AN OVERVIEW OF 2020
2020 was a challenging year for the global glass packaging market due to the Covid-19 pandemic. While sector-related investments were postponed to future years, weight reduction projects and other efforts focused on operational excellence and efficiency continued to move forward. Product innovation, total quality management, sustainability, digitalization and Industry 4.0 are priority areas across the entire glass packaging industry and gain more importance each day.
The pandemic resulted in reduced consumption of glass packaging in the alcoholic beverages, soft drinks-fruit juice and bottled water sectors. The HoReCa (hotel-restaurant-café) channel was severely affected by the near global shutdown of tourism, restaurant and entertainment businesses. As anti-pandemic measures were imposed – including curfews, lockdowns and social distancing – people around the globe adopted greater concern for their health and hygiene. As a result, household consumption models began to account for an even higher share in glass packaging products categories. Although increased household consumption partially offset declines outside the home, the global glass packaging industry is expected to contract compared to the previous year. In the short-term, the glass packaging market is expected to shrink by a single digit in North America. Meanwhile, Europe, South America, Asia-Pacific, Middle East and Africa markets are expected to shrink even more due to the pandemic.
The Russian glass packaging market, which steadily contracted until 2018 due to the government push to reduce alcohol consumption, finally displayed signs of recovery in 2019. After recording positive growth for the first time after many years, Russia’s glass packaging market is expected to post a similar performance in terms of volume in 2020 as the prior year. Russian households increased their consumption of alcoholic beverages during the pandemic despite lower demand in the overall alcoholic beverages sector due to the restrictions imposed on the HoReCa channel. The beer and wine industries account for more than half of the total demand in the Russian glass packaging market.
The Turkish glass packaging market shrank compared to the previous year. In 2020, the Turkish glass packaging market experienced difficulties in key segments, including the soft drinks-fruit juice, bottled water, mineral water, wine and alcoholic beverage segments. This performance paralleled the challenging environment faced in the economy, tourism and other crucial sectors. However, household consumption rose due to increasing awareness of hygiene and health during the pandemic. In response to these adverse conditions in the domestic market, Turkey’s glass packaging producers increasingly turned to export markets.
ACHIEVEMENTS IN 2020
In 2020, Şişecam Glass Packaging continued to expand, even as the Turkish economy faced a difficult period and the overall global environment was sluggish. It recorded innovations that facilitated sustainable profitable growth along with increased exports. Always keeping the value offered to the customer at the forefront, Şişecam Glass Packaging increased its sales volume to over 1.2 million tons in its Turkey operations in 2020.
During the year, Şişecam Glass Packaging further increased its export volume by expanding its access to global markets. Thanks to implementing new marketing and sales strategies, exports accounted for 31% of total sales in Turkish operations. It exported 500 thousand tons to approx. 40 countries in 2020. Glass packaging international sales accounted for 57% of total sales.
With capital investments in Turkey, Şişecam Glass Packaging further expanded its production capacity. A new pharmaceutical line at the Eskişehir Plant was commissioned in third quarter 2020. The Yenişehir Plant was shut down in December to perform scheduled cold repairs on the C furnace. This facility was put back into operation upon completion of the furnace cold repairs in early January 2021.
In 2020, Şişecam Glass Packaging increased its sales volume by 27% compared to the previous year. The business line’s net turnover reached TRY 5,467 million, with 57% of sales revenue from overseas operations.
Facilities and capacities
Şişecam carries out glass packaging operations in 4 countries, including Turkey, Russia, Ukraine and Georgia, with a total production capacity of 2.6 million tons/year.
Operations in Turkey
Şişecam Glass Packaging conducts production activities in Turkey at 3 facilities located in Mersin, Bursa, and Eskişehir.
While maintaining its leading position in the sales of Şişecam Glass Packaging, mineral water sector, together with food and alcoholic beverages sectors, constitutes approximately 82% of total domestic sales. The Company aims to consolidate its sales distribution by sector with a more balanced sales mix. Şişecam Glass Packaging is also gradually expanding its capacity allocated to exports in accordance with its growth target in foreign markets.
In 2020, Şişecam Glass Packaging focused on extending the endurance of glass packaging, lightweighting the products, improving new product processes, optimizing product and SKU, reducing process inputs and production wastes, using renewable energy, and boosting the recycling of glass.
Operations outside Turkey
Şişecam Glass Packaging’s first investment abroad is Mina Plant in Georgia. The Company is the Georgian market leader as only glass packaging manufacturer in the country. Although facility sales dropped in 2020 due to the pandemic, the share of the fruit juice-beverage sectors in its sales increased.
