller and Armand Dupree Blister, Carton box

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Specification

Filling machines MRM 2 US 13 75% Liquid filling machines Cozzoli 3 Italy/USA 5 50% Powder filling machines N/A 2 US 8 80% One position filling machine Abamex 5 México 5 70% Liquid filling machines Abamex 2 México 10 70% Semi-viscous filling machines Kalish 2 Canada 9 80% Coding machines Video Jet 13 US 7 75% Coding machines Image 3 US 5 80% Blister machines Various 8 Various 7 75% Capping machines MRM 2 US 10 70% Capping machines Bealt 2 México 10 70% Most of Fuller’s packaging machinery (60%) was manufactured in the United States. This company perceives American machinery to be the most technologically advanced and quite flexible for adapting to their various packaging applications. Fuller has also bought an important machinery base from Mexican manufacturers. The company believes Mexican machinery has similar quality to imported machines in most uses. D) Last Purchases of Packaging Machinery The company’s last purchase of packaging machinery took place in 1999, when they purchased a blister machine that was custom made by a local equipment supplier. This machine is currently operating at 50% of specifications and needs constant maintenance. The previous purchase was in 1997, when they acquired 3 coding machines from Italian supplier Image. The company is very satisfied with these machines.

Machinery Brand Country Cost (Approximately) Blister machine Custom made México US $250,000 Code machines Image Italy US $120,000

E) Future Packaging Machinery Ordering Plans, 2002–2003 The company has developed a US$2 million budget for the purchase of new processing and packaging machinery, about 50% of which will go for packaging machinery. The company intends to replace those machines that are less efficient and that need more constant repairs and maintenance. They would like to purchase equipment that is more easily adapted to their production needs and easier to operate.

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The following is a preliminary list of the equipment that the company is interested in purchasing:


Powder filling machine 1 T.B.D. Replacement T.B.D. Viscous filling machines 2 T.B.D. Capacity Expansion T.B.D. Capping machines 2 T.B.D. Capacity Expansion T.B.D. Can Closing Machines 4 T.B.D. Capacity Expansion T.B.D. Cooling tunnel 1 T.B.D. Capacity Expansion T.B.D. Transporting system 1 T.B.D. Capacity Expansion T.B.D. F) Purchasing Policies and Financial Arrangements In previous years Fuller was not able to purchase equipment because they had not received a final approval from their corporate office. They indicate that the budget has now been approved and that they will proceed with the purchases shortly. All purchasing decisions will be made by the Mexican company, so potential suppliers should contact the Mexican operation. Company personnel say they are flexible regarding potential suppliers. They are interested in equipment that meets their production needs and in suppliers that can commit to providing spare parts and adequate service in México. The company also wants the supplier to provide a spare parts kit with the purchase of each machine to ensure they will have spare parts available when needed. As the company has not purchased equipment lately, they do not feel that they are up-to-date on new technologies and equipment for their industry. The company can purchase from the manufacturer or a local representative; the critical issue is a commitment of local service for the machine. Fuller will not require financing for the purchase of new equipment. Payments will be handled by their corporate office in the United States, and terms usually are a 50% down payment and the balance once the equipment is in operation. G) Factors That Influence Purchasing Decisions

1. Technical support. 2. Technology. 3. Price. 4. Brand recognition. 5. Flexibility.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company does not have a preference for any specific potential equipment supplier. They have had experience with a Mexican supplier called Abamex; they like the pricing of the equipment, its flexibility, and the availability of spare parts. The weak points are its unsophisticated technology and undependable technical support. Fuller’s evaluation of packaging machinery according to its country of origin: Origin Technology Flexibility Service Price United States Good Good Regular Good México Regular Very Good Regular Very Good Italy Very Good Very Good Good Regular Canada Good Good Good Regular I) Trade Show Attendance / Trade publication Information: Fuller staff attend trade shows like ExpoPack and Expo Farma in México. The company also attends cosmetics industry trade shows in France and Germany. The company subscribes to trade publications like Reportero Industrial, but they do not receive any specialized publication for machinery. J) Specific Interest This company is especially interested in receiving information on filling machines, capping equipment, and transporting systems. The company indicated that they have a limited knowledge of the new technologies available for the cosmetics industry. K) Contact Information Company Name: House of Fuller, S.A. de C.V. Contact: Ing. Javier Martínez Pineda Position: Plant Manager Address: Redención N° 17 Col. Jardines del Sur, Xochimilco 16050, México D.F. Telephone: (5255) 5624-2910 Fax: (5255) 5641-7301 E-mail: [email protected] Web page: N/A

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Industrias Alen, S.A. de C.V.

Industry: Home care Sub Industry: Cleaning and sanitary products Location: Monterrey, Nuevo León Size: (sales) US $280 million Purchasing Potential:

US $18.3 million for 2002 US $8 million for 2003 US $7 million for 2004


Complete packaging line for bottles (Bottle blowers, Bottle orienting machine, Filling machine, Capping machine, Labeling machine, Printing machine, Coding machines, Carton form, fill, and seal machine, Sealing machine, Palletizing machine) NEW PLANT

A) Company Description Industrias Alen, a Mexican company founded in 1951, is one of the largest home care products manufacturers in México with four manufacturing and distribution plants in México and two in the United States. Alen employs 5,000 people and has plans to grow its production capacity in México by building a new plant in the state of Puebla. Alen exports to Canada, the United States, and Central America. B) Main Products Produced and How They Are Packaged

Product Brand Package Liquid cleaners Flash, Fulgor, Pinol,

Pinol Limón, Eco Pine Plastic bottle

Toilet odor control liquid

Flash Plastic bottle

Acids Sultana Plastic bottle Liquid detergent X pres Plastic bottle Kitchen cleaner Eficaz Plastic bottle Multipurpose fabric cleaner

Flash Plastic bags

Bleach, Cloth disinfectant

Blancatel, Cloraluz, Clorales

Plastic bottle

Fabric softener Ensueño Plastic bottle Cloth hangers Colorines Pack Plastic jar and bags Insecticide Vape Espirales Cardboard box, Plastic bag Toilet cleaning tablets Pinol, Flash Cardboard box and plastic bag

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Specification

Bottle blowers / Bekum 50 US 10 100% Bottle blowers / AOKI 20 Japan 6 100% Bottle blowers / Katex 8 Germany 3 100% Bottle blowers / Uniloy 15 US 5 100% Filling machines / Equiteck 4 US 5 60% Filling machines / MRM Elgin 4 US 1 100% Filling machine / Mengibar 1 Spain .1 100% Capping machines / Surekap 30 US 8 70% Labeling machines / Hotmelt 10 Germany 10 100% Labeling machines / Logotech 25 US 10 80% Printing machines/ MP 25 US 10 70% Coding machines / Marsch 70 US 5 60% Coding machines / Markem 2 US 5 100% Box forming machines/ COMBI 18 US 5 80% Box forming machines/ FWF 4 US 2 100% Box sealing machines/ 3M 50 US 6 100% Palletizing machines/ Lantech 15 US 5 100% Bottle orienting machines 5 US 3 100%

D) Last Purchase of Packaging Machinery Industrial Alen invested US$3.5 million in packaging machinery during the last three years. Their last acquisition of packaging equipment took place in November 2001 when they acquired a filling machine from the Spanish manufacturer Mengibar.

Machinery Brand Country Filling machine Mengibar Spain

E) Future Packaging Machinery Ordering Plans, 2002–2003 Industrias Alen is building a new manufacturing plant in the state of Puebla, approximately 80 miles from México City. The first stage of this new plant will have three processing and packaging lines. The company plans to acquire US$15 million in new equipment during 2002 for this first stage. Their expansion plan calls for installing additional lines in subsequent years, with packaging machinery investments of US$8 million for 2003 and US$7 million in 2004. In addition, the company plans to purchase a new packaging line for bottles for their México City plant. This line will include bottle blowers, bottle orienting machine, filling

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machine, capping machine, labeling machine, printing machine, coding machines, carton form, fill, and seal machine, sealing machine, and palletizing machine.


Estimated Budget

Complete line for packaging in bottles 1 T.B.D Expansion T.B.D F) Purchasing Policies and Financial Arrangements Alen prepares yearly investment plans for the purchase of manufacturing and packaging equipment. Estimates of required equipment are based on expected demand growth for its products, introduction of new products, and cash flow available for investment. The corporate offices in Monterrey make purchasing decisions, and most purchases are made directly through the equipment manufacturers. The company purchases with its own funds and with bank credit. To purchase major or imported equipment, Alen has used US ExIm Bank financing and considers vendor financing when available. G) Factors that Influence Purchasing Decisions

1. Service. 2. Price. 3. Technology. 4. Presence in the market. 5. Brand recommendations.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company is highly satisfied with the functioning of machines by Katex, Bekum, Uniloy, and Aoki because they are highly flexible and they offer excellent service and reliability. Although they prefer these brands, the company is open to new suppliers. According to country of origin, Alen regards packaging machinery in the following way: Origin Technology Flexibility Service Price United States Regular Regular Good Good Spain Good Good Regular Regular Germany Good Good Good Good Japan Good Regular Good Good

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J) Specific Interest Alen welcomes information from packaging machinery suppliers offering good solutions for home care products. The company is interested in the whole packaging process, from manufacturing bottles to palletizing. K) Contact Information Company Name: Industrias ALEN, S.A. de C.V. Contact: Ing. Omar Picazzo Position: Asesor de Nuevos Productos Address: Boulevard Díaz Ordáz # 1000, Col. Los Treviño,

66350, Santa Catarina, Nuevo León, México. Telephone: (52-81) 8122-1049 Fax: (52-81) 8122-1594 E-mail: [email protected] Web: www.alen.com.mx

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Industrias LAVIN de México, S.A. de C.V.

Industry: Personal Care Sub Industry: Creams, gel, shampoo, nail care

liquids Location: Jiutepec, Morelos, México Size: (sales) US $8 million Purchasing Potential:

US $180,000 for 2002


Gravimetric and powder filling machines, Labeling and Coder machines, one Carton form, fill, and seal machine.

A) Company Description Industrias Lavin de México is a small, privately held Mexican company that was established in 1986 to produce personal care products. The company began by manufacturing nail care products and now operates two plants at the same location. They are currently producing private- label gel, nail care, body creams, and shampoos for supermarket chains like Wal-Mart, Comercial Mexicana, Soriana, Gigante, Chedrahui, and ISSSTE. They also manufacture a variety of similar products under their own brand, Nuvel. This company sells mostly into the local market and is planning to export to Panama in 2002. B) Main Products Produced and How They Are Packaged All of this company’s products are positioned in the private label or low-end markets, making them known and well accepted in those segments. They consider their products to offer better quality than other similarly priced alternatives.

Product Brand Package Shampoo Nuvel and Private labels Plastic, PVC, PET containers (1

and ½ lt.) Liquid body cream Nuvel and Private labels PVC containers (1 and ½ lt.) Nail care products Nuvel and Private labels Plastic, PVC, PET containers

(1/4 and 1/8 lt.) Gel Nuvel and Private labels Plastic, PVC, PET containers

(1Kg, 375 and 180 gr.) Deodorant (stick) Nuvel and Private labels PVC container (220 gr.) Solid cream Nuvel and Private labels Plastic and PVC containers

(1Kg, 375 and 180 gr.) Body lotions Nuvel and Private labels Plastic, PVC, PET containers (1

and ½ lt.)

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C) Installed Packaging Machinery The company stated they have moved forward with significant investments in plant and equipment over the past two years. They forecast that the new equipment purchases will continue, as they must improve their productivity to meet growing competition in their markets. The company indicates that most of their manufacturing practices are obsolete, and many parts of the process are still done manually. Industrias Lavin’s foremost objective is to automate their processes and defend their market share through manufacturing efficiency.

Current Machinery Used Brand Units Origin Average Age Specification

Liquid filling machines Simplex 5 México 8 80% Viscous and semi-viscous filling machines

Simplex 5 México 8 80%

Capping machines Line Reel 3 US 5 90% Labeling machine Accra Ply 1 US 2 90% Powder filling machine N/A 1 US 10 80% Coding machine Domino 1 US 8 90% D) Last Purchases of Packaging Machinery This company’s last purchase of packing machinery occurred in 1999. It included a semi-viscous filling machine from a local supplier, Simplex, and a used Accra Ply labeling machine from the United States. The company spent US$118, 000 on this purchase.

Machinery Brand Country Cost (Approximately) Labeling machine Accra Ply US US $38,000 2 Filling machines Simplex México US $80,000

E) Future Packaging Machinery Ordering Plans, 2002–2003 This company is starting a new project to manufacture sunscreens with Evernice (their own brand) and private label for supermarkets. This undertaking will require the acquisition of two filling, capping, and labeling/coding machine lines in 2002, for which the company has budgeted US$180,000. Also, Industrias Lavin is planning to replace the current powder-filling machine, but they need to compare at least three possible providers and their services available in México as well as cost.

Machinery Units Origin Motive of Purchase

Estimated Budget

Gravity filling machine (16 nozzles)

1 T.B.D Expansion T.B.D

Capping machine 1 T.B.D Expansion T.B.D Powder filling machine 1 T.B.D Expansion T.B.D Coding/printing machine 1 T.B.D Expansion T.B.D

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F) Purchasing Policies and Financial Arrangements The company does not have any special policies for the purchasing of packaging machinery. They look for equipment that is especially designed for the personal care industry and prefer suppliers that already have equipment in operation in the Mexican market. The most important requisite is for the supplier to be able to offer adequate service in the Mexican market and to have a secured supply of spare parts. The company usually pays a 50% down payment for the equipment, and the balance is paid once the machine is in operation at their facilities. G) Factors that Influence Purchasing Decisions

1. Service (technical support and personnel training). 2. Equipment safety 3. Supplier’s reputation. 4. Delivery times. 5. Price.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers As mentioned, the company is interested in working with suppliers with an adequate support infrastructure in México. Industrias Lavin’s evaluation of packaging machinery according to its country of origin: Origin Technology Flexibility Service Price United States Very Good Very Good Good Good Spain Good Good Good Regular Germany Good Good Good Regular France Very Good Very Good Regular Bad México Bad Regular Good Good Korean Very Good Very Good Very Good Very Good I) Trade Show Attendance / Trade Publication Information The executives from this company regularly attend two trade shows, Expo Farma and Expo Pack, both taking place in México. The company receives trade publications like the magazine from México’s cosmetics association (Sociedad de Quimicos Cosmetologos de México) and others like Reportero Industrial, Manufactura, and Cosmetics Technologies (USA).

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J) Specific Interest The company is especially interested in receiving information on filling, sealing, and labeling and coding machines for a new series of sunscreen products they plan to introduce to the market in 2002. They are also interested in information on equipment that will help them automate their processes and on tape dispensing machines. K) Contact Information Company Name: Industrias Lavin de México, S.A. de C.V. Contact: Ing. Gabriel Carreto Position: Manufacturing Director Address: Calle 9 Este N° 24 Col. Civac 62500, Jiutepec Morelos, México Telephone: (52) 5724-2680 Fax: (52) 5726-4050 E-mail: [email protected], [email protected]

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Industrias Selectas (Myrurgia), S.A. de C.V.

