Italy’s Guala in closures deal with SA’s MCG

Italy’s Guala Closures has announced the acquisition of the Metal Closures division of MCG Industries for an undisclosed amount, part of a strategy to boost its presence in the fast-growing sub-Saharan African market. Operating out of Paarden Eiland in Cape Town, Metal Closures is a leading manufacturer of aluminum closures in South Africa for the wine, spirits, beverage, water and food sectors.

Company chairman and CEO Marco Giovannini (above) said the acquisition of MCG Metal Closures represents a further step in the strategy of both consolidating its core business and strengthening the group’s presence in the fast growing sub-Saharan African market.

The deal is subject to approval by the competition authorities and, if successful, will give Guala a foothold in every continent. According to a FoodProductionDaily report, the current EBIT of MC’s closures was equivalent to approximately 5% of Guala’s total earnings before tax.

Andre Barnard, national sales manager for MCG, said he believed there were substantial growth opportunities for the sub-Saharan region.

“The economic situation in Europe and the US is pretty difficult at the moment, so you can see companies from those regions looking to invest in Africa,” he said. “Based on the current inquiries we receive, I believe that the greatest potential for growth lies in the spirit sector. The wine segment, while very strong in South Africa, is less developed elsewhere.”

Guala concurs with this market assessment, telling FoodProductionDaily that it too saw sprits as the key growth strand, followed by wines.

Barnard added that poverty throughout the region remained an issue and that there was a need to invest in countries and populations as a whole rather than just thinking about capital expenditure in terms of plants.

“It’s a chicken and egg situation – to create demand for a product – be it a drink or anything else – it is necessary to invest in a country as a whole,” he said. “Once a middle class is created then consumption of products – including alcohol – increases. But returns will come in the medium to long term.”

Neelin Naidoo, CEO of MCG Industries hailed the acquisition as a major opportunity for the closures unit to expand its market reach and draw on Guala Closures’ global expertise.

Source: FoodProductionDaily