Australian beverage packaging provider Amcor, which recently spent A$3 billion (€1.67bn) to buy Schmalbach in Germany, has just spent A$135 million on a single burner glass plant near South Australia's Barossa Valley, marking the end of a market dominated by just one player, ACI.
There it will make premium wine bottles.
While the thrust overseas is to focus strictly on just three areas of the packaging business, the opening of the glass plant is a foray into an entirely new area for Amcor.
It pits the packaging giant against a tough competitor, ACI, which has monopolised glass making in Australia for the best part of 100 years.
When development and contracting giant Leighton approached Amcor in January 2000 with an idea to build a new bottle factory, there was an almost instant meeting of minds.
Amcor CEO Russell Jones was already thinking along similar lines. Jones, who worked as ACI's head of packaging before moving to Amcor, believed his former employer was vulnerable.
The right plant, in the right place, producing the right mix of products, could steal valuable market share from the monopolist in the high-margin and rapidly expanding wine bottle market.
For his part, Leighton operations manager Ray McCann had been shopping an idea for a new glass plant around the packaging industry since 1997.
After several dead-end negotiations, McCann turned to Amcor.
"By this stage we'd developed a proposal, found the technology, found land," McCann says. "Then someone in the group suggested trying to talk to Amcor. We did it in January 2000."
Eventually the two sides agreed to adopt Leighton's $ 130 million waif, a hi-tech, single burner plant near both the raw materials and the end customer. Amcor has consequently dipped its toe in interesting water. Its competitor, ACI, is a profitable monopolist that has burnt off all comers. The most recent, Smorgon, sold up in 1992. Since then all the wineries, brewers and food manufacturers in Australia must deal with it alone.
But John Winkle, who ran ACI's glass operations before being plucked out of retirement to run Amcor's, says a number of ACI's customers had grown unhappy.
"It's the old story," Winkle says. "A monopoly supplier is never loved. It doesn't matter how good they are, everyone likes to have choice."
Compounding this, he says, is that ACI maximises profits by working very close to capacity, "and if there's mix changes or sudden growth spurts it can be difficult to supply bottles of the type required".
Jones says ACI lacks sufficient capacity to keep pace with growth in demand - and the bottle is the second most expensive element of the wine companies' product.
The biggest growth is at the premium end. Premium bottles are heavier than others. The glass is thicker and therefore darker in colour, and the dent in the base of the bottle (the punt) is deeper, meaning the bottle can be taller, providing more space for the designer label.
Mark Cotton, an equities analyst with Macquarie Equities, says the "market structure, longer term, would probably bear two players". But he warns that ACI will not give up the profitable premium end of the market without a fight. In the short term this would lead to pressure on margins as each tried to cut the other's grass.
ACI glass general manager Rob Barnett says that so far that is not happening. Nevertheless, he says, Amcor is entering a tough business.
"It's interesting that it's a new player in the industry - most worldwide are trying to get out, because the returns are very difficult," Barnett says.
Can Amcor make its stated 15 per cent on funds employed?
"Not as I understand the industry dynamics - but maybe they have a different cost structure that I'm not familiar with."
Barnett says the big issue will come "down the track" when capital reinvestment is required.
Amcor is confident it will return 15 per cent by year three, and Jones says the company is "entirely satisfied with the models we are working on".
He says winemakers already know Amcor well as suppliers of corrugated boxes, wine casks and flexible film, and the glass bottle plant was built with their support and involvement. According to company officials Five wineries already agreed to long-term contracts before the proposal even made it to the Amcor board in August 2000. Since then, 10 more have signed and together they make 90 per cent of Australia's wine.