Industry: Personal Care Sub Industry: Perfumes, soap, creams, powders, deodorant Location: México City Size: (sales) US$50 Million Purchasing potential: N/A Specific Business Opportunities:

Plant relocation and modernization project for 2003

A) Company Description Industrias Selectas is a subsidiary of the Myrurgia perfumery of Spain. The company started operations in México over 50 years ago as a distributor for Myrurgia products, and approximately 25 years ago they started production in México. Currently the company is exporting products to Spain because at present it is cheaper to manufacture some products in México. Industrias Selectas has over 190 different product offerings packaged in México. They export approximately 30% of their production to Spain and Central America. B) Main Products Produced and How They Are Packaged

Product Presentation Deodorant Stick, roll-on and spray Perfumes Crystal bottle and carton box Powder Plastic jar Soap Paper wrap and box Cosmetics Blister pack

Industrias Selectas manufactures soaps, perfumes and deodorants domestically and imports cosmetics and powders, which are imported as bulk and packed in México. C) Installed Packaging Machinery

Current Machinery Used Brand Units Origin Wrapping machines for soap ACMA

Verpackum 3 3

Italy Germany

Wrapping machines for round soap Custom made 1 Spain Blister machines Jenetron

Hamer 1 1

México Spain

PVC Thermoforming machine Filamatic 1 US Volumetric filling machines (Carrousel)

Macruz

2 2

México Italy

Piston filling machines Filamatic 1 US Labeling and coding machines Printapros 6 Spain

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The vast majority of the packaging equipment being used by this company is European because they give serious consideration to recommendations made by the Spanish corporate office. Industrias Selectas also has an important base of Mexican machinery, which they consider to be very rough and of poorer quality than imported equipment, however, spare part and service availability is much better. D) Last Purchase of Packaging Machinery Mirurgia’s last purchase occurred in 1998 when the company acquired plastic injection and blister machinery so they could package certain products in-house instead of sending them out to third-party packagers.

Machinery Brand Country Blister Machines Jenetron

Hamer México Spain

PVC Thermoforming machine Filamatic US E) Future Packaging Machinery Ordering Plans, 2002–2003 Industrias Selectas has not purchased packaging machinery in the last three years because it has plans to move to a new location. The company’s México City plant is surrounded by other businesses and houses, so it has no room for expansion. The company plans to move to Texcoco (near México City) in 2003, and the relocation project includes renewing a major portion of its machinery. F) Purchasing Policies and Financial Arrangements Industrias Selectas defines its own packaging machinery needs and usually buys directly from the equipment manufacturer. The purchasing decision process includes the evaluation of at least three equipment alternatives. Considerable emphasis is placed on the vendors’ capacity to provide good local service as well as spare parts availability. For major projects, the company’s headquarters is involved in the decision-making process, and their final approval is required before placing an order. After a decision has been reached, the Mexican company handles the purchasing process. They are responsible for placing the order, negotiating a contract, and selecting the financing scheme, which might involve internal monies and credits from the vendor. Servicing for the machinery is provided in-house, and the equipment supplier’s technicians are only required for major repairs.

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G) Factors That Influence Purchasing Decisions.

1. Technology. 2. Immediate response for service and spare parts. 3. Spare parts. 4. Space.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Company staff members said they prefer European machinery for its superior durability. When available, Mexican machinery is selected because of a local concern’s ability to respond immediately to service requirements. Origin Technology Flexibility Service Price United States Average Good Poor Average Italy Very Good Good Good Good Spain Good Good Good Good México Average Good Very Good Very Good I) Trade Show Attendance / Trade publication Information Industrias Selectas personnel attend trade shows in México only, with the most representative for packaging machinery being ExpoPack. The company regularly receives equipment literature from their parent company in Spain as well as from suppliers. J) Specific Interests The company is highly interested in obtaining information from potential suppliers for soap-wrapping machines and filling machines for creams, as well as from potential suppliers for their liquid soap project. K) Contact Information: Company Name: Industrias Selectas Myrurgia, S.A. de C.V. Contact: Ing.Emilio Pelegrin Position: CEO Address: Lago Alberto #436 Col. Anahuac México, D.F. Telephone: (5255) 5260-2144, 5260-1583 Fax: (5255) 5260-2297

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Procter & Gamble Manufactura (P&G), S. de R.L. de C.V.

Industry: Home, personal care, pharmaceutical, beverage and food products

Sub Industry: Detergents and soaps, home care, baby care, women’s products, tissues and towels, beauty/health care products

Location: México City Size: (sales) US $1.5 billion Purchasing Potential: US $12–15 million for 2002 and 2003. Specific Business Opportunities:

Case erecting machines, Case IDs, Case closings, Case handlings, Hotmelt equipment, Gift/Gadget-promotional inserters, Carton fillers (powder), Case filling, Coding and Labeling systems, End of line automation

A) Company Description Procter & Gamble Manufactura, is the local subsidiary of the US multinational corporation Procter & Gamble. It began operations in México in 1948 with the construction of a manufacturing facility in the Vallejo area, located in the heart of México City. The Mexican operations for this company employ over 5,000 people and include six manufacturing facilities and a corporate office. The company has an extensive product line, which has now grown to include the Clairol line as a result of the recent acquisition of this company by P&G. This acquisition will generate new investments in plants and equipment as its objective was to position P&G as the market leader in hair care products in the Latin American region. P&G’s operations in México are divided into two main divisions: 1) Compañía Procter & Gamble México, S. de R.L. de C.V—This division’s core activity is the distribution and sale of P&G’s products throughout México. 2) Procter & Gamble Manufactura, S. de R. L. de C.V.—This division is responsible for the manufacturing of all products and the management of product inventories and distribution. This division operates six manufacturing facilities in México, which are:

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Industrial Facility Activity Vallejo Plant Poniente 146 No. 850 Col. Industrial Vallejo Entre A. Ceylán y Norte 59 02300 México D.F.

The largest detergent plant in the world. It manufactures various brands of detergents including Ariel, Bold 3, Salvo, and Rindex and Downy fabric softener. About 60% of the production is exported to various markets in the Americas. The Vallejo complex also houses the GBS LA Strategic Purchases and the corporate offices for LA F&HC packaging engineering.

Naucalpan Plant San Andrés Atoto No. 326 Col. San Francisco Cuautlalpan Naucalpan de Juárez 53560 Edo. De México

Manufactures health care products including Pepto-Bismol, Vicks, and Crest toothpaste among other products. This plant exports about 80% of its production to the United States, Canada, and the Caribbean.

Talisman Plant Av. Talisman No. 210 Col. Tres Estrellas Del. Gustavo A. Madero 07820 México D.F.

Produces soaps including Safeguard, Zest, and Camay. One of the largest soap plants in the world, it exports about 80% of its production to many areas, including Japan, Saudi Arabia, Latin America, and the Caribbean.

Estrella Plant Poniente 146 No. 730 Col. Industrial Vallejo 02300 México D.F.

Manufactures sanitary pads such as Always and Diapers such as Pampers. The plant exports to the Latin American and Caribbean markets.

Mariscala Industrial Complex Km. 16 Autopista Querétaro–Celaya Calera de Obrajuelo Municipio de Apaseo el Grande Guanajuato 38180 México

One of P&G’s most important investments in México. The complex includes one sulphate processing plant, one sulphurated (biodegradable reagent) plant, one shampoo manufacturing plant, and one hand and body liquid soap plant. Production from this facility is also exported to various markets including the United States, Latin America, and the Caribbean.

Tissue Paper Manufacturing Plant Km. 115.5 Carretera Los Reyes Zacatepec 90300 Apizaco, Tlaxcala

P&G’s most recent investment in México. The plant makes facial and toilet tissues and paper towels. This plant also exports to other Latin American markets.

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B) Main Products Produced and How They Are Packaged P&G manufactures and markets in México more than 50 different products with more than 80 different formats and packages, the most representative are:

Product Brand Package Laundry Ariel, Ace, Rindex, Dryel,

Downy, Downy Revitalizer, Tide, Bounce

Plastic bag, carton boxes, PET and PVC bottles with spray applicator as well as PVC containers

Detergents Salvo, Salvo Gel, Dawn Plastic bag, carton boxes, PVC containers Home care Maestro Limpio, Febreze,

Swiffer, Fit Plastic bag, carton boxes, PET and PVC bottles with spray applicator as well as PVC containers

Soap bars Camay, Safeguard, Zest Wrapping with plastic paper Hair products

Head & Shoulders, Pantene, Pert Plus

PVC bottles

Dental care Crest PVC tube Deodorants Secret PVC sticks Health care Vicks Cough/Cold Products,

Pepto-Bismol, Metamucil PVC, glass and PET bottles, carton box, PVC and aluminum containers, plastic blister

Diapers Pampers Plastic bags, PVC containers Sanitary pads

Always Individual plastic bags, carton boxes

Tissues, toilet paper, paper towels

Charmin, Bounty, Puffs, Lirio, Lunch, Cheff

Plastic bags, carton boxes

C) Installed Packaging Machinery Information regarding process and packaging machinery considered confidential, however, the company did provide general information on the types of equipment they use in their manufacturing facilities throughout Latin America. About 50% of their packaging machinery consists of bagging machines for powders, followed by filling machines for liquids and powders. The company also has a large number of packaging lines that include sealing, labeling, coding, transport, and palletizing.

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Sample list of packing machinery:

Current Machinery Used Bagging/Pouches machines / PMB-UVA (Germany and Holland) Case/Tray wrapping machines Closing machines Container & component handling machines Vertical form, fill & seal machines (powder, liquid and viscous)/ VFFS Inspecting machines Marking machines Packaging support/specialty equipment Wrapping machines Tape dispensing machines Pallet forming, dismantling, and securing machines Transporting systems Capping machines Carton form, fill, and seal machines Labeling machines Coder machines Container handling machines

D) Last Purchases of Packaging Machinery The company’s most recent purchase of packaging machinery occurred in November 2001, when they invested US$260,000 in one Scoring Laser Machine LMY from Germany. This machine was purchased for production of a new product at the Vallejo facility.

Machinery Brand Country Cost Scoring laser machine LMY Germany US $260,000 Carton form, fill, and seal, bagging and wrapping line

Ronchi Italy US $140,000

During the 2000–2001 period, P&G replaced their bagging equipment at all their plants in Latin America. They replaced Try Angle equipment with PMB-UVA, which is a joint venture between a German and a Dutch company. The value of the purchase reached US$18 million for 120 machines. About 80 of these machines will be installed at the Vallejo plant. E) Future Packaging Machinery Ordering Plans, 2002–2003 P&G Manufactura has a US$10 million purchasing budget for acquiring new packaging machines during 2002 for all of the Latin American region. Future purchases will be for equipment in general to improve production and enable the launch of new products and formats.

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The following list presents some of the types of machines that are contemplated for future purchases:

Machinery Origin Motive of Purchase CASE ERECTING Bliss type case erecting (capable to deliver 25 to 35 cpm) RSC case erecting (high speed)

T.B.D Expansion

CASE ID Online ink-jet printers for corrugate containers (high resolution for bar code printing) Online laser printers for alpha numeric codes

T.B.D Renovation

CASE CLOSING Hot melt case sealers, capable of automatic refilling and high speed (>40 cpm)

T.B.D Increase productivity

CASE HANDLING Empty case delivery systems for 100-plus cases per minute

T.B.D Increase production

HOT MELT EQUIPMENT T.B.D Expansion GIFT / GADGET–Promotional Inserters T.B.D Expansion CARTON FILLERS (Powder) T.B.D New product line CASE FILING T.B.D New product line CODING SYSTEMS Ink Laser etc. T.B.D Renovation END OF LINE AUTOMATION T.B.D Increase productivity WEIGHING SYSTEMS T.B.D New product line F) Purchasing Policies and Financial Arrangements The corporate equipment purchasing office for the Latin America region is housed at the Vallejo complex in México City. This office is responsible for reviewing all purchases for both process and packaging equipment going to their 16 plants in the region: México (6), Venezuela (2), Brazil (2), Argentina (2), Guatemala (1), Peru (1), Colombia (1), and Chile (1). P&G does not have any special agreements with equipment suppliers, but a corporate approval is required to introduce new equipment into their facilities in the case of a “global” project. For new suppliers, the company usually runs a series of equipment tests at the equipment manufacturer’s facilities then introduces a single piece of equipment into one of P&G’s plants for further testing. For every purchase, the company defines what is the state-of-the art equipment or technology for that particular application. Once this is defined, the company identifies potential suppliers that are invited to present proposals. P&G negotiates terms with the selected supplier.

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The company purchases equipment with its own cash flow. Common payment terms are 40% down payment, 40% at delivery, and a final payment 30 days after the equipment is in operation at their plant. G) Factors that Influence Purchasing Decisions The most important factor in a P&G decision to purchase equipment is the result of the tests they conduct on proposed equipment. If a supplier is approved, it can become a “global” supplier for the group.

1. Efficiency. 2. Global service.* 3. Cost. 4. Flexibility. 5. P&G corporate’s recommendations.

* P&G also requests a spare parts kit, training on the use of the equipment, and local service and support. H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers During the negotiations for the purchase of new equipment, P&G signs a service agreement with the supplier outlining the terms of the service and support it will provide locally to each machine it sells into this company. The company indicates it gives an edge to existing suppliers but that it is open to evaluating new alternatives. P&G evaluation of packing machinery according to its country of origin: Origin Technology Flexibility Service Price United States Good Good Regular Regular Spain Good Regular Regular Regular Germany Very Good Very Good Good High Holland Very Good Very Good Very Good Regular France Good Regular Good Regular I) Trade Show Attendance / Trade Publication Information P&G personnel always attend local trade shows like ExpoPack and international shows like Pack Expo in Chicago and Las Vegas as well as others in Dusseldorf, Germany. The company also regula rly receives information from potential suppliers and also consults PMMI’s CD-ROM, which they consider a useful tool for learning about technologies and potential US and Canadian suppliers.

