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8. The Beverage Industry

8.1. Industry Overview Mexico continues to be the second-largest market for soft drink products in the world, with an estimated average annual consumption of 38.5 gallons per capita. The Mexican refreshment industry produces close to 4 billion gallons per year. Global consolidation tends in the beverage industries also are present with Mexican companies. Examples include the acquisition of Panamco by Femsa and the recent acquisition of Kaiser brewery in Brazil. There also is growing competition between local producers and multinationals, including Coke and Pepsi. The local companies are able to maintain, and in some instances grow, market share in some segments of the soft drink market. According to ANPRAC in Mexico, approximately US $2 billion is invested in bottling equipment for refreshments. Companies invest, on average, US $40 to $60 million in bottling and packaging equipment per year. In terms of beer, Mexico is the third-largest beer producer in the world, