The first output from the new facility will start mid 2005. It will have a capacity of 200 million wine bottles per annum with production phased in to match contractual supply agreements.
Until Amcors Gawler plant began production last year, ACI Glass was the sole manufacturer of glass wine bottles in Australasia.
Even before Amcors new furnace comes on line, current wine bottle ppodiction capacity is way ahead of consumption, with both companies relying on continued rapid growth.
Amcor managing director Russell Jones said the new investment reinforced Amcors commitment to this fast-growing industry.
With the construction of the second furnace, the site would be producing 400 million premium wine bottles a year with bottle shapes and colours that covered over 88 per cent of the total market.
Operating costs will be reduced through lower overheads and better asset utilisation. The working capital to sales ratio will be substantially reduced through greater manufacturing flexibility, Jones said.
Strong customer demand for Amcors premium wine bottles had enabled new long term supply agreements to be both extended and upgraded, underpinning demand for the new furnace.
The existing wine bottle plant commenced production in May 2002 and has been an outstanding success.
The wine industry continues to be one of the fastest-growing industries in Australia with export growth last year of 26 per cent and future growth expected to remain strong.
Strong industry support, including long term supply agreements, underpin volumes for a second furnace.
Having a two furnace facility delivers a lower cost base and improved manufacturing flexibility that will further enhance customer service and value, he said.
The existing plant was profitable in the first six months of operations and is on target to deliver a 15 per cent return on investment. The long term supply agreements that support the second furnace will ensure a return in excess of 15 per cent is achieved for this new investment.
With the building of the second furnace, Amcor will be a substantial supplier of wine bottles in Australia.
The plant is located in the heart of the major wine producing region and its modern technology and high production efficiencies ensures it is Australias low cost producer, he said.