How glass can make packaging look premium

The packaging arm of HSIL, AGI Glaspac is one of the leading container glass manufacturers in India. With its two facilities in Hyderabad and Bhongir (Telangana), AGI is eyeing to contribute to the global vision to replace plastic packaging with green and eco-friendly counterparts.

Capturing 20% market share in the Indian glass packaging industry, AGI Glaspac is generating a turnover of around Rs 1,300 crores with a range of glass packaging – from 5 ml to 4,000 ml – and has an average capacity of melting 1,600 tonnes of glass per day.

These numbers are set to grow, as HSIL has big plans for AGI. Recently, the parent company announced a strategic investment of Rs 220 crores in AGI Glaspac’s expansion, which will fortify AGI’s presence not only in India, but also abroad, with emphasis on exports and high-quality glass packaging.

However, Rajesh Khosla, president and CEO, AGI Glaspac has a word of caution. He says that the recycling infrastructure is still underdeveloped in comparison to global countries. Hence, the role of the government, manufacturers and the common consumers is more important than ever to adopt glass as a better lifestyle option. Khosla tells Aultrin Vijay and Mansi Gupta how:

WhatPackaging? (WP): How was 2021 for AGI Glaspac? 
Rajesh Khosla (RK): We are one of India’s leading glass container manufacturers and the largest in South India. AGI Glaspac is well-positioned in the market, and we are catering to approximately 20% of the glass container demand in the country. We are targeting 22% of the market share, once our new 154-tonnes-per-day (TPD) speciality glass facility is operational. We foresee top-line growth in our revenue by 15-18% by 2022-23.

WP?: How was the last quarter?
RK: In the last quarter, revenue growth was driven by improved realisations and better product mix, and sales volume with visible demand revival as markets saw broad-based recovery after the second wave of the pandemic. Our business continues to see strong traction with higher demand for packaged products in the market. Revenue growth was driven by the beer, liquor and wine industries.

WP?: Please share some numbers.
RK: Well, EBIT margins improved to 20.2% in Q2 FY2022 from 14.2% in Q2 FY2021 as a result of higher revenue, optimised product mix and higher operational efficiencies. Due to relining of the furnace, glass container capacity utilisation during the quarter was 66% as compared to 72% in the same quarter last year and 89% in the previous quarter.

Khosla: We are targeting 22% of the market share, once our new 154-tonnes-per-day (TPD) speciality glass facility is operational

WP?: AGI melts 1,600 tonnes of glass per day. Could you please give us the proportion of recycled glass?
RK: AGI has positioned itself as one of the leading container glass manufacturers in the country with two manufacturing facilities, one in Hyderabad and the other one at Bhongir (Telangana). Today, AGI melts more than 1,600 tonnes of glass per day and has been heavily investing in R&D, machine-building and business excellence capabilities to maximise productivity and upgrade the plant.

AGI is also investing in technology upgrades, inspection, packaging systems, warehousing and logistics. It is looking at increasing its volumes by at least 50% to meet the rising market demand in the upcoming five years. The proportion of recycled glasses we use in AGI is 35%.

WP?: What is AGI Glaspac’s stand in terms of using or increasing the use of recycled materials?
RK: The Asia-Pacific container glass market size is forecast to reach USD61.0 billion by 2026, after growing at a CAGR of 4.3% during 2021-2026. Hence, the growing demand of glass containers owing to its various benefits such as infinite reusability, recyclability, and refillability has led to its increased adoption in various industries, which is a vital factor contributing to its market growth.

Additionally, countries such as India, South Korea, China and Thailand in the APAC region have been witnessing significant increase in beer consumption. On the other hand, the increase in beer consumption has also positively impacted the Asia-Pacific container glass market as the majority of beers are packaged in glass bottles. However, the wide availability of various other alternative packaging materials is estimated to create challenges for the growth of the Asia-Pacific container glass market.

WP?: What is India’s recycling behaviour? 
RK: The recycling infrastructure is still underdeveloped in India. Hence, the role of the manufacturers, policymakers and reinsurers is vital in adopting glass as a better lifestyle option to help India achieve its global vision to replace plastic with green and eco-friendly packaging.

Several pharma companies around the world are pledging and taking significant steps towards key sustainability goals. Various companies in India are also making it a priority. In future, the company’s performance in the areas of climate protection and occupational health and safety will be of utmost importance.

WP? And what needs to be improved?
RK: The current recycling system is not equipped to solve the problem of plastic pollution and companies need to be made accountable. The manufacturer needs to reduce and phase out the production of single-use plastic and provide alternatives to packaging. Coordination among the authorities should push for better implementation. The consumers must ensure that all plastic waste leaving homes is segregated and not contaminated with food waste.

WP?: What is the percentage of glass being recycled in India? Is it as much as that of paper and metal?
RK: In India, the percentage of glass recycling is only around 45%. The rate for paper is just under 30%; for plastics, about 60%; for metal, between 20% and 25%. There is a dire need to improve the glass recycling in the country as recycled glass reduces related air pollution by 20% and related water pollution by 50%.

Recycling glass reduces the space in landfills that would otherwise be taken up by used bottles and jars.

The Indian alcohol market will be Rs 1,75,400 crores, boosting the country's glass packaging segment

WP?: Which segment of glass packaging has grown significantly during the last couple of years? 
RK: The market for glass packaging in the alcoholic beverage industry has been on the rise. The glass packaging industry is primarily boosted by increasing alcoholic beverage consumption in the country. As per CARE Ratings, the Indian alcohol market is expected to increase to Rs 1,75,400 crores by 2021, boosting the country's glass packaging segment.