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J) Specific Interest P&G’s packaging engineers indicated that very short-term opportunities for US and Canadian suppliers exist for Carton fillers (Powder). K) Contact Information Company Name: Procter & Gamble Manufactura, S. de RL de C.V. Contact: Ing. Rafael de La Hoz Position: GBS LA Strategic Purchases Address: Poniente 146 N° 850 Col. Industrial Vallejo 02300, México D.F. Telephone: (52) 5724-2680 Fax: (52) 5726-4050 E-mail: [email protected] Web page: www.pg.com.mx Company Name: Procter & Gamble Manufactura, S. de RL de C.V. Contact: Ing. Hans Hatmann Position: LA F&HC Packing Engineering Address: Poniente 146 N° 850 Col. Industrial Vallejo 02300, México D.F. Telephone: (52) 5724-2786 Fax: (52) 5724-2788 E-mail: [email protected] Company Name: Procter & Gamble Manufactura, S. de RL de C.V. Contact: Ing. Luis Mazzei Position: LA F&HC Packing Engineering Address: Poniente 146 N° 850 Col. Industrial Vallejo 02300, México D.F. Telephone: (52) 5724-2782 Fax: (52) 5724-2788 E-mail: [email protected] Company Name: Procter & Gamble Manufactura, S. de RL de C.V. Contact: Ing. Ituriel Cárdenas Position: LA F&HC Packing Engineering Address: Poniente 146 N° 850 Col. Industrial Vallejo 02300, México D.F. Telephone: (52) 5724-2792 Fax: (52) 5724-2788 E-mail: [email protected]

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Company Name: Procter & Gamble Manufactura, S. de RL de C.V. Contact: Ing. David E. Flores Salorio Position: Latin America F&HC Engineering Address: Poniente 146 N° 850 Col. Industrial Vallejo 02300, México D.F. Telephone: (52) 5724-2836 Fax: (52) 5724-2788 E-mail: [email protected] Company Name: Procter & Gamble de México, S. de RL de C.V. Contact: Ing. José Antoni Junco Position: Latin America F&HC Engineering Address: Poniente 146 N° 850 Col. Industrial Vallejo 02300, México D.F. Telephone: (52) 5724-2747 Fax: (52) 5724-2788 E-mail: [email protected]

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Productora de Cosméticos, S.A. de C.V. (Wella)

Industry: Personal Care Sub Industry: Hair products Location: México City Size: (sales) US$ 40 Million Purchasing potential: US$ 500,000 for 2000 and 2001 Specific Business Opportunities:

Carton form, fill, and seal machine, Labeling machines, Filling and Capping machines for liquids

A) Company Description: Productora de Cosmeticos was established 30 years ago as the local Wella Company, a German world leader in hair care products dating back to 1880. Productora de Cosmeticos manufactures and distributes Wella products in México and other countries in Central and South America, including Venezuela, Colombia, and Peru. The company manufactures hair dyes, shampoos, perms, decoloring, and other hair treatments. The company’s main local brands are Koleston, Viva Color, Color Perfect, Color Touch, Wellapon, Yerbacid, Crisan, and Soft Color. B) Main Products Produced and How They Are Packaged Wella packs its products mostly in capped plastic bottles. Most of its hair dyes are also packed in plastic bottles, but this is being changed to aluminum sachets. Dyes are also individually packed in carton boxes wrapped in cellophane, containing also rubber gloves packed in a plastic bag. Individual products are also packed for shipping in carton boxes palletized with stretch plastic.

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C) Installed Packaging Machinery Current Machinery Used Brand Units Origin Average

Age Specification

Tube fill and seal machines Unipac IWKA Norden Gasti

1 2 1 2

US Germany Sweden Germany

12 80%

Bottle filling and capping machines

MRM Elguin Rationator

Brinder CAM

Simplex

3 2 1 2 2

US Germany Germany

Italy Germany

12 80%

Aluminum sachet filling machines

Merz 1 Germany 4 100%

Carton form fill and seal machines

CAM IWK

2 2

Italy Germany

10 90%

Labeling machines Pago Combina Domino

3 3 1

Italy Germany

US

12 80%

Overwrapping machines PRV Penta 1 Italy 9 90% Ink-Jet coding machines Image Linx

Domino Acuprint

3 6 5

US US US

10 80%

Tape dispensing machines Debeck 6 México 12 80% Wraparound lidding machines (Stretch)

N/A 2 US 10 80%

About 60% of the machinery used in this plant is German, 20% from the United States, and the remaining 20% came from Italy. The company believes that packaging machinery offered by European suppliers, especially Italian and German, is the most technologically advanced for all uses except for coding where the United States is the leader. D) Last Purchases of Packaging Machinery This company’s last important purchase of packaging machinery was in October 2001 when they acquired a cellophane wrapping machine from German supplier Pester. The company spent close to US$100,000 in this acquisition. E) Future Packaging Machinery Ordering Plans, 2002–2003 Productora de Cosméticos has not yet developed its budget for acquisitions of packaging machinery during 2002, however, they mentioned the need for a carton form, fill, and seal machine, a labeling machine, cellophane wrapping machine, and a filling and capping machine for liquids. These acquisitions will likely take place in the second half of 2002 except for the cellophane wrapping machine. It will be supplied by PRB, an Italian supplier

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that is in final negotiations for the sale of this machine. The company will pay US$107,000 for this machine. The company also mentioned that it most likely will select IMA to supply the filling machine. F) Purchasing Policies and Financial Arrangements Productora de Cosméticos makes purchasing decisions locally but relies on recommendations from its parent company in Germany. The local company sends information on its requirements (that, is type of packaging and desired speed) to suppliers to solicit proposals. The company compares three to four proposals before making a decision. Productora de Cosméticos informs Wella in Germany before presenting the purchase order. Wella checks with its other manufacturing facilities to see if such a machine is available for sale to México. When Wella introduces a new product to be manufactured by several of its facilities, the parent company chooses the equipment and negotiates the global purchase with the supplier. The local company does purchase from the local representatives of their suppliers. They usually purchase from equipment suppliers with which they’ve had previous experience. G) Factors That Influence Purchasing Decisions.

1. Versatility to package various products with the same machine. 2. Cost. 3. Previous experience with equipment manufacturer. 4. Technical support. 5. Delivery schedule and financing.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company has no specific agreements with any equipment supplier. But the company has a strong preference for German equipment, and the parent company is actively involved in selecting equipment suppliers for its subsidiaries. The local company considers the cost for spare parts and service for German equipment to be very high, but they are willing to pay the price because of the machine’s speed and versatility. The company provides regular maintenance to its equipment with its own personnel but relies on the equipment suppliers to train their personnel both for operating and repairing the equipment. The company also hires the suppliers to repair the equipment. Spare parts are purchased directly from the manufacturer or from their distributors in the United States, as local representatives seldom have spare parts available.

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Origin Technology Flexibility Service Price United States Good Good Good Good Germany Very Good Very Good Good Expensive Italy Good Very Good Average Expensive I) Trade Show Attendance / Trade publication Information: Productora de Cosméticos attends ExpoPack and ExpoFarma in México, and company directors visit other shows in Europe. The company subscribes to trade publications for the pharmaceutical and cosmetics industries. The company also searches for potential suppliers via the Internet. J) Specific Interests The company is interested in receiving information on suppliers for box form, fill, and seal machines, sachet filling, labeling equipment, and capping machines. K) Contact Information: Company Name: Productora de Cosméticos, S.A. de C.V. (Wella) Contact: Ing. Tonatiuh G. Sparza Position: Maintenance Manager Address: Camino a San Lorenzo #858 Deleg. Iztapalapa 09850, México D.F. Telephone: (52) 5624-7585, 5624-7591 Fax: (52) 5612-8020 E-mail: [email protected]

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UNILEVER Home and Personal Care, S.A. de C.V.

Industry: Personal Care Sub Industry: Face care products (creams, lotions, cleansers, etc.),

shampoos, conditioners, roll-on and stick deodorants, body creams and oils, compact powders (cosmetics)

Location: Cuernavaca, Morelos Size: (sales) US$260 million Purchasing potential: US$3.2 million Specific Business Opportunities:

Filling, Capping, Labeling, and Carton form, fill, and seal machines

A) Company Description Unilever HPC (Home and Personal Care) is a wholly owned subsidiary of Unilever Group México. Unilever acquired this facility in 1985 from the US company Chesborough Pond’s. Most of the production of this facility is sold in the Mexican market. About 15% is exported to other Latin American countries and Israel and a small portion to Europe. This company also imports and distributes other products from Unilever’s personal care line, like Dove and some Pond’s products, which are imported from the United States. B) Main Products Produced and How They Are Packaged This Unilever division manufactures several product lines at this facility. Some of Unilever’s most important brands are Pond’s, Rexona, Dove, and Suave. The principal products that are packaged at this facility are:

Product Brand Package Facial cream Pond’s Plastic jar (7 different versions from

120 to 470 ml) Shampoo / Conditioner Helen Curtis,

Suave, Sedal Plastic with “tapafacil” cap

Talc Efficient Plastic bottle Hair gel Aqua Net PET jar (600 and 175 ml) Deodorants Rexona, Axe,

Patrich, Impulse Plastic bottle, roll-on, bar, spray

Hair spray Aqua Net, Suave Aluminum Bottle Hand cream Vasenol Plastic bottle (60, 295 and 443 ml)

Plastic tube (177 ml) Petroleum jelly Vaseline Plastic Jar Cleansing lotion Pond’s PET bottle

All products are cartoned and palletized manually.

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C) Installed Packaging Machinery Unilever HPC’s manufacturing facility in Cuernavaca, Morelos, operates 16 lines using diverse machinery that includes the following:


Specification

Filomatic/ Comadis

3 15 90%

Misard 1 2 90% Ronchi 10 Italy 3 90% Purdy 2 Italy 15 90%

Filling machines for liquids and viscous products (vertical and rotative)

Colton Hope 2 10 90% Custom made 8 México 2 to10 75% Capping machines Krones 3 US 2 90% Their own 7 México 10 75% Labeling machines Krones 3 US 2 90%

Ink-jet coder Videojet 14 US 5 + 80% Case forming and closing CAM 2 US 3 90% Group package “cellophane” CAM 2 US 3 80% Tape dispensing machine Devek 12 Cooling tunnels 4 México 3 to20 95% Pallet machine 1

D) Last Purchases of Packaging Machinery At the end of 2000 Unilever HPC acquired some machinery to satisfy their growing packaging needs. One of the machines was a 15-year-old filling machine they purchased from a sister company in Chile. Other machinery bought that year included:

Machinery Brand Country Line for roll-on deodorants including capping and labeling machines

Krones US

E) Future Packaging Machinery Ordering Plans, 2002-2004 Future machinery purchases that are being considered by Unilever HPC, will include the following equipment:

Machinery Units Brand Motive of purchase

Estimated Budget

Filling machine 3 or 4 Ronchi Replacement US$500,000 each Capping and labeling machine 3 or 4 Krones Replacement US$400,000 each Carton form, fill, & seal machine 3 Krones Replacement N/A

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F) Purchasing Policies and Financial Arrangements For defining future equipment needs, the company deve lops sales estimates for the following years and analyzes whether their existing manufacturing capacity will be able to support the expected demand. Other factors they evaluate are the productivity at each production line and if their operation could be made more efficient. There are also some tax and depreciation issues that are considered for defining the timing in which they will proceed with their equipment purchases. The company has estimated it will invest US$3 million during 2002 for the purchase of packaging machinery. The selection process for new equipment is initiated by the facility in México, which defines potential supplier and equipment alternatives. The local operation consults with a corporate department, Global Technology Center, which operates two centers for Unilever, one in England and the other in the United States. These centers are constantly evaluating suppliers and equipment they could recommend to their manufacturing facilities worldwide. Once recommendations are received from the Global Technology Centers, a final decision is reached by the facility in México. All equipment decisions are made around the specifications of the company’s products, those suppliers that present the alternatives that best match the company’s requirements are considered. The company indicates that it is willing to take any new technology risk as long as the proposed machinery meets their manufacturing requirements. The company purchases equipment with its own cash flow and usually pays a 30% down payment, a schedule of payments as the machine is being built, and a final payment once the machine is in operation at their facility in Cuernavaca. G) Factors That Influence Purchasing Decisions.

1. Equipment quality and efficiency. 2. Price. 3. Service. 4. Technical support.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Unilever HPC México prefers US machinery for their manufacturing processes. As for packaging machinery, they are already using Italian equipment from Ronchi, which was recommended to them by their Global Technology Center, with very good results. Ronchi is becoming the favorite packaging equipment brand at a corporate level. They are very satisfied with the quality and flexibility of the equipment and the technical support they have received from the manufacturer. They are not as satisfied with the service they are receiving from the local representatives.

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Equipment maintenance is performed by their internal technical staff, which is trained by their machinery suppliers. The company purchases spare parts directly from the equipment manufacturers, and in some cases, it purchases some custom-made spare parts in México that are used until the original spare part is received. Unilever has some agreements with packaging machinery suppliers at a corporate level, where they receive volume discounts due to the large volume of equipment purchased by this multinational firm. Unilever HPC México’s evaluation of packing machinery by country of origin: Origin Technology Flexibility Service United States Very Good Good Good Germany Very Good Good Good/Average Italy Very Good Very Good Average I) Trade Show Attendance / Trade publication Information Unilever HPC staff attend national and international trade shows that exhibit packaging machinery. They visit ExpoPack in México and various trade shows in Germany. The company also receives monthly trade show publications like Manufactura and Reportero Industrial. J) Specific Interest Unilever HPC México is interested in receiving information from new potential suppliers of packaging machinery specifically for filling, coding, and capping machines. K) Contact Information: Company Name: Unilever de México, S.A. de C.V.-HPC Contact: Mr. Fernando Romero C. Position: SHE Plant Manager Address: Calle 21 E # 1 62500, Civac, Jiutepec. Morelos México Telephone: (5277) 7329-1037 Fax: (5277) 7329-1143 E-mail: [email protected] Web page: www.unilever.com.mx

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Grupo Warner Lambert México, S.A. de C.V. (División La Campana)

Industry: Personal care Sub Industry: Antiseptics (mouthwash), creams, over-the-

counter products (vitamins) Location: México City Size: (sales) US $30 million Purchasing Potential: N/A Specific Business Opportunities:

Filling viscous and semi-viscous machines, Labeling machines, Coding machines, Blister machines, Other equipment

A) Company Description Grupo Warner Lambert México Division La Campana began operations in México 36 years ago. It is the local subsidiary of Pfizer/Warner Lambert, which manufactures personal care products. This company division operates two plants in México; one is located in México City, where they produce liquid and solid creams under the Lubriderm name, which is a well-recognized brand in the Mexican market. They also manufacture their oral hygiene products like Listerine and Astringosol at this facility. The other plant is located in San José Iturbide in the state of Guanajuato, where they produce over-the-counter (OTC) products and an antiseptic ointment called La Campana. Pfizer and Warner-Lambert merged in 2000 to form the world’s fastest-growing major pharmaceutical company. Through the association with Pfizer; the Pfizer/Warner Lambert group operates other facilities in México. A Pfizer plant located in Toluca in the state of México manufactures pharmaceuticals; an Adams plant manufactures gum; and a gelcaps plant manufactures vitamins. The last two facilities are located in the city of Puebla. The La Campana division sells most of its production in the local market. They export a small portion, mostly of “La Campana” ointment, to the US and Central American markets. B) Main Products Produced and How They Are Packaged

Product Brand Package Liquid cream Lubriderm High density polyethylene bottles of

180, 300, 480 ml. Solid cream Pomada de la Campana Plastic container, aluminum tube Antiseptics Listerine, Astringosol PET bottles of 250, 500, 750 ml. Syrups Agarol, Benadril,

Benadrex PET and glass bottles of 100, 150, 180, 120 ml.

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C) Installed Packaging Machinery Following is a sample list of equipment in operation at the company’s México City plant.


Specification

Filling liquid machine/ Kalish 2 Canada 5 85% Filling liquid machine/ Cozzoli 3 Italy 15 85% Carton form, fill, and seal machine/ IWKA 3 Germany 15 85% Capping machines/ Kalish 2 Canada 5 85% Labeling machines/ Kalish 2 Canada 5 85% Coding machines:

Domino Image Video Jet

5 3 2

US Italy US

2 2 2

85% 85% 85%

Palletizing machine/ Lantec 1 US 5 85% Blister machine/ Uhlman 1 Germany 16 80% D) Last Purchase of Packaging Machinery This company most recently purchased packaging machinery in 2001, when they invested US$35,000 in three coding machines from Image and Videojet.

