Home' Trinidad and Tobago Guardian : October 5th 2014 Contents As Allan Perez leafed through
the latest edition of Pack-
aging Now, the leading pub-
lication for the packaging
industry, he couldn t help
thinking that his company
would have to make some significant changes
if it wanted to survive.
Perez Glassworks had grown since its for-
mation in 1978 to become the largest supplier
of glass bottles in the country. In recent years,
however, customers had started shifting
towards cheaper plastic, aluminium and Tetra
Pak cartons. This trend had accelerated after
the global financial meltdown forced many
companies to seek ways to cut back on expens-
es. While the local packaging industry con-
tinued to show steady growth, the market for
glass bottles had shrunk and profits at the
company had started to decline. Perez was
convinced that a change in the business model
was required to turn things around but was
unsure about the specific strategy to adopt to
ensure his company s future .
Perez Glassworks was set up in 1978 to sup-
ply glass bottles to firms in the soft drink
industry who were faced with the exorbitant
cost of importing bottles for their products.
Through prudent strategic management, Allan
Perez had managed to transform the company
into the top supplier of glass bottles in the
country with revenue of more than $28 million
Although 97 per cent of the company s rev-
enue continued to be generated by the sale of
glass bottles, it had recently responded to the
increased competition by offering labelling
services to clients who wanted to customise
the appearance of their bottles.
The company operated out of a modern,
state-of-the-art facility located in the O meara
Industrial Estate that was able to produce glass
bottles in a wide variety of sizes and colours.
In order to ensure access to raw materials, the
company operated a silica mining plant in
Valencia and established long-term contracts
with global manufacturers for other materials.
The scale of operations meant that cus-
tomers could place orders on a just-in-time
basis although longer order times were needed
during the Christmas season when demand
for glass bottles peaked. Perez Glassworks had
a large number of loyal customers and had
forged strong customer relationships over the
years by guaranteeing quality products and
The local packaging industry continued to
show steady growth, fueled by a robust econ-
omy, increased urbanisation and rising incomes
from a growing middle class. The food and
beverage sector continued to be prosperous
and expand despite the recent global economic
crisis which had setback the glass packaging
industry. Glass bottles continued to be popular
because the chemical properties of glass meant
that it did not react to the contents of the
Customers, however, had become increas-
ingly quality conscious and were placing greater
importance on the overall appearance of the
packaging. Increases in the demand for import-
ed products, particularly processed foods, also
meant that there was increased exposure and
use of alternative packaging materials.
Recent innovations in production had made
glass packaging more cost effective for cus-
tomers although increases in the price of raw
materials and operating expenses had eroded
the profit margins of the bottling company.
Perez Glassworks had initially absorbed these
increased costs but the company had eventually
been forced to raise the prices for its products.
This made its glass bottles less attractive than
substitute packaging materials such as Tetra
Pak cartons and plastic (PET) bottles.
The company also had to be cautious when
raising prices in order to avoid giving com-
petitors an opportunity to undercut its prices
and steal market share.
PET bottles had become increasingly popular
as a substitute for glass bottles because of
their sturdiness, low cost and flexibility in
design. They were a particularly popular pack-
aging choice in the soft drink, pharmaceutical
and food sectors which required longer shelf
life for products.
PET bottles were also favoured by retailers
because they were easier to stack on shelves
and their transparency made the contents of
the bottle more visible and therefore attractive
to consumers. It was expected that global sales
of PET bottles would continue to show strong
growth and further displace glass bottles in
the packaging sector.
Key customer segments
The major customers for the company s
glass bottles were large business buyers in the
liquor, soft drink and pharmaceutical industries.
These industries had all experienced vigorous
growth in recent years which drove the demand
for packaging solutions.
The growth of the middle class with atten-
dant higher incomes had led to an increase in
the consumption of alcoholic beverages but
many consumers were now demanding foreign
brands which came prepackaged in their own
containers. Beer on the other hand was dom-
inated by a single local producer who continued
to use glass bottles although sales had also
been negatively impacted by imports.
The majority of soft drinks were sold in
plastic bottles as companies responded to the
steady increase in the price of glass bottles.
Some companies also bottled their products
in aluminium cans which greatly reduced the
probability of losses due to breakage during
transportation and storage. While glass bottles
were still widely used in the pharmaceutical
industry, many companies had turned to plas-
tic, aluminium and blister technology. This
had the benefits of reducing product weight
and making it easier to store items on shelves.
Consumers were increasingly price sensitive
and negotiated more aggressively over price
with packaging suppliers before placing orders.
These shifts in the market posed major chal-
lenges for glass bottle producers and threatened
the future of the industry.
Allan was very aware of the challenges his
company faced given its dependency on glass
bottle sales. While he kept encouraging his
sales reps to be more aggressive in promoting
the company s products to existing customers,
he questioned whether this strategy would be
Perhaps, he thought, it was time to seriously
consider the prospect of diversifying the com-
pany s product portfolio as suggested by a
1. What are the major strengths,
weaknesses, opportunities and
threats facing Perez Glassworks?
2. What strategic objectives can
Perez Glassworks pursue to over-
come its challenges?
3. What specific actions should the
company take to build stronger ties
with its business-to-business (B2B)
Dr Barney Pacheco is a lecturer in the
Department of Management Studies at
The University of the West Indies, St Augus-
OCTOBER 5 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
FINANCE | SBG15
Breaking the glass ceiling
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