It is expected to maintain its share in the future due to its usage in premium products. The growth is expected to be witnessed across different beverage products such as juices, coffee, tea, soups, non-dairy beverages and others.

WP?: Was it sustainable?
RK: The industry is already seeing the ethical living trend influencing purchases in the alcoholic beverage industry. We are seeing the growth of the conscious consumer who has a higher inclination for authenticity, individuality and sustainability by tapping into local credentials and cultural aspects. This trend is driving the rise of local brands, especially in developing markets. We can see both new players adding the local touch and multinationals adapting to fit the needs of consumers from different cultures and geographies.

WP?: What changes are necessary to be introduced in glass packaging?
RK: Excess capacity, increased competition and the development of a regulatory framework are the real future challenges for the Indian glass industry. Glass packaging continues to face fierce competition from other forms of packaging in India, where for commercial reasons, the use of alternative materials is increasing.

Among the reasons for some customers to switch are loading ability, breakages and unit cost. The industry needs to develop more lightweight bottles and improve the durability of its finished products. In the past, the local glass container industry has concentrated its efforts on such objectives as traceability to restrict counterfeiting. Such an initiative would involve the use of permanent engravings on containers, showing the quarter and year of manufacture. This system could be helpful to protect consumers from any harmful practices employed by counterfeiters.

WP?: In terms of sustainability, how does glass packaging compare with the other options in the current market, such as paper?
RK: Glass packaging offers a more sustainable alternative to single-use packaging and shows environmental benefits over single-use systems. The industry is also driven by the growing environmental awareness among the consumers, with glass packaging being a reusable and environmentally friendly alternative to plastic packaging. The growing disposable incomes and changing lifestyles of consumers are also factors that are driving the growth of the market.

Glass is more sustainable than plastic or paper. It requires less energy to recycle existing glass products than to melt raw materials. Glass containers are not usually treated with chemicals for durability, which makes them excellent for the recycling process.

WP?: Today, even plastic can achieve low levels of carbon footprint in rigid packaging. What about glass when compared to paper, metal and plastic?
RK: Yes, glass cuts out CO2 emissions. For every six tonnes of recycled container glass used, a tonne of carbon dioxide, a greenhouse gas, is reduced. A relative 10% increase in cullet reduces particulates by 8%, nitrogen oxide by 4%, and sulphur oxides by 10%.

WP?: How can the government help in improving the recycling infrastructure?
RK: Industry 4.0 for Make in India and atmanirbharta for the manufacturing sector is being effectively promoted by the government since a manufacturing base provides a steady growth, especially when compared to a service-based economy. Within the industry, there is a lot of innovation going on. Various factors are driving the transition towards increased sustainable packaging practises, which are being pushed by health-conscious consumers, the government and laws and regulations by industry leaders. Companies that achieve this transition towards sustainable packaging are positively rewarded.

Today, AGI melts more than 1,600 tonnes of glass per day 

WP?: HSIL has announced an investment of Rs 220 crores for the expansion of AGI Glaspac. Could you please share some insights into this?
RK: We have set up a greenfield facility in 2020 to make speciality glass at Bhongir, Telangana with an investment of Rs 220 crores. This year, we have invested Rs 55 crores from the Rs 220 crores to build a new furnace of 154 TPD at AGI speciality glass division. The speciality glass facility will have a manufacturing capacity of 154 TPD and five manufacturing lines spread across 15 acres. The company will focus on exports to the US, Australia and a few markets in Europe. The plant will cater to high-end pharmaceuticals, including vials, perfumery, cosmetics and other segments. Investing in Bhongir was a strategic decision, and this facility will be near the current facility. All the raw materials such as sand, soda ash as well as power can be shared.

WP?: How did the pandemic affect AGI’s business in India?
RK: We as a manufacturing company faced a lot of trouble in logistics, as the lockdown curbed the movement of goods in and out of the districts. The government eased our efforts by including the glass-manufacturing sector under essential services. The exemption of non-essential goods will help most of the factories with supply materials. Most companies have stored enough raw materials beforehand to run their businesses. A few companies will also have an added advantage when they have their own factories manufacturing the required materials, such as sand.

WP?: Any challenges?
RK: The problems faced by the industry in the emergency period and immediately before the lockdown include supply of raw materials/input for manufacture, transportation of finished goods, ability of the employees to come to the place of work, and the Covid-19 outbreak. Then there was the subsequent lockdown which delayed the setting up of a new plant in the eastern part of India.

WP?: What are AGI's plans for the Indian packaging industry in the next financial year?
RK: The industry has reported steady growth over the past several years and shown a high potential for expansion, particularly in the export market. Almost all user segments are expanding, such as processed foods, hard and soft drinks, fruit and marine products. We are planning to invest in technology upgrades, inspection, packaging systems, warehousing and logistics. We are looking to increase the volumes by at least 50% to meet the rising market demand in the next five years.

WP?: What is your outlook for 2022?
RK: The glass packaging industry is primarily boosted by increasing alcoholic beverage consumption in the country. Overall, the Indian glass packaging market is expected to register a CAGR of 6.94 % in 2026. The nationwide lockdown has brought the entire packaging supply chain to an almost grinding halt. However, the glass packagers in the country shifted their focus towards the pharmaceutical industry. Today, the Indian pharmaceutical glass packaging market is anticipated to grow at a CAGR of 7.7% during the forecast period (2020-2026). The industry has reported steady growth over the past several years and shown high potential for expansion, particularly in the export market. Almost all user segments are expanding, such as processed foods, hard and soft drinks, fruit, and marine products.

Note: Drinking glasses, glass objects and window glass cannot be placed with recyclable glass because they have different chemical properties and melt at different temperatures than the recyclable bottles and containers.