Machinery Brand Country Cost Coding machines Image

Video Jet Italy US

US $35,000

E) Future Packaging Machinery Ordering Plans, 2002-2003 The company is planning to close their manufacturing plant in México City and transfer all personal care production to the Toluca and Puebla plants and to a plant in Colombia. The La Campana division plans to sell about 70% of their processing and packaging equipment and purchase new equipment to improve production efficiency. This plan will be implemented in 2004, so during 2002 and 2003, the company will be evaluating which equipment should be purchased and selecting potential suppliers. Because of this plan to relocate production, the company does not have a purchasing plan for 2002. They expect that their investment in new equipment and in the expansion of their facilities will have a cost of between US$10 million and US$15 million.

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Some of the equipment under consideration for purchase for their new project will likely include:


Estimated Budget

Filling liquid machine/ Kalish /Cozzoli 1 Canada Modernization T.B.D. Carton form, fill, and seal machine 1 T.B.D. Modernization T.B.D. Capping machines/ Kalish 1 Canada Modernization T.B.D. Labeling machines/ Kalish 1 Canada Modernization T.B.D. Blister machines/ Uhlman 1 Germany Modernization T.B.D. F) Purchasing Policies and Financial Arrangements Warner Lambert/Pfizer has a series of purchasing policies that must be followed by all their facilities worldwide. One of such guidelines seeks to standarize the equipment, processes, technologies, and suppliers throughout all facilities. They believe that this policy makes production more efficient and reduces their equipment and spare parts costs. New equipment needs are identified at each facility. They develop a technical and economic analysis of the proposed investment and send the information to their corporate office in New York for approval. The local company requests proposals from various suppliers and makes a final decision on the purchase. The company has an internal technical staff that is responsible for providing most of the maintenance for their equipment. In some cases, like their Uhlman blister machine, they contract maintenance service to the equipment manufacturer, which sends a maintenance crew from Germany. This service was negotiated with the supplier at the time of purchase. When necessary, all of the company’s suppliers provide technical training on the operation and maintenance of the equipment to this company’s workers and maintenance staff. G) Factors that Influence Purchasing Decisions

1. An existing relationship with Warner Lambert and/or Pfizer. 2. Equipment quality. 3. Technical support. 4. Vendor financing. 5. Price. 6. Previous experience with supplier and / or and brand reputation.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company indicated that they have a preference for European equipment but that they evaluate potential suppliers from any country. Meeting the company’s technical and manufacturing requirements is more important than the origin of the machines.

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Warner Lambert División la Campana indicated they have a strong preference for two suppliers, Uhlman from Germany and Kalish from Canada. The first, a long-time supplier, has installed equipment at all of their plants worldwide. But getting spare parts can take a long time. The company mentioned that the equipment from Kalish has excellent technology and is very flexible in its applications, but that the company does not offer adequate post-sales service in México. Origin Technology Flexibility Service Price United States Good Good Regular Average Germany Very Good Good Very Good Not Good Canada Very Good Very Good Average Very Good I) Specific Interest The company is interested in receiving information on new packaging technologies for liquid hand creams, antiseptics, and syrups. They are also interested in machinery for blisters; carton form, fill, and seal; palletize; filling for viscous and semi-viscous products; labeling machines; coding machines; and other related equipment. J) Contact Information Company Name: Grupo Warner Lambert México, S.A. de C.V. (División la Campana) Contact: Mr. Jorge A. Fernández B. Position: Engineering, Maintenance & EHS Manager Address: Av. División del Norte #3443 Col. San Pablo Tepetlapa 04620, México, D.F. Telephone: (52-55) 5326-8565 Fax: (52-55) 5326-8570 E-mail: [email protected] Web page: www.pfizer.com

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VI. The Pharmaceutical Industry 6.1. Industry Overview The Mexican pharmaceutical market is estimated at US$6.5 billion, of which 82% is represented by prescription drugs. The country imports a significant portion of its internal consumption, estimated at about 22%,it while exports about 18% of its local production.

Mexican Pharmaceutical Sector (Million US$)

1998 1999 2000/e 2001

Imports 1,702 1,787 1,876 N/A Local production 4,202 4,538 4,901 N/A Exports 1,311 1,495 1,721 N/A Total Market 4,593 4,830 5,056 6,455*

Source: HDC with data from Bancomext and AMIIF / * Numbers were obtained from different data series: 2001 estimation comes from Segmento–Itam Enero-Febrero 2002, P.12 with data from PMM Pharmaceutical Mkt. México

The import of pharmaceutical products is growing by a lesser rate than local production and exports. It is expected that in the coming years, imports of pharmaceutical products will decrease further as they continue to be substituted by local production. Some of the segments in the Mexican pharmaceutical market that have experienced the highest growth during the past five years are vitamins, herbal products, and nutritional supplements, which are expected to continue growing at average rates of 16% per year. Competition in these segments is intense, and new investment is expected for the construction of additional manufacturing facilities in México to satisfy both growing local demand and increasing export to other Latin American countries. 6.2. Ranking of Companies by Size According to information maintained in the register of companies at the Ministry of Commerce and Industrial Production (SECOFI), there are 249 pharmaceutical companies in México, employing 44,985 people. The breakdown by size is as follows:


MICRO 0 to 30 85 34.14% SMALL 31 to 100 69 28.05% MEDIUM 101 to 500 64 26.02% LARGE 501+ 31 12.60% Total 249 100.00% Source: SECOFI- SIEM

The vast majority of these companies are located in México City (Distrito Federal).

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Location of Pharmaceutical Companies

State No. of Companies

Distrito Federal 169 Jalisco 26

Estado De México 26

Puebla 7

Queretaro 4

Other 17

TOTAL 249 Source: SECOFI- SIEM

6.3. Key Players Large multinational companies operating local manufacturing facilities are the dominant players as they control over 65 % of the pharmaceutical market in México.

Top Pharmaceutical Producers in México (Figures in millions of US dollars)

Company Name Sales

2000 Sales 2001*

Colgate Palmolive 925 N/A Bristol Myers Squibb México 514 N/A Grupo Novartis México 455 N/A Merck Sharp & Dohme de México 279 280 Boehringer Ingelheim Promeco 233 260 SmithKline Beecham México 221 N/A Eli Lilli y Compañia de México 199 130 Pfizer 188 300 Rhodia México 187 N/A Grupo Prove-Quim 37 N/A

Source: Expansion Magazine–Top 500 Mexican Companies. Figures in dollars using exchange rate of 9.2 MX pesos per US$1.0 * This information was received from the companies during the interviews. It might lack precision as to the actual sales figures for these companies.

6.4. Summary of Interviewed Companies Seven pharmaceutical companies were interviewed for this report. Data gathered indicates that Italian and German packaging machinery have a much stronger penetration in this market than US equipment.

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Installed Packaging Machinery by Country of Origin

41%

24%

13%

11%

4% 3% 4%

Italy

Germany

US

Mexico

Sweden

England

Other

Of the pharmaceutical companies interviewed, six were large multinationals and only one is a Mexican company. Combined purchasing budget for these nine companies is US$7.05 million.

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APOTEX (Protein, S.A. de C.V.)

Industry: Pharmaceutical Sub Industry: Patent medicine Location: México City (D.F.) Size: (sales) US$200 million Purchasing Potential: US$300,000 Specific Business Opportunities:

Tablet dispensing machine, Frask filling and capping machine, Powder compacting machine, Labeling Machine

A) Company Description Protein S.A. de C.V. is the Mexican subsidiary of Toronto-based company APOTEX. Founded in 1974 by Dr. Barry Sherman, today APOTEX is the largest pharmaceutical company in Canada. It manufactures 167 different medicines in over 450 different formats. The APOTEX group invests over US$83 million per year in research and development, positioning itself among the 17 companies with the largest R&D investments in Canada. In México, APOTEX has one plant owned by its Mexican subsidiary Protein. The Mexican company has 400 employees and four production lines: one for tablets, one for powders, one for liquids, and one for creams. Protein manufactures over 50 products in 150 different formats and has over 1,300 clients in México. B) Main Products Produced and How They Are Packaged Protein manufactures over 50 different medicines based on Electrolytes, Naproxen, Methalcopramide, Miconazole, Ranitidine, and Metronizadole.

Product Package Electrolytes Cellophane envelope Naproxen Flask Methalcopramide Blister Micronazole Tube Ranitidine Cellophane Metronizadole Flask

C) Installed Packaging Machinery Protein has four packaging lines installed in its México City plant: one for tablets, one for powders, one for liquids, and one for creams or semi-viscous products. The most important packaging machinery of the company is as follows:

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Specification

Blistering machine / Famar 1 Italy 12 80% Carton form, fill, and seal machine / Sanasi

1 Italy 12 80%

Blistering machine / BlickPack 1 Argentina 8 80% Envelope packaging machine / Serpack 2 Spain 3 80% Envelope packaging machine / Tremar 1 Italy 15 80% Envelope packaging machine / Dirmatir 1 US 7 80% Tube packaging machine /Arenco 2 Germany 4 80% Labeling machine /Char Lapier 1 Canada 2 80% Labeling machine /Label air 1 US 2 80%

In addition to this major machinery, the company’s packaging lines are complemented by conveyors, bulk handling machines, inspection and coding equipment, counting systems, and sterilizing machines. D) Last Purchase of Packaging Machinery Protein invests continuously in upgrading and expanding its packaging machinery installed base. In the last three years, the company spent US$570,000 on packaging machinery, with investments of US$250,000 in 2000, US$170,000 in 1999, and US$150,000 in 1998. The latest acquisition of packaging machinery was an envelope-packaging machine acquired from the Mexican distributor of Serpack from Spain.

Machinery Brand Country Envelope packaging machine Serpack Spain

E) Future Packaging Machinery Ordering Plans, 2002-2003 As mentioned before Protein is constantly investing in improving and expanding its installed base of packaging machinery. The company has procurement plans, which have to be approved by the general director, and major purchases (machinery of over US$100,000) must be approved by the APOTEX headquarters in Toronto. Future procurement plans pending approval include:


Estimated Budget

Tablet packaging line 1 Europe Expansion N/A Frask packaging line 1 Europe Expansion N/A Powder compacting machine 1 N/A Replacement N/A Labeling Machine 1 N/A Replacement N/A

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The new lines will be installed in a new area of the plant; the other machines will replace existing machinery. Protein’s expansion plan will require investments of approximately US$300,000 per year for the next three years. F) Purchasing Policies and Financial Arrangements Protein follows the procurement policies of APOTEX, which include evaluating at least three potential suppliers. The company also bases its candidate selection process on recommendations of the headquarters in Canada, so it is recommended that potential suppliers approach APOTEX in Canada in addition to approaching Protein in México. All purchases need approval from the general director in México, and major purchases must be approved by the headquarters in Canada. Protein generally uses export credits for the acquisition of new machinery. The company has used ExIm Bank and other ECA credits in the past. Depending on the cost of the machinery, the company pays 50% in advance, and the rest is paid through financing. G) Factors that Influence Purchasing Decisions

1. Price. 2. Technical support. 3. Brand recognition. 4. Availability of spare parts and service. 5. Contacts.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers.

The company prefers European machinery due to past experience and high precision of this equipment. They mentioned that US equipment suppliers provide better service and spare part availability, however, they feel the United States still lags behind European packaging manufacturers for pharmaceutical products. The company prefers US equipment for coding and labeling machines and conveyors. Origin Technology Flexibility Service Price United States Good Good Good Good Germany Very Good Good Good Average Italy Very Good Good Good Good Spain Average Average Average Good France Good Good Good Good South America Average Good Good Good

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I) Specific Interest Protein is interested in receiving information from manufacturers of machinery for pharmaceutical products. The company is especially interested in information on packaging machinery for tablets and flask packaging. J) Contact Information Company Name: Protein, S.A. de C.V. Contact: Q.F.B. David Sosa Position: Production Manager Address: Añil #865

Col. Granjas México México D.F. Telephone: (52-55) 5657-0888 Fax: (52-55) 5654-4432 E-mail: [email protected]

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Boehringer Ingelheim Promeco, S.A. de C.V.

Industry: Pharmaceutical Sub Industry: Patent drugs, vitamins, other related

products. Location: México City Size: (sales) US$260 million ( total sales for

Boehringer Ingelheim in México) Purchasing potential: US$600,000 Specific Business Opportunities:

Packaging machinery for a new line: Labeling, Blowing, Filling, Capping machines

A) Company Description Boehringer Ingelheim is the fourth largest pharmaceutical company in the world. Its operations in México comprise two companies: Boehringer Ingelheim Promeco, with a manufacturing facility in México City, and Boehringer Ingelheim Vetmedica with a plant in Guadalajara. Total sales in México for both divisions reached US$260 million in 2000, making it the fifth largest pharmaceutical company in the Mexican market. About 10% of total sales are exported to the US and Canadian markets. The new industrial complex for Promeco was inaugurated in 1998 and is located in the Xochimilco area of México City. The complex is composed of a production plant for oral solids, a plant for the production of liquids, a quality control lab, and a state-of-the-art warehousing facility. The operations of the Promeco facilities have been certified by the Mexican ministry of health, the US FDA, and the Canadian TPP. Investments in the Promeco plant were part of Boehringer Ingelheim’s OPINA (Optimization of the Pharmaceutical Industry in North America) project. Some of the products that are manufactured and/or packaged at these facilities are sold in the Mexican market under the following names: Bipasmín®, Buscapina®, Gotinal®, Isodine®, Lonol®, Lonol Sport®, Mobicox®, Bisolvon®, Bisolpent®, Bremagan®, Viramune®, Pharmaton®, Prodolina®, Mucosolvan®, Venastat®, and Mensifem®. B) Main Products Produced and How They Are Packaged

Product Brand Package Ointment / Gel Lonol Flexile tube Hypodermic injection products Various brands Glass ampoules Cough and other syrups Bisolvon, Bisolpent, Mucosolvan,

others Glass bottles

Iodine-based products Isodine douche, foam, solution, gargle Plastic bottle

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Once the product is in its container, it is packed in a box carton. C) Installed Packaging Machinery This list presents the packaging machinery installed at the liquids production plant:


Weighers Metler-Toledo 7 Switzerland 5 Cabin: Ampoule washing, filling and sterilizing tunnel

BOSCH 1 Germany 8

Autoclave Fedegari 1 Italy 8 Particles checkers Eisai 1 Japan 12 Fracture checkers Nikka Densok 1 Japan 7 High-speed rotative label machine (400 per min)

Libra 4 Italy 3

Printing machine Jaime 1 France 5 Dynamic scale BOSCH 1 Germany 1 Viscous filling machine COMADIS 1 Italy 7 Carton form, fill, seal machine IMA-150 1 Italy 7 Scale BOSCH 4 Germany 1 Tape dispensing machine Multipack 1 Italy 8 Coding machine Leatus 6 Germany 8 to new Thermoforming blister machine Farmores 1 Italy 12 Carton form, fill, and seal machines / M-80

Marchessini 1 Italy 12

Tape dispenser machine Multipack 1 Italy 12 Shrink and retractile oven AXON 1 US 6 Filling machine Serak 1 France 11 Orienting flask machine OZAF 1 Italy Filling machine MAR 1 Italy 20 Unwrapping machine Multipack 1 Italy 3 Bottle blower machine Neri 1 Italy 3 Filling liquid (200 bottles/min) Farmomac 1 Italy 3 Carton form, fill, and seal machine / MA-400

Marchessini 1 Italy 8

Box form machine BFB 1 Italy 3 Bottle washer machine Libra 1 Italy 8 Filling machine 100 bottles/min IMA Farmomac 1 Italy 10 Box form machine BFB 1 Italy 12 Multi-packaging (flasks, spray, instructive)

Marchessini 1 Italy 3 months

Scale BOSCH 1 Italy 3 months Tape dispensing machine Miltipack 1 Italy 3 months Coding machine Leatus 1 Italy 3 months

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Boehringer Ingelheim personnel consider the efficiency of their existing packaging machinery to be very good. However, because of their extensive product line, they must stop the production lines twice a week for a couple of hours to reconfigure the lines to the requirements for each product type. Packaging the product into cartons is performed manually. D) Last Purchases of Packaging Machinery During 2000–2001 the company spent US$500,000 to purchase packaging machinery. Following is a list of the equipment purchased during this period.