During the year, Şişecam Glass Packaging consolidated its position as the leading glass packaging manufacturer in the Russian market. The Company recorded the highest sales volume in local currency in 2020.
Investment expenditure of TRY 529 million
In 2020, Şişecam Glass Packaging successfully realized modernization, capacity and operational improvement investments totaling TRY 529 million in Turkey, Russia, and Georgia, despite some of the scheduled investments being postponed to 2021 because of the pandemic. Due to growing competition in the glass packaging market, Şişecam Glass Packaging has maintained a strategic focus on cost control, operational excellence, lean production and digitalization. In addition, the Company conducted various development and cost reduction efforts leading to energy savings across all its facilities.
PRODUCT DESIGN PROJECTS AND AWARDS
Thanks to its unique and innovative designs, Şişecam is a leader in glass packaging domestically and globally. Şişecam’s glass packaging design activities are conducted by the Şişecam Science, Technology and Design Centre. In 2020, the Centre completed 368 creative designs for 206 projects. Five new packaging designs were registered, including “ultra-light” water and mineral water bottle designs.
Şişecam operates in line with its vision to become a global glass packaging manufacturer that adds value to people and the environment. Toward these ends, Şişecam has received 74 awards, including 18 presented by foreign organizations, since 2006. As the creator of so many award-winning designs, Şişecam Science, Technology and Design Centre is committed to continuously adding to its collection of innovative, high-quality and user-friendly designs.
University Collaborations
Şişecam Science, Technology, and Design Centre has so far conducted 15 joint project activities with 11 leading universities in Turkey to support and develop the creative designs of university students in Industrial Design departments.
No such project was conducted in 2020 due to the pandemic, though “Online Design Talks” events were carried out with 3 universities:
We Add Glass to Life!
Şişecam engages in awareness-raising activities on the benefits of glass packaging. The “Add Glass to Life (Hayata Cam Kat)” initiative, a standalone web platform, completed its ninth year. We continue to share a variety of content on different subjects, including environment, health and taste, via the website and social media channels.
“Add Glass to Life” is a successful initiative that expanded organically. It is a standout among leading brands in the corporate blog category.
Studies for using cullet
Based on the awareness that glass is the most natural and healthiest packaging material, Şişecam conducts all its business operations in line with an approach that embraces eco-friendliness and sustainability. The Company aims to use natural resources efficiently, minimize environmental impact, and constantly boost energy efficiency. To these ends, it plans to increase the use, amount and quality of recycled glass (cullet) at production plants in order to minimize the resource consumption. Şişecam aims to support and continuously improve glass cullet suppliers by conducting quality and quantity premium practices. A total of 256 thousand tons of recycled glass was procured.
Şişecam Çevre Sistemleri A.Ş., a subsidiary of Şişecam, continues its efforts to promote recycling of glass and improving the existing glass waste collection systems in Turkey. Glass waste recycling operations are carried out at sites near the Yenişehir and Eskişehir glass packaging plants. Şişecam Çevre also procures and recycles furnace-ready cullet from other suppliers to ensure that it is re-used in production.
Thanks to the recycled glass savings since 2011;
EXPECTATIONS AND OBJECTIVES FOR 2021
Being a supplier of the food, beverages and pharmaceuticals sectors, the glass packaging business line is subject to only limited downside risks associated with pandemic in the demand side and therefore still continue to present opportunities. In 2021, Şişecam Glass Packaging will continue efforts to become a global player. The Company aims to expand its penetration and sales volume in export markets while maintaining market leadership in Turkey. Şişecam Glass Packaging plans to further embrace operational excellence in the face of changing global and Turkish glass packaging market dynamics.
Efforts to boost glass packaging production and encourage recycling thereof will continue apace within a framework of respect for people, nature, and the environment. As an industry leader, Şişecam Glass Packaging will focus on improving its competitiveness in both domestic and international markets in the coming year.
The Company remains committed to boosting manufacturing efficiency in every area by leveraging on its advanced production technologies, creating highly automated ‘smart factories’, ensuring cross-facility standardization and achieving Industry 4.0 compatibility. Şişecam Glass Packaging uniquely combines its technological superiority with an innovative and authentic perspective. The Company will continue playing a key role in the future of all its stakeholders, particularly employees and customers.
Now more than ever, it is essential to achieve strong positioning in the evolving competitive landscape. The Covid-19 pandemic was a stark reminder of the importance of effective supply chain management and local service expectation is increasing. In 2021, Şişecam Glass Packaging’s strategic priorities include remaining cost competitive; engaging in effective end-to-end supply chain and total quality management; positioning itself as a preferred glass packaging manufacturer by enhancing customer loyalty and creating added value for the customer; maintaining high levels of service quality, production efficiency and operational excellence.
