3 June 1999: US-based Anchor Glass Container Corporation, the third-largest manufacturer of glass containers in the US, has signed an agreement with Anheuser-Busch, Inc., to provide all the bottles fo…
3 June 1999: US-based Anchor Glass Container Corporation, the third-largest manufacturer of glass containers in the US, has signed an agreement with Anheuser-Busch, Inc., to provide all the bottles for the brewer“s Jacksonville, Florida and Cartersville, Georgia breweries, beginning in January 2001. The order, which has a five-year minimum term, could increase Anchor“s sales by as much as 10%, according to the company. Anticipated annual revenues from the order could amount to more than 20% of Anchor“s current sales. “The contract shows Anheuser-Busch“s confidence in us,” said Anchor chairman John J. Ghaznavi. Ghaznavi said he believes the exclusive, long-term supply agreement reflects a mutually beneficial relationship between the companies. To meet the expanded demand from the supply contract, Anchor said it will invest approximately US$ 45 million in new equipment for its Jacksonville, Florida and Warner Robins, Georgia, plants over the next eighteen months to increase production efficiency. The two plants already devote a substantial percentage of their capacity to supplying the nearby Anheuser-Busch breweries. The modernization will make the Anchor facilities two of the most cost-competitive glass manufacturing plants in the nation. Because of the plants“ productivity and their proximity to the breweries, “Anchor“s profit margins will improve significantly,” said Richard M. Deneau, president of Anchor. “This is a major step in Anchor“s return to profitability.” To accommodate the expanded volume for Anheuser-Busch, Anchor will shift much of its production for other customers at Jacksonville and Warner Robins to its plants in the Northeast. Anchor plants in Salem, New Jersey and Elmira, New York, which are closer to customer facilities, will take on the reassigned production. These changes will provide further margin improvement for Anchor, said the company. Anchor Glass said the order reflects the increasing need of market leader Anheuser-Busch for glass bottles, and that beer industry sales in the US jumped in the first quarter of 1999 and are expected to continue rising in response to the strong economy and demographic trends.