Machinery Brand Country Carton form, fill, and seal / MA-350 Marchessini Italy Coding machine Leatus Italy Scale BOSCH Germany Tape dispensing machine Multipack Italy

E) Future Packaging Machinery Ordering Plans, 2002–2003 Boehringer Ingelheim Promeco does not develop specific budgets for the purchase of new packaging machinery. Equipment purchasing plans are the result of specific manufacturing projects. Near-term plans for the liquids facility include replacement of the machinery in the line used to produce the Isodine products to modernize the process. The company plans to order a filling machine, probably from Farmomac, at an estimated cost of $600,000 to improve the line. F) Purchasing Policies and Financial Arrangements At the Promeco plant an economic cost-benefit analysis is conducted for all the lines every year. If they propose any new equipment, it must have a payback within three years in order for the purchase to be approved. If a purchase is approved, the company selects the equipment fr om at least three options. A final decision is reached jointly between the managerial committee in México and the corporate headquarters in Germany. G) Factors that Influence Purchasing Decisions

1. Compatibility with existing machinery and conformity to trend for equipment standardization.

2. Service. 3. Flexibility and reliability. 4. Price.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Boehringer Ingelheim staff members mentioned that the best machinery for their industry is made in Germany, but that these machines are very expensive. They also like Italian equipment as it is flexible and easy to operate, and they have received very good technical support. The company indicated they are inclined to purchase machinery that is similar to that which they are already using, as their personnel are already familiar with this equipment and the suppliers. This is important to them because, in the liquids area, they manufacture a wide range of products, but they cannot justify a dedicated line for each product. As products share the same production line, the machinery and related equipment must be cleaned at least twice a week. Because of this constant reconfiguration and cleaning, the company prefers equipment with which they are familiar, a factor they expect can reduce downtime. They mentioned that establishing a business relationship with a particular supplier also generates several advantages. They can negotiate better pricing and get spare part kits at reduced prices, among other benefits. As for maintenance, they indicate that this is performed by their own staff. Most of the spare parts are purchased from the local representatives of their equipment suppliers or directly from the manufacturers. The plant also has a shop where they manufacture those spare parts that are most commonly replaced. Boehringer Ingelheim Promeco’s evaluation of packaging machinery according to its country of origin: Origin Technology Flexibility Service Price United States Good Low Inadequate High Germany Very Good Good Good High Italy Very Good Good Good Average Francia Good Good Good Average Japan Very Good Good Good High I) Trade Show Attendance / Trade publication Information Representatives of this company visit only one trade show in México—ExpoFarma, which focuses on the pharmaceutical industry. They do not attend other shows as they indicate that their equipment purchases are sporadic. J) Specific Interests Boehringer Ingelheim Promeco is interested in a filling machine for liquids. This machine should work for various densities, as it will be used for the Isodine line that includes douche, foam, gargle, and liquid.

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K) Contact Information: Company Name: Boehringer Ingelheim Promeco Contact: Q.F.B. Laura G. Acosta Rodriguez Position: Manager of liquids production Address: Maíz # 49 Xochimilco 16090, México D.F. Telephone: (5255) 56 29 83 00 ext. 8114 Fax: (5255) 54 20 85 82 E-mail: [email protected] ingelheim.com Web page: www.promeco.com

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Eli Lilly de México, S.A. de C.V.

Industry: Pharmaceutical Sub Industry: Trade mark drugs, prescription, over

the counter products, and other medical specialty products

Location: México City Size: (sales) US$130 million Purchasing potential: US$N/A Specific Business Opportunities:

Carton form, fill and seal machines.

A) Company Description Eli Lilly and Company is a global, high-technology company founded by Col. Eli Lilly in 1876 in Indianapolis, Indiana, in the Midwest section of the United States. Eli Lilly and Company is a global research-based pharmaceutical corporation dedicated to creating and delivering innovative pharmaceutical-based health care solutions that enable people to live longer, healthier, and more active lives. Lilly employs more than 31,000 people worldwide and markets its medicines in 179 countries. Research and development facilities are located in Australia, Belgium, Canada, England, Germany, Japan, Singapore, Spain, and the United States. Clinical studies are conducted in more than 65 countries worldwide. Lilly manufacturing facilities are located in Australia, Brazil, China, Egypt, England, France, Germany, Hungary, Ireland, Italy, Japan, Korea, México, Pakistan, Poland, Puerto Rico, South Africa, Spain, Taiwan, and the United States. In México Eli Lilli has been present for over 60 years and produces approximately 40 products in 70 different formats. B) Main Products Produced and How They Are Packaged Eli Lilly produces a wide variety of medical drugs with its most important products being antidepressive pills Prozac, antibacterial liquid Merthiolate, vitamin Cebaline, antibiotic Losone, cancer medicine Gemza, insulin Humulin, and other nerve control products. Most of Eli Lilly’s tablets and capsules are blister packed, and only vitamins and liquids (oral) are packaged in plastic bottles. Injections are packed in glass ampoules.

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Specification

Ampoule filling machine/ Cozzolli 1 Italy 20 99% Capping machine / 3M 1 US 12 99% Labeling machines / Newman 3 US 10 90% Carton form, fill, and seal / CAM 2 Italy 8 95% Carton form, fill, and seal / Uhlman 1 Germany 99% Laser labeling machine (Holograms)/ Neri

4 Italy 2 50%

Blister machines / Uhlman 3 Germany 8 80% PVC wrapping Machines/ Package 1 US 20 99% Wrapping machine/ CAM 4 Italy 8 99% Tablet filling machine/ Kremer 1 Germany 2 98% Container orienting machine/ Palace 1 US 2 98% Printing, imprinting machines / Hapamatic

3 Italy 8 80%

Carton form, fill, and seal machines/ Uhlman

3 Germany 8 80%

Tablet and capsule machinery 12 Italy 10 80% Tray machines 20 México 10 70%

Most of Eli Lilly’s packaging machinery (95%) is Italian or German. This company perceives Italian pharmaceutical machinery to be the most technologically advanced and quite flexible for adapting to various packaging applications. D) Last Purchases of Packaging Machinery Eli Lilly’s 1998 purchase of packaging machinery included four hologram labeling machines from the Italian supplier Neri, two tablet machines from Kramer (Germany), and a Palace brand orienting machine. The company invested US$1.1 million in these purchases.

Machinery Brand Country Hologram labeling machine Neri Italy Tablet machines Kramer Germany Container orienting machine Palace US

The Venezuelan subsidiary of Eli Lilly recently sent a packaging line to México, which includes a filling machine, orienting machine, blower, labeling machine, and capping machine. This system will be conditioned to fit in Eli Lilly’s México plant. Over the past three years, Eli Lilly has spent on average about US$1 million per year for packaging machinery and spare parts.

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E) Future Packaging Machinery Ordering Plans, 2002–2003 Since Eli Lilly just received an entire packaging line from its sister subsidiary in Venezuela, the company will focus in setting up this line and has no other packaging machinery purchasing plans. The company is analyzing a project to renew their carton form, fill, and seal machines, which present frequent problems due to old age and extensive use. F) Purchasing Policies and Financial Arrangements Eli Lilly México defines its own packaging machinery needs and usually buys directly from the equipment manufacturer. The purchasing decision process includes evaluation of at least three alternatives. Considerable emphasis is placed on the vendor’s capacity to provide good service, and the supplier must have other machinery functioning in México. The company believes this eases the process to receive service and spare parts. Eli Lilly notifies its US headquarters of its purchasing plans, but usually the selection process and the purchases are made with local resources. G) Factors That Influence Purchasing Decisions

1. Quality. 2. Service. 3. Flexibility. 4. Ease of operation. 5. Price.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Eli Lilly México considers the Europeans to be the leaders in packaging machinery for the pharmaceutical industry. They indicated that they are more knowledgeable about German and Italian machinery than US equipment due to the service they receive from manufacturers of their cur rent machinery. Lilly personnel noted that it is company policy to purchase only highly recognized brands and the most advanced technology available. Among Eli Lilly’s preferred brands are Uhlman and CAM. Eli Lilly maintains their equipment on regular basis and schedules frequent visits from their main suppliers. As for spare parts, Eli Lilly buys directly from the manufacturers or through representatives when those have proved to provide a good service.

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Eli Lilly’s evaluation of packaging machinery by country of origin: Origin Technology Flexibility Service Price United States Good Good Good Good Germany Very Good Very Good Good Average Italy Very Good Very Good Good Good I) Trade Show Attendance / Trade publication Information Staff members of Eli Lilly México regularly attend pharmaceutical sector trade shows ExpoFarma and ExpoPack, which take place every year in México. Additionally they subscribe to specialized magazines like Manufactura and the magazine of the Pharmaceutical Association. And they pay special attention to literature received from equipment manufacturers. J) Specific Interest At present Eli Lilly’s interest in packaging machinery is concentrated on carton form, fill, and seal machinery. They believe this is an area where US suppliers could be competitive. K) Contact Information Company Name: Eli Lilly de México, S.A. de C.V. Contact: Ing. Marcela Carreras Position: Conditioning Manager Address: Calz. De Tlalpan #2024 Col. Country-Churubusco 04200, México D.F. Telephone: (52) 5484-3800, 5484-3813 Fax: (52) 5484-3866 E-mail: [email protected]

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Laboratorios BEST, S.A.

Industry: Pharmaceutical Sub Industry: Patent medicine, Generics Location: México City (D.F.) Size: (sales) N/A Purchasing Potential: N/A Specific Business Opportunities:

Filling machine for liquids, Labeling machines, Capping machine

A) Company Description Laboratorios Best is a Mexican company dedicated to the production of generic and patent medicine. The company has its own pharmacy chain with over 350 locations called Farmancias Similares, where they distribute their products. Best manufactures medicines under their generic name, and the company competes against international laboratories by selling similar products at less than half the price of branded medicine. The group has been aggressive by advertising on television and radio, and their products are targeted to meet the needs of low- and medium-income people. The group also has control over the BEST foundation in México, which provides medical services from more than 600 doctors in 350 locations throughout the country. Laboratorios Best has one plant in México City. B) Main Products Produced and How They Are Packaged

Product Brand Package Liquid medicines Similares Plastic bottles Tablets Similares Blister and plastic bottles Capsules Similares Blister and plastic bottles

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C) Installed Packaging Machinery The most representative packaging machinery of the company includes:


Specification

Tablet counting and dispensing machine / King

1 England 12 80%

Capping machine/ Libra 1 Italy 4 80% Labeling machine/ Libra 1 Italy 4 80% Liquid filling and capping machine/ Marlow

1 Italy 1 80%

Labeling machines/ No brand 1 México 2 80% Blister machine for tablets and capsules/ Argentécnica

1 Argentina 5 80%

Carton form, fill, and seal machine/ Argentécnica

1 Argentina .5 80%

D) Last Purchase of Packaging Machinery This company invested US$300,000 in the last two years for new packaging machinery. Their most recent purchase was made in September 2001 when they acquired a Liquid filling and capping machine from Marlow in Italy.

Machinery Brand Country Liquid filling and capping machine Marlow Italy

E) Future Packaging Machinery Ordering Plans, 2002-2003 This company has not developed a formal investment program; they purchase new packaging machinery depending on the demand for their products. The company has identified the need to purchase additional filling machines, a capping machine for plastic bottles, and two additional labeling machines to place labels on plastic bottles. These purchases will be made in the next 18 months as the company is increasing its production of liquid medicines. F) Purchasing Policies and Financial Arrangements The company acquires packaging machinery from Mexican distributors or on occasion from packaging machinery distributors in the United States. They have no preference for any brand or origin of the machinery, but they require that service be available in México. They select the machinery that can satisfy their production needs, and their purchasing decision is based mostly on price, flexibility, and quality of the equipment.

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They purchase machinery with their own resources and usually follow the payment schedule of the supplier. G) Factors that Influence Purchasing Decisions

1. Quality. 2. Local service. 3. Price. 4. Flexibility. 5. Brand recognition

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers. The company has no preference for any brand or origin of machinery, but they only purchase from suppliers offering local service. The company also requires manuals in Spanish, as most operators are not bilingual. Laboratorios BEST made the following evaluation according to origin of the machinery: Origin Technology Flexibility Service Price United States Good Good Good Good Germany Very Good Very Good Very Good Very Good Italy Very Good Very Good Very Good Very Good Argentina Good Good Good Good I) Specific Interest Ladoratorios Best has selected all their packaging machinery suppliers at ExpoPack and ExpoFarma trade shows. They are interested in receiving information from suppliers of packaging machinery for liquid medicines that have a local presence. J) Contact Information Company Name: Laboratorios BEST, S.A. Contact: QFB. Jaime Portilla Gil de Partearroyo Position: Technical Director Address: Muncicipio Libre #199 Col. Portales, 03300, México, D.F. Telephone: (52-55) 5605-0794 Fax: (52-55) 5604-3846 Web page: www.fundacionbest.org.mx/

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Merck Sharp and Dohme de México S.A. de C.V.

