Beer-maker East African Breweries Limited (EABL) is set to shut down its glass manufacturing subsidiary for three months beginning Monday to allow for refurbishment of the factory at an estimated cost of more than Sh1 billion.
The brewer plans to replace the furnace, forming machines and other equipment used in the mixing, melting and moulding of glass bottles at Central Glass Industries (CGI), its fully-owned subsidiary located in Kasarani, Nairobi.
East African Breweries Limited managing director Charles Ireland says the repair work is necessary to seal energy leaks from the furnace which wears out every eight to 10 years, reducing its efficiency.
“We will switch off the furnace beginning Monday and we anticipate that the refurbishment work will last three months,” Mr Ireland told the Business Daily last Thursday, estimating the repairs to cost between Sh1 billion and Sh1.5 billion.
“The furnace has a thermal lining and the older the equipment gets, more energy leaks out, reducing the overall efficiency of the machine. You are forced to apply more energy to produce the same number of glasses as before.”
The glass maker has a daily melting capacity of 140 tonnes that can produce 73 different glass shapes. The company also has a printing facility for bottle labelling.
Central Glass has been manufacturing and selling glass bottles regionally for 27 years, with more than 50 per cent of its products being exported to countries like Uganda, Tanzania, Ethiopia, Rwanda, Burundi, Eritrea and Seychelles.
The glass company supplies Kenya Breweries Limited with bottles for its beer and soft drinks (Alvaro and Malta Guinness).
The firm also manufactures bottles used by another sister company, United Distillers Vintners (UDV) which locally produces and sells spirits like Popov, Smirnoff, Gilbeys, Kenya Cane, Kenya Gold and V&A.
Multinational soft drinks maker Coca-Cola is another of CGI’s major local customers.
The coming into force of the Alcoholic Drinks Control Act, 2010, which outlawed the sale of spirits in plastic bottles spirits, also swung some extra business in CGI’s way.
“The plant continues to operate at full capacity with major challenges in meeting expanding demand,” says EABL.
EABL added that it had been preparing for this revamp for nearly one year, promising that it would have enough stock for its customers during the shutdown.
The company said it would source the new equipment from different suppliers across Europe and that the process will see it engage about 100 contractors.
“We have been preparing for this revamp for about one year now once we reached that point where the furnace had to be replaced,” said Mr Ireland.
“In anticipation, we have already built up sufficient glass bottle reserves so there will be no interruption of supply (for KBL and other customers).”
EABL, which saw its after-tax earnings for the year to June 2014 grow by five per cent to Sh6.85 billion compared to Sh6.52 billion the previous year, owns eight companies in the region.