Industry: Pharmaceutical Sub Industry: Prescription drugs Location: México City Size: (sales) US$280 million Purchasing potential: US$650,000 Specific Business Opportunities:

Labeling machine, Carton form fill and seal machines, Blister machine, Tablet packaging machine, Laser coding machines

A) Company Description Merk Sharp & Dhome México started manufacturing pharmaceutical products in México in 1930 and is the local subsidiary of Merck and Company from the United States. The Mexican operation represents only 5% of total sales for the group, and 70% of local production is exported to other Latin American countries. The company manufactures several prescription drugs for the treatment of heart disease, AIDS, and osteoporosis as well as anti- inflammatory agents and other medicines. The México plant manufactures solid tablets and imports vaccines and veterinary products from the United States and Europe. The company also imports most of its raw materials. B) Main Products Produced and How They Are Packaged Tablets are the only products manufactured by Merck Sharp and Dhome in México and are packed in blisters sealed with aluminum and packaged for retail in a carton that also in most cases contains an instruction sheet. Ophthalmic drops and injections, which are imported, are labeled in México and packed for retail in a box carton. C) Installed Packaging Machinery Current Machinery Used Brand Units Origin Average

Age Specification

Labeling Libra 2 Italy 12 80% Cartoning Uhlman 1 Germany 22 80% Cartoning CAM 1 Germany 17 90% Cartoning Machesini 2 Italy 3 90% Cartoning IMA 3 Italy 3 80-90% Blister 3 Italy / Germany Bar code 6 Filling liquids 2 US Sealing machine 1 Italy Inspection 1 Japan

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The packaging machinery in this facility operates 24 hours a day in three work shifts with 80 to 90% efficiency. About 70% of the machinery used in this plant is Italian, 20% German, and the remaining 10% came from the United States. The company believes that packaging machinery offered by European suppliers, especially Italian and German, is the most technologically advanced. The company indicated they are open to considering suppliers from other countries as long as they can offer economic or production benefits. D) Last Purchases of Packaging Machinery This company’s most recent packaging machinery purchase took place in April 2002, when they acquired a labeling machine from the US supplier Image, at a cost of close to US$38,000. E) Future Packaging Machinery Ordering Plans, 2002–2003 The company has plans to include one new packaging line for tablets in their production facility in México City. The line will include a Tablet dispensing machine, a Blister machine, and a Carton form, fill, and seal machine as well as a Laser coding machine and a Labeling machine. They have not decided which suppliers to use, but most likely they will use existing suppliers. The budget authorized for these acquisitions is US$650,000. F) Purchasing Policies and Financial Arrangements The equipment selection process includes evaluating financial and technical aspects of the proposed suppliers. Most equipment is selected based on previous experience with the suppliers, both locally and within the Merck group. The local company requests quotes from equipment suppliers, and a final purchasing decision is made jointly by the local and the parent company, which will provide financing to their Mexican subsidiary. Terms are negotiated by Merck and Company in the United States and usually include a 35% advance payment and the remainder at 30 days after the equipment is delivered. This company purchases most of its machinery directly from the manufacturers. G) Factors That Influence Purchasing Decisions

1. Previous experience with the supplier. 2. Equipment quality. 3. Service, with specific commitments negotiated with the purchase ( Service Project). 4. Brand reputation.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Merck Sharp & Dohme staff indicated they do not have any specific commitments to any suppliers. They noted that one of the most important factors they consider when purchasing equipment is what they refer to as “Service Project.” By this, they refer to very specific servicing commitments negotiated with the supplier, which include regular visits by the supplier’s technicians to review the equipment and to train Merck’s maintenance crews. Merck Sharp and Dohme indicated they tend to prefer European machinery because it has given them good results. They mentioned that the service they have received as well as the technology and flexibility of the equipment makes European equipment a better option when compared to US equipment. In this regard, they mentioned that US equipment has very good quality and is much less expensive than European equipment but lacks the flexibility to easily adapt to new packaging requirements. This flexibility makes European equipment more cost effective to the company in the long run. Origin Technology Flexibility Service Price United States Good Poor Good Good Germany Good Very Good Good Expensive Italy Good Very Good Good Expensive I) Trade Show Attendance / Trade publication Information: While the company has not made any specific commitments to any suppliers, they have identified who they believe to be the packaging machinery leaders for pharmaceutical products from whom they receive information on new technologies and equipment. Because of these relationships, they do not attend trade shows because they receive information on new technologies directly from their current suppliers. J) Specific Interests Merck Sharp and Dohme is open to reviewing information from suppliers of cartoning machines, blister machines, coding equipment, and tablet dispensing machines. K) Contact Information Company Name: Merck Sharp and Dohme, S.A. de C.V. Contact: Ing. Guillermo Puente Position: Engineering manager Address: Av. División del Norte #3377 Col. Xiotepingo 04610, México D.F. Telephone: (5255) 2122-1600 Fax: (5255) 2122-3725 E-mail: [email protected]

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Novartis

Industry: Pharmaceutical Sub Industry: Patent drugs, other specialty

pharmaceutical products Location: México City Size: (sales) US$ N/A Purchasing potential: US$2.5 million for new equipment (1/3

for packaging machinery). Specific Business Opportunities:

Blister line, Carton form, fill, and seal machine

A) Company Description Novartis is one of the most important global pharmaceutical companies. The company was established in Switzerland over 400 years ago and currently has operations in 142 countries. Operations in México for this company date back 50 years, and in 1996 it adopted the Novartis name after the merger of the Ciba and Sandoz operations. The company manufactures a wide variety of patent drugs, health care, optical, and nutrition products. The company operates one single plant in México, located in México City. B) Main Products Produced and How They Are Packaged Novartis produces a wide range of health products ranging from patent drugs to eye care products. The company operates three divisions: Novartis produces drugs for the treatment of cancer, rheumatism, arthr itis, central nervous and respiratory systems, skin, and bones, and other products. Suipharm manufactures generic drugs, and Ciba Vision produces contact lenses and eye care products.

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C) Installed Packaging Machinery Current Machinery Used Units Origin Average

Age Specification

Ampoule filling machine / Bosch 1 Germany 22 60% Bottling lines for liquids / IMA 1 Italy 2 50% Bottling line for solids / Kalish 1 Canada 4 80% Carton form, fill, and seal machine 1 Germany 9 75% Weight verification machines / Icore 8 US > 1 80% Print and apply labeling machines / Libra

2 Italy 7 & 4 90%

Inspecting for Ampoule (filling and particle free) / EASI

1 Japan 17 90%

Blister machinery / IMA 2 Italy 7 80% Blister machinery / Bosch 1 Germany >1* 70% Blister machine / Uhllman 1 Germany 15 70% Dispensing machines / Solipack 2 Italy 7 80% Tablet machinery 2 Germany 9 75% Fluid dryer 1 Germany Reactor / Moltomat 1 Germany Granuladores / Srokes 1 USA Leaflet & coupon (Integrated) 2 Italy 4 85% Vibrators 4 Germany 32 50% Tape dispensers 5 Various

*This machine was installed in México in 2001 but came from a Novartis plant in Germany where it was in operation for 10 years. D) Last Purchases of Packaging Machinery The company invested US$3.5 million in the purchase of machinery during 2000 and US$1.6 million in 2001. Approximately one-third of this investment was used to purchase packaging equipment. Some of the most recent packaging equipment purchases have included the following machines:

Machinery Brand Country Weigh verification systems Icore US Carton form, fill, and seal machine

Marchezzini Italy

Reader coding machine Litus US E) Future Packaging Machinery Ordering Plans, 2002-2004 Novartis has a US$2.3 million budget to purchase new machinery during 2002. About US$760,000 will be used to purchase packaging machinery.

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The company is constantly reviewing the productivity of their production lines; the company also undergoes productivity audits conducted by their headquarters. New equipment requirements are defined by the result of these audits, as the logical objective is to improve the process to make it more efficient. The production areas with the lowest relative efficiency become priorities for the purchase of new equipment. During 2002 the company is considering the purchase of the following equipment:


Estimated Budget

Tape dispensing machine 12 US / Devek Improve the closing process

US $4,300 each

Blister machine 1 TBD Expansion N/A F) Purchasing Policies and Financial Arrangements. Novartis México indicated that they prefer to purchase equipment from supplier representatives in México, as they believe that having a local technical representative assures better service from the supplier. Spare parts are purchased from the manufacturer. When purchasing new equipment, the company evaluates at least three potential suppliers. Once the purchasing decision is reached, the whole purchasing process is the responsibility of the Mexican operation. They are responsible for placing the order, negotiating a contract, and selecting the financing scheme, which might involve internal monies, a credit line with Citibank, or vendor options. G) Factors That Influence Purchasing Decisions

1. Return on investment/payback. 2. Previous experiences with supplier and recommendations from other Novartis

affiliates worldwide. 3. Durability. 4. Tradeoff between cost and efficiency. 5. Good local technical support.

H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers Most of Novartis México’s packaging machinery is from Germany and Holland. Novartis considers the Europeans to be the leaders in packaging machinery for the pharmaceutical industry. But this concept could be the result of a traditional view regarding

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the equipment suppliers for this industry. They are convinced they can find good options elsewhere, noting that they are very satisfied with Kalish/Canada from whom they purchased a bottling line for solids 3 years ago. The company is open to meeting with new potential suppliers and indicated that closing a sale with their operation in México facilitates future access to other facilities worldwide. One of the purchasing criteria that Novartis México changed over the past two years was the payback concept. Now they feel that the machine’s ability to adapt to the company’s precise needs is a more important decision factor. They also desire equipment that is long lasting and that won’t need to be replaced in just a few years. To reduce their inventory levels, the company now works under batch production. This has created the need to configure their lines about 17 times per month, which has reduced plant efficiency and increased the need for a larger technical staff. It has also created the need for increased training for their maintenance staff. However, the machine achieved payback in 2 years. Novartis provides maintenance to their equipment on a regular basis and schedules a yearly visit from their suppliers’ technicians, who review overall equipment functionality and also train Novartis’ maintenance crews. They believe they pay a very high price for these services but consider it important to keep their equipment working to specification. As for spare parts, Novartis buys directly from the manufacturers, as they find this to be a faster alternative than placing an order with the local representative. Novartis’ evaluation of packaging machinery by country of origin: Origin Technology Flexibility Service Price United States Poor Poor N/A Good Canada Very Good Very Good Bad Average Germany Very Good Average Bad High Italy Very Good Very Good Bad High I) Trade Show Attendance / Trade publication Information When Novartis initiates the process of selecting packaging machinery, it relies on recommendations from affiliate companies, performs additional research via the Internet, and contacts potential suppliers. They visit ExpoPack regularly and a pharmaceutical sector trade show called ExpoFarma, which takes place every year in México. Additionally, they subscribe to specialized magazines like Manufactura, magazines of the Pharmaceutical Association, El Asesor weekly newsletter, and Latin American Pharmaceutical Technology. J) Specific Interests At present Novartis’ interest in packaging machinery is concentrated on Blister machinery. They also mentioned they are interested only in newly developed equipment for the

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pharmaceutical industry and in control features to help them avoid product “cloning” as there is a strong black market of medical products in México. K) Contact Information: Company Name: Ciba Farmacéutica, S.A. de C.V. (Novartis) Contact: Ing. Jaime Sierra Basells Position: Production Manager Address: Calz. De Tlalpan #1779 Col. San Diego Churubusco 04120, México D.F. Telephone: (5255) 5628-6776 Fax: (5255) 5544-4344 E-mail: [email protected] Web page: www.novartis.com

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Pfizer, S.A. de C.V.

Industry: Pharmaceutical Sub Industry: Patent medicine, vitamins,

specialized medication, veterinarian medicine

Location: Toluca, state of México Size: (sales) US$300 million Purchasing Potential: US$3 million Specific Business Opportunities:

Blister machines, Carton form, fill, and seal machines, Ink injection printers.

A) Company Description Pfizer, which in 2000 merged with its former rival Warner-Lambert, is one of the top five drugmakers in the world. With its origins in Germany in the 19th century, it has 52 production facilities and a presence in 150 countries. Pfizer entered the Mexican market in 1951. The company is divided into four groups: Pfizer Pharmaceuticals Group, Pfizer Consumer Healthcare, Pfizer Global Research and Development, and Pfizer Animal Health Group. Over the past three years, Pfizer has participated in the three most successful new product launches in the industry—each breaking the previous record for first-year sales. The first was Lipitor (atorvstatin calcium), launched and marketed by Pfizer and Warner-Lambert as partners. It was followed by Viagra (sildenafil citrate) and then Celebrex (celecoxib capsules), discovered by and copromoted with Searle, a division of Pharmacia Corporation. These products all have many years of growth and patent life ahead. Along with such industry leaders as Norvasc (amlodipine besylate), Zoloft (sertraline HCL), Viracept (nelfinavir mesylate), and Neurontin (gabapentin), these are the products that will drive the continuing success of the new Pfizer. In México Pfizer has one plant located near the city of Toluca in the state of México. This plant employs 240 workers; the company’s administrative offices are located in México City with over 400 administrative and 800 sales employees. Pfizer sales in México reach over US$300 million, and the México plant also covers Central and South America. Pfizer México exports to Costa Rica, Brazil, Colombia, Venezuela, Argentina, and most of the Caribbean.

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B) Main Products Produced and How They Are Packaged

Product Brand Package Ointment Terramicina Aluminum tube Tablets Triciscos Blister Injectable liquid Preconst Glass ampoule Capsule Terramicina Blister Capsule Vibramicina Blister Capsule Terrados Blister Tablets Cortril Blister Capsule Viterra Blister Chewable tablets Viterra Blister Capsule Obrón Blister Tablets Fasigyn Blister Oral suspension Combantrin Glass flask Capsule Feldene Blister Ointment Feldende Gel Aluminum tube Injectable liquid Feldene Glass ampoule Capsule Minipres Blister Tablets Unasyna Blister Powder suspension Unasyna Plastic flask Tablets Femhrt Blister Tablets Norvas Blister Capsule Sinequan Blister Injectable liquid Bonadoxina Glass ampoule Tablets Bonadoxina Blister Drops Bonadoxina Plastic flask Oral suspension Bonadoxina Glass flask Tablets Obinese Blister Tablets Diabinese Blister Capsule Diflucan Blister Oral suspension Difulcan Glass flask Suspension Azitrocin Glass flask Tablets Azitrocin Blister Tablets Altruline Blister Capsule Altruline Blister Tablets Cardura Blister Oral suspension Zyplo Glass flask Solution Zyplo Glass flask Tablets Viagra Blister Tablets Relpax Blister

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C) Installed Packaging Machinery The most representative packaging machinery used by Pfizer México is:


Specification

Ointment filling machine/ Norden Matic 1 England 10 100% Carton form, fill, and seal machine/ Norden Pack

1 England 10 100%

Blowing, filling, and capping machine for liquids/ CAM

1 England 12 100%

Labeling machine/ New Jersey 2 US 9 100% Carton form, fill, & seal machine/ CAM 1 England 25 70% Blister machine/ Uhlmann 3 Germany 7 80% Carton form, fill, and seal machine/ Uhlmann

3 Germany 8 80%

Capsule/tablet dispensing machine/ Laxo 1 US 25 60% Blister Machine/ KP1L 1 Germany 30 90% Carton form, fill, and seal machine/ Cartopack

1 US 20 80%

Ointment filling machine/Arenco Gan 1 England 20 70% Filling machine/ Triangle 1 N/A 15 80% Liquid dosifiers 1 N/A 18 80% Hologram dispensing machine/ Itamper 1 Italy 2 80% Weighing machines / Mettler Toledo 1 US 1 80%

D) Last Purchase of Packaging Machinery. Pfizer has invested more than US$2.5 million dollars in packaging machinery over the last three years. Their latest acquisition was a blister machine and a carton form, fill, and seal machine from the German manufacturer Uhlman.

Machinery Brand Country Blister, Carton form, fill, and seal machines Uhlmann Germany

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E) Future Packaging Machinery Ordering Plans, 2002–2003 Pfizer has developed a budget of US$2.5 million to cover its packaging machinery needs in the following three years. The most important machinery included in their investment plan is as follows:


Estimated Budget

Blister, Carton form, fill, & seal machine

1 Germany Replacement US$800,000

Carton form, fill, & seal machine 1 - Replacement US$600,00 Weight verification machines 2 - New US$30,000 Ink injection printers 2 - New US$30,000

F) Purchasing Policies and Financial Arrangements Pfizer México prepares an annual budget for purchasing new machinery. The list for new equipment is based on changing technical requirements as well as new production plans. Once the budget is defined, it is sent for approva l to the corporate office in New York. After receiving approval, the local company makes all decisions regarding equipment selection and purchasing. Larger purchases are made directly with the equipment manufacturer, while small equipment and spare parts are purchased through the supplier’s local representatives. Pfizer follows recommendations of other Pfizer plants for the selection of packaging machinery suppliers, and in some cases the corporate offices in New York negotiate with the suppliers for acquisition of equipment for several Pfizer plants. When selecting new equipment, this company makes evaluations based on production parameters, technology, and price. Payment methods are negotiated on a case-by-case basis with each supplier. Common terms are 30% advance payment and the remaining 70% once the equipment is working in their facility. Origin Technology Flexibility Service Price United States Good Good Very Good Good Germany Very Good Regular Good Regular England Good Regular Good Good G) Factors that Influence Purchasing Decisions

1. Service. 2. Capacity and technology. 3. Price. 4. Recommendations of other Pfizer plants. 5. Brand recognition.

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H) Comments on Preferred Brands and Existing Business Arrangements with Packaging Equipment Suppliers The company has supply agreements with Uhlmann (Germany) and CAM (England). Under this agreement, Uhlman and CAM give preferential prices and conditions to Pfizer on exchange for purchasing volumes and recurrent orders. The company prefers European machinery because they find it to be the most precise for pharmaceutical applications and to have adequate price-quality relationships. I) Specific Interest The company is interested in receiving information from manufacturers of packaging machinery mainly for tablets and capsules. J) Contact Information Company Name: Pfizer, S.A. de C.V. Contact: Ing. José Avila Hernández Position: Manager of Pharmaceutical Production Address: Km. 63 Carretera México-Toluca, Toluca, Estado de México,

México. Telephone: (52-722) 279-7107 Fax: (52-722) 215-1702 E-mail: [email protected] Web page: www.pfizer.com

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VII. APPENDIX A Imports of Packaging Machinery by Country of Origin, January–December 2000 Source: Bancomext 84221101: Of the household type—Total Imports

Million US$ % Share Country 1998 1999 2000 1998 1999 2000

% Change 00/99

0 THE WORLD 2.97 3.58 3.66 100.00 100.00 100.00 2.12 1 United States 1.81 2.37 2.11 61.05 66.24 57.72 -11.02 2 Canada 0.66 0.91 1.01 22.20 25.33 27.62 11.36 3 Spain 0.39 0.17 0.29 13.00 4.85 7.87 65.82 4 Sweden 0.03 0.09 0.13 0.92 2.41 3.44 45.89 5 European Union 0.00 0.00 0.04 0.00 0.00 1.21 N/A 6 Italy 0.02 0.03 0.03 0.84 0.83 0.94 14.81 7 Taiwan 0.00 0.00 0.03 0.01 0.01 0.79 N/A 8 Australia 0.00 0.00 0.01 0.00 0.00 0.15 N/A 9 Germany 0.02 0.00 0.00 0.53 0.10 0.09 -6.96

10 Korea, South 0.00 0.00 0.00 0.00 0.01 0.06 635.64 11 China 0.00 0.00 0.00 0.00 0.01 0.04 434.00 12 Japan 0.00 0.00 0.00 0.01 0.00 0.03 712.50

84222001: For cleaning bottles and other containers, other than those included in subheadings 8422.20.02 and 03—Total Imports


% Change 00/99

0 THE WORLD 3.05 1.00 2.72 100.00 100.00 100.00 171.51 1 United States 1.83 0.72 1.68 60.10 72.24 61.66 131.72 2 Germany 0.50 0.00 0.46 16.28 0.00 16.82 N/A 3 Italy 0.49 0.11 0.25 16.21 10.93 9.20 128.61 4 Denmark 0.00 0.00 0.14 0.00 0.20 5.00 N/A 5 Australia 0.00 0.00 0.08 0.00 0.00 2.96 N/A 6 Netherlands 0.00 0.00 0.05 0.00 0.00 1.72 N/A 7 Spain 0.00 0.00 0.04 0.00 0.36 1.31 880.68 8 Canada 0.01 0.10 0.02 0.49 9.89 0.79 -78.43

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84222002: For washing glass bottles, having a capacity from 3 milliliters to 20 l—Total Imports


% Change 00/99

0 THE WORLD 2.19 2.83 2.36 100.00 100.00 100.00 -16.63 1 Italy 2.02 2.21 2.09 92.31 78.04 88.85 -5.09 2 United States 0.16 0.26 0.15 7.22 9.06 6.18 -43.08 3 Venezuela 0.00 0.00 0.11 0.00 0.00 4.63 N/A 4 Spain 0.00 0.18 0.01 0.04 6.53 0.34 -95.69 5 Germany 0.00 0.12 0.00 0.00 4.40 0.00 0.00

84222003: Tunnel type washers, of continuous belt for metallic containers, with an output capacity exceeding 1,500 units per minute—Total Imports


% Change 00/99

0 THE WORLD 0.00 0.04 0.07 100.00 100.00 100.00 69.00 1 United States 0.00 0.04 0.07 100.00 100.00 100.00 69.00

84222099: Other—Total Imports


% Change 00/99

0 THE WORLD 7.91 11.31 11.75 100.00 100.00 100.00 3.87 1 Italy 6.04 8.52 8.53 76.36 75.33 72.63 0.14 2 United States 1.26 1.90 1.79 15.87 16.77 15.20 -5.86 3 Germany 0.08 0.54 0.70 1.07 4.79 5.93 28.82 4 Switzerland 0.00 0.01 0.18 0.00 0.10 1.52 N/A 5 Denmark 0.04 0.00 0.15 0.51 0.03 1.29 N/A 6 Canada 0.06 0.00 0.13 0.81 0.01 1.09 N/A 7 European Union 0.01 0.00 0.11 0.09 0.00 0.96 N/A 8 Netherlands 0.01 0.09 0.05 0.14 0.81 0.40 -48.89 9 France 0.01 0.02 0.04 0.09 0.22 0.31 46.55

10 Spain 0.20 0.12 0.03 2.47 1.04 0.30 -70.59 11 Japan 0.00 0.00 0.02 0.05 0.04 0.14 248.04 12 Austria 0.00 0.01 0.01 0.06 0.05 0.08 66.82

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84223001: For packing or packaging milk, butter, cheese, or other dairy products, other than those included in subheading 8422.30.10—Total Imports


% Change 00/99

0 THE WORLD 8.43 8.88 14.16 100.00 100.00 100.00 59.50 1 United States 3.03 4.40 8.85 35.97 49.53 62.48 101.19 2 France 0.76 0.46 1.81 9.00 5.13 12.78 297.22 3 Switzerland 0.00 0.00 1.20 0.00 0.00 8.47 N/A 4 Germany 0.97 1.11 1.06 11.45 12.54 7.47 -4.96 5 Japan 0.58 2.28 0.32 6.91 25.65 2.24 -86.04 6 Italy 0.82 0.02 0.21 9.78 0.17 1.50 N/A 7 Canada 0.97 0.28 0.21 11.48 3.11 1.49 -23.73 8 Chile 0.00 0.00 0.19 0.00 0.00 1.34 N/A 9 Argentina 0.03 0.00 0.12 0.41 0.00 0.87 N/A

10 Costa Rica 0.00 0.00 0.10 0.00 0.00 0.73 N/A 11 Brazil 0.00 0.00 0.07 0.00 0.00 0.49 N/A 12 European Union 0.00 0.00 0.01 0.00 0.00 0.09 N/A 13 United Kingdom 0.00 0.00 0.01 0.00 0.00 0.05 N/A 14 South Africa 0.00 0.01 0.00 0.00 0.07 0.00 0.00 15 Sweden 0.63 0.06 0.00 7.48 0.71 0.00 0.00 16 China 0.00 0.00 0.00 0.00 0.05 0.00 0.00 17 India 0.00 0.02 0.00 0.00 0.23 0.00 0.00 18 Israel 0.01 0.05 0.00 0.17 0.61 0.00 0.00 19 Taiwan 0.00 0.00 0.00 0.00 0.00 0.00 0.00 20 Spain 0.62 0.19 0.00 7.34 2.19 0.00 0.00

249

84223002: For packing, closing, capsuling, and/or packaging liquids, other than those included in subheadings 8422.30.01, 03 and 10—Total Imports


% Change 00/99

0 THE WORLD 62.50 61.10 71.10 100.00 100.00 100.00 16.37 1 Italy 13.33 31.25 27.02 21.34 51.15 38.00 -13.55 2 Germany 19.13 7.57 23.05 30.61 12.38 32.42 204.69 3 United States 20.90 12.85 9.80 33.45 21.02 13.78 -23.75 4 European Union 0.00 0.69 4.23 0.00 1.12 5.95 517.00 5 France 1.49 3.36 2.10 2.38 5.50 2.95 -37.57 6 Switzerland 0.01 0.18 1.43 0.02 0.30 2.01 688.03 7 Spain 0.19 2.81 0.89 0.30 4.60 1.25 -68.29 8 Sweden 0.10 0.40 0.74 0.16 0.65 1.05 87.73 9 Brazil 2.89 0.09 0.60 4.63 0.14 0.84 597.05

10 Israel 0.16 0.18 0.47 0.25 0.30 0.66 161.68 11 United Kingdom 0.17 0.26 0.35 0.27 0.43 0.49 33.75 12 Argentina 2.74 0.00 0.23 4.39 0.00 0.32 N/A 13 Colombia 0.00 0.45 0.09 0.00 0.73 0.13 -79.96 14 Korea, South 0.00 0.00 0.03 0.00 0.00 0.04 N/A 15 Puerto Rico (US) 0.00 0.00 0.03 0.00 0.00 0.04 N/A 16 Taiwan 0.00 0.00 0.02 0.00 0.00 0.03 N/A 17 Denmark 0.05 0.00 0.02 0.07 0.00 0.03 N/A 18 Japan 0.00 0.00 0.01 0.00 0.00 0.01 N/A 19 Canada 0.51 0.22 0.00 0.81 0.37 0.00 -99.55

84223003: For packing jams, tomato extracts, corn soup, and other syrupy foods—Total Imports


% Change 00/99

0 THE WORLD 0.74 0.58 1.94 100.00 100.00 100.00 235.07 1 France 0.00 0.00 0.90 0.00 0.00 46.10 N/A 2 Italy 0.04 0.25 0.52 4.92 42.74 26.95 111.27 3 United States 0.56 0.15 0.52 75.69 26.12 26.71 242.70 4 United Kingdom 0.00 0.00 0.00 0.00 0.00 0.24 N/A 5 Netherlands 0.00 0.01 0.00 0.00 1.08 0.00 0.00 6 Switzerland 0.00 0.00 0.00 0.60 0.00 0.00 0.00 7 China 0.00 0.00 0.00 0.00 0.42 0.00 0.00 8 Belgium 0.14 0.00 0.00 18.79 0.00 0.00 0.00 9 Canada 0.00 0.00 0.00 0.00 0.00 0.00 0.00

10 European Union 0.00 0.14 0.00 0.00 24.07 0.00 0.00 11 Spain 0.00 0.03 0.00 0.00 5.57 0.00 0.00

250

84223004: For packing liquids in ampoules, whether or not performing other attached operations—Total Imports


% Change 00/99

0 THE WORLD 1.52 4.85 2.02 100.00 100.00 100.00 -58.24 1 Italy 0.65 1.42 0.97 42.67 29.28 48.16 -31.32 2 Germany 0.32 3.17 0.69 21.12 65.41 33.86 -78.38 3 Japan 0.34 0.00 0.25 22.22 0.00 12.36 N/A 4 Canada 0.00 0.00 0.05 0.00 0.00 2.66 N/A 5 France 0.00 0.00 0.04 0.00 0.00 2.15 N/A 6 United States 0.21 0.24 0.01 13.99 4.94 0.63 -94.64 7 Ireland 0.00 0.00 0.00 0.00 0.00 0.15 N/A

84223005: For molding and/or packaging candy—Total Imports


% Change 00/99

0 THE WORLD 0.69 1.46 1.55 100.00 100.00 100.00 6.17 1 United States 0.00 1.00 1.43 0.00 68.64 92.10 42.45 2 United Kingdom 0.15 0.00 0.08 21.57 0.00 5.48 N/A 3 Brazil 0.00 0.00 0.03 0.00 0.00 1.96 N/A 4 Italy 0.01 0.01 0.01 1.68 0.74 0.46 -33.92 5 Germany 0.53 0.37 0.00 76.76 25.38 0.00 0.00 6 Spain 0.00 0.08 0.00 0.00 5.24 0.00 0.00

251

84223006: Metering-packing machines, by volume or by weight, for bulk products, in bags or other similar containers, whether or not provided with closing—Total Imports


% Change 00/99

0 THE WORLD 11.33 8.96 7.28 100.00 100.00 100.00 -18.73 1 United States 2.18 3.00 2.62 19.25 33.45 36.01 -12.53 2 Germany 5.14 0.76 2.15 45.36 8.53 29.57 181.88 3 Japan 0.39 0.32 0.98 3.44 3.55 13.44 207.70 4 Australia 0.00 0.01 0.45 0.00 0.07 6.24 N/A 5 Spain 0.92 2.58 0.32 8.12 28.77 4.37 -87.66 6 France 0.00 0.25 0.28 0.02 2.76 3.86 13.70 7 Canada 0.10 0.06 0.19 0.88 0.68 2.66 218.65 8 Netherlands 0.91 0.97 0.13 8.06 10.87 1.75 -86.95 9 Switzerland 0.07 0.38 0.10 0.62 4.20 1.37 -73.51

10 Guatemala 0.00 0.04 0.04 0.00 0.44 0.49 -9.62 11 Italy 1.57 0.57 0.01 13.88 6.38 0.19 -97.53 12 China 0.00 0.02 0.00 0.00 0.20 0.05 -77.78

84223007: For vacuum packing, in flexible containers


% Change 00/99

0 THE WORLD 2.56 3.34 4.63 100.00 100.00 100.00 38.48 1 United States 0.85 1.29 2.28 33.00 38.48 49.23 77.18 2 Germany 0.83 0.57 0.62 32.31 16.98 13.50 10.06 3 Japan 0.37 0.03 0.43 14.29 0.97 9.39 N/A 4 France 0.00 0.00 0.43 0.00 0.00 9.27 5 Canada 0.27 0.28 0.31 10.71 8.45 6.66 9.19 6 European Union 0.00 0.00 0.18 0.00 0.00 3.86 N/A 7 Netherlands 0.05 0.13 0.11 2.10 3.88 2.48 -11.34 8 Italy 0.00 0.39 0.11 0.14 11.54 2.42 -70.97 9 Switzerland 0.16 0.03 0.05 6.20 0.90 1.00 53.79

10 New Zealand 0.00 0.00 0.03 0.00 0.00 0.58 N/A 11 Korea, South 0.00 0.02 0.03 0.00 0.47 0.55 62.85 12 China 0.00 0.02 0.02 0.11 0.73 0.42 -20.23 13 Spain 0.02 0.53 0.02 0.95 15.90 0.33 -97.16

252

84223009: Tea packaging machines, in pouches, labelers—Total Imports


% Change 00/99

0 THE WORLD 0.08 0.23 0.12 100.00 100.00 100.00 -45.59 1 Argentina 0.07 0.00 0.08 98.07 0.00 61.81 N/A 2 United States 0.00 0.00 0.05 0.02 0.52 38.19 N/A 3 Spain 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4 Italy 0.00 0.23 0.00 0.00 99.48 0.00 0.00 5 Malaysia 0.00 0.00 0.00 1.91 0.00 0.00 0.00

84223010: For packing milk, juice, fruits, and other similar products, and in addition, forming and closing their own disposable plastic or paperboard containers—Total Imports


% Change 00/99

0 THE WORLD 12.29 36.45 32.05 100.00 100.00 100.00 -12.08 1 Australia 1.54 8.78 6.59 12.54 24.08 20.58 -24.88 2 Italy 1.87 7.21 6.11 15.22 19.78 19.05 -15.35 3 Japan 0.00 1.50 5.67 0.00 4.12 17.69 277.60 4 United States 1.66 3.82 4.06 13.54 10.48 12.66 6.26 5 Sweden 4.37 11.80 3.98 35.54 32.37 12.42 -66.26 6 France 0.45 2.10 3.95 3.66 5.77 12.31 87.74 7 Spain 0.28 0.83 0.62 2.32 2.26 1.94 -24.83 8 China 0.00 0.00 0.59 0.00 0.00 1.85 N/A 9 Germany 1.36 0.01 0.21 11.04 0.03 0.65 N/A

10 United Kingdom 0.00 0.19 0.16 0.00 0.52 0.49 -15.99 84223011: Overcapping capsuling machines—Total Imports


% Change 00/99

0 THE WORLD 0.31 1.01 0.75 100.00 100.00 100.00 -26.45 1 Brazil 0.00 0.00 0.27 0.00 0.00 35.83 N/A 2 Canada 0.00 0.01 0.18 0.00 0.89 23.75 N/A 3 United States 0.13 0.51 0.17 42.07 50.28 22.48 -67.12 4 European Union 0.00 0.00 0.09 0.00 0.00 11.65 N/A 5 Italy 0.09 0.00 0.05 28.81 0.00 6.18 N/A 6 Japan 0.00 0.33 0.00 0.00 32.27 0.11 -99.76

253



% Change 00/99

0 THE WORLD 61.85 53.23 48.53 100.00 100.00 100.00 -8.83 1 United States 33.58 31.21 29.66 54.28 58.63 61.12 -4.96 2 Italy 10.22 8.63 5.98 16.52 16.22 12.31 -30.78 3 Germany 2.21 3.54 4.46 3.57 6.64 9.20 26.21 4 Spain 1.31 3.31 2.62 2.11 6.22 5.40 -20.78 5 United Kingdom 0.94 0.86 1.93 1.52 1.62 3.98 123.66 6 Canada 2.76 1.16 1.07 4.46 2.18 2.21 -7.50 7 Netherlands 1.05 1.33 0.68 1.70 2.49 1.40 -48.81 8 France 3.79 0.91 0.56 6.13 1.71 1.16 -38.17 9 Switzerland 0.86 0.02 0.30 1.40 0.04 0.62 N/A

10 Taiwan 0.06 0.26 0.24 0.09 0.50 0.50 -9.05 11 Brazil 0.02 0.21 0.24 0.04 0.39 0.50 16.98 12 Japan 0.06 0.23 0.20 0.10 0.42 0.42 -10.29 13 Argentina 0.12 0.24 0.17 0.20 0.45 0.35 -28.80 14 China 0.01 0.05 0.09 0.02 0.09 0.19 89.56 15 Venezuela 0.00 0.14 0.09 0.00 0.26 0.18 -34.11 16 Korea, South 0.02 0.11 0.09 0.03 0.20 0.18 -19.30 17 Sweden 3.15 0.26 0.06 5.09 0.50 0.12 -77.25 18 Denmark 1.23 0.22 0.03 1.99 0.42 0.05 -88.51

254

84224001: Tying or strapping machines, including hand operating—Total Imports


% Change 00/99

0 THE WORLD 8.16 5.83 8.78 100.00 100.00 100.00 50.60 1 United States 4.25 2.53 5.12 52.09 43.30 58.30 102.74 2 Taiwan 1.25 0.83 0.86 15.27 14.15 9.77 3.95 3 Netherlands 0.00 0.00 0.74 0.00 0.08 8.43 N/A 4 Germany 0.91 0.15 0.74 11.10 2.60 8.38 385.44 5 Italy 0.52 0.53 0.50 6.36 9.10 5.69 -5.80 6 Canada 0.11 0.56 0.32 1.30 9.67 3.59 -44.02 7 Japan 0.22 0.11 0.18 2.73 1.88 2.00 59.92 8 Switzerland 0.37 0.02 0.11 4.49 0.32 1.28 499.81 9 Korea, South 0.02 0.07 0.09 0.26 1.25 0.98 17.91

10 China 0.00 0.05 0.08 0.02 0.82 0.93 69.66 11 Spain 0.40 0.10 0.02 4.92 1.66 0.27 -75.27 12 Thailand 0.02 0.01 0.02 0.19 0.12 0.22 174.26 13 Sweden 0.02 0.01 0.00 0.23 0.19 0.06 -56.76 14 France 0.00 0.00 0.00 0.01 0.00 0.04 N/A 15 United Kingdom 0.00 0.81 0.00 0.03 13.82 0.03 -99.62 16 Hong Kong 0.00 0.00 0.00 0.01 0.03 0.02 6.97 17 Belgium 0.00 0.00 0.00 0.00 0.00 0.01 278.03

84224002: Of a unit weight not exceeding 100 kg, for encasing, metallic containers—Total Imports


% Change 00/99

0 THE WORLD 0.00 0.11 0.06 100.00 100.00 100.00 -42.21 1 United States 0.00 0.00 0.04 100.00 0.19 61.12 N/A 2 Germany 0.00 0.00 0.02 0.00 0.00 35.21 N/A 3 Taiwan 0.00 0.00 0.00 0.00 0.00 3.66 N/A 4 Italy 0.00 0.11 0.00 0.00 99.81 0.00 0.00

255

84224003: For packaging confectionery products—Total Imports


% Change 00/99

0 THE WORLD 1.43 2.71 5.69 100.00 100.00 100.00 110.04 1 Netherlands 0.50 0.42 2.01 34.82 15.38 35.30 382.07 2 Italy 0.15 0.60 1.72 10.82 22.06 30.28 188.28 3 United States 0.02 0.88 1.03 1.67 32.48 18.10 17.03 4 Switzerland 0.33 0.41 0.40 23.36 14.97 6.99 -1.93 5 Spain 0.00 0.00 0.26 0.00 0.00 4.63 N/A 6 United Kingdom 0.16 0.23 0.22 11.34 8.39 3.81 -4.71 7 Germany 0.00 0.13 0.05 0.00 4.69 0.85 -61.95

84224004: Box packing or unpacking machines for bottles—Total Imports


% Change 00/99

0 THE WORLD 12.18 16.52 20.94 100.00 100.00 100.00 26.76 1 United States 4.81 9.53 12.38 39.50 57.69 59.12 29.90 2 Italy 4.81 6.48 6.98 39.50 39.21 33.31 7.71 3 Germany 1.07 0.24 1.29 8.78 1.47 6.14 429.44 4 France 0.71 0.00 0.16 5.85 0.00 0.76 N/A 5 Brazil 0.37 0.27 0.06 3.03 1.64 0.29 -77.84 6 Spain 0.00 0.00 0.06 0.00 0.00 0.28 N/A 7 Austria 0.00 0.00 0.02 0.00 0.00 0.10 N/A 8 Argentina 0.28 0.00 0.00 2.30 0.00 0.00 0.00 9 Canada 0.13 0.00 0.00 1.04 0.00 0.00 0.00

84224005: Automatic machines for placing and wrapping compact discs in a case—Total Imports


% Change 00/99

0 THE WORLD 0.06 0.77 0.30 100.00 100.00 100.00 -60.61 1 Germany 0.00 0.58 0.16 0.00 75.75 51.35 -73.30 2 United Kingdom 0.00 0.00 0.05 0.00 0.00 17.43 N/A 3 United States 0.06 0.19 0.05 98.41 24.25 17.08 -72.27 4 Netherlands 0.00 0.00 0.04 0.00 0.00 14.15 N/A 5 China 0.00 0.00 0.00 1.59 0.00 0.00 0.00

256



% Change 00/99

0 THE WORLD 88.53 97.26 98.55 100.00 100.00 100.00 1.33 1 United States 42.86 43.72 45.76 48.41 44.95 46.43 4.66 2 Italy 22.12 23.59 23.13 24.98 24.25 23.47 -1.94 3 Germany 10.16 10.80 9.85 11.48 11.10 10.00 -8.74 4 France 1.29 2.80 2.37 1.45 2.88 2.40 -15.47 5 Sweden 1.70 2.83 2.26 1.92 2.91 2.29 -20.32 6 Netherlands 1.88 1.44 2.18 2.12 1.48 2.21 51.11 7 Canada 1.96 2.00 1.73 2.22 2.05 1.76 -13.13 8 Korea, South 0.20 0.60 1.39 0.23 0.62 1.41 130.90 9 Spain 0.90 1.94 1.36 1.02 2.00 1.38 -29.72

10 Argentina 0.45 1.95 1.36 0.50 2.00 1.38 -30.12 11 European Union 0.65 0.03 1.29 0.73 0.03 1.31 N/A 12 Denmark 0.04 0.33 1.16 0.04 0.34 1.18 248.40 13 Brazil 0.41 0.11 1.14 0.46 0.11 1.16 931.63 14 Switzerland 0.77 0.51 0.70 0.86 0.53 0.71 35.72 15 Taiwan 0.60 0.72 0.56 0.67 0.74 0.57 -22.01 16 Japan 0.80 1.51 0.55 0.91 1.55 0.56 -63.36 17 United Kingdom 1.29 1.12 0.54 1.45 1.15 0.54 -52.12 18 Australia 0.00 0.00 0.32 0.00 0.00 0.32 N/A 19 Cape Verde 0.00 0.00 0.18 0.00 0.00 0.18 N/A 20 Colombia 0.27 0.00 0.15 0.30 0.00 0.15 N/A 21 Austria 0.10 0.00 0.11 0.11 0.00 0.11 N/A

257

PARTS 84229001: Being recognized as exc lusively designed for cleaning or drying machines or apparatuses or packing machines—Total Imports


% Change 00/99

0 THE WORLD 8.13 8.50 10.13 100.00 100.00 100.00 19.23 1 Sweden 1.74 2.30 3.00 21.40 27.05 29.62 30.57 2 United States 3.04 3.04 2.65 37.36 35.77 26.18 -12.74 3 Germany 1.18 1.11 1.51 14.45 13.05 14.90 36.09 4 Italy 0.48 0.68 0.89 5.91 8.05 8.76 29.83 5 France 0.41 0.41 0.64 5.08 4.82 6.32 56.07 6 Brazil 0.57 0.28 0.61 6.95 3.33 6.07 117.17 7 European Union 0.05 0.07 0.16 0.63 0.78 1.59 142.82 8 Spain 0.03 0.07 0.15 0.42 0.82 1.45 110.64 9 Denmark 0.15 0.10 0.11 1.81 1.22 1.13 10.45

10 Canada 0.22 0.06 0.09 2.75 0.74 0.89 43.66 11 Argentina 0.06 0.02 0.07 0.76 0.25 0.69 231.04 12 Afghanistan 0.00 0.00 0.05 0.00 0.00 0.54 N/A 13 Japan 0.07 0.05 0.05 0.88 0.64 0.50 -7.38 14 Switzerland 0.06 0.09 0.03 0.79 1.09 0.34 -62.51 15 Panama 0.00 0.04 0.03 0.00 0.46 0.27 -31.58 16 Austria 0.01 0.01 0.02 0.07 0.16 0.25 81.17 17 Belgium 0.00 0.00 0.02 0.00 0.00 0.16 N/A 18 United Kingdom 0.05 0.04 0.01 0.65 0.41 0.14 -60.62 19 Australia 0.00 0.00 0.01 0.00 0.00 0.11 N/A 20 Netherlands 0.00 0.00 0.01 0.01 0.04 0.06 75.42 21 China 0.00 0.00 0.00 0.00 0.03 0.02 -15.07 22 Cuba 0.00 0.00 0.00 0.00 0.00 0.02 N/A 23 Czech Republic 0.00 0.00 0.00 0.01 0.00 0.00 N/A 24 India 0.00 0.00 0.00 0.00 0.00 0.00 N/A 25 Chile 0.00 0.00 0.00 0.00 0.00 0.00 N/A 26 Nicaragua 0.00 0.00 0.00 0.00 0.00 0.00 N/A 27 Guatemala 0.00 0.01 0.00 0.00 0.07 0.00 -96.81

258

84229004: Door assemblies being recognized as exclusively designed for those goods included in subheading 8422.11—Total Imports


% Change 00/99

0 THE WORLD 0.00 0.00 0.00 100.00 100.00 100.00 -55.86 1 United States 0.00 0.00 0.00 60.86 98.46 83.31 -62.65 2 Japan 0.00 0.00 0.00 0.00 0.00 16.69 N/A 3 Germany 0.00 0.00 0.00 1.41 0.00 0.00 0.00 4 Argentina 0.00 0.00 0.00 18.22 0.00 0.00 0.00 5 Korea, South 0.00 0.00 0.00 0.27 0.00 0.00 0.00 6 Taiwan 0.00 0.00 0.00 19.23 0.00 0.00 0.00 7 Greece 0.00 0.00 0.00 0.00 1.54 0.00 0.00

259



% Change 00/99

0 THE WORLD 26.61 28.24 33.73 100.00 100.00 100.00 19.46 1 United States 14.46 15.08 18.52 54.35 53.40 54.88 22.78 2 Italy 4.55 4.83 6.02 17.11 17.12 17.85 24.52 3 Germany 3.51 3.37 3.32 13.20 11.93 9.85 -1.30 4 European Union 0.04 0.36 0.84 0.16 1.29 2.48 129.84 5 France 0.56 1.02 0.71 2.12 3.60 2.11 -30.04 6 Norway 0.00 0.00 0.59 0.00 0.00 1.75 N/A 7 Spain 0.32 0.41 0.56 1.20 1.46 1.66 35.88 8 Australia 0.11 0.35 0.51 0.42 1.24 1.51 45.85 9 Belgium 0.21 0.07 0.43 0.81 0.25 1.29 510.70

10 United Kingdom 0.52 0.50 0.42 1.95 1.76 1.24 -15.45 11 Argentina 0.07 0.18 0.42 0.25 0.64 1.23 129.64 12 Switzerland 0.40 0.32 0.26 1.51 1.12 0.76 -19.44 13 Japan 0.20 0.19 0.25 0.74 0.66 0.75 36.72 14 Canada 0.36 0.30 0.23 1.33 1.06 0.70 -21.32 15 Netherlands 0.65 0.75 0.21 2.43 2.66 0.64 -71.41 16 Brazil 0.11 0.10 0.11 0.40 0.35 0.32 10.29 17 Puerto Rico (US) 0.03 0.05 0.07 0.10 0.16 0.22 65.70 18 Taiwan 0.23 0.05 0.06 0.86 0.18 0.17 8.45 19 Denmark 0.06 0.09 0.05 0.22 0.32 0.14 -46.69 20 Korea, South 0.02 0.02 0.05 0.07 0.06 0.14 174.25 21 Sweden 0.08 0.06 0.03 0.31 0.22 0.09 -48.87 22 Venezuela 0.00 0.00 0.03 0.00 0.01 0.08 N/A 23 China 0.02 0.01 0.01 0.06 0.02 0.04 121.41 24 Colombia 0.00 0.00 0.01 0.00 0.00 0.04 N/A 25 Malaysia 0.01 0.00 0.00 0.04 0.00 0.01 N/A 26 Portugal 0.00 0.09 0.00 0.00 0.32 0.01 -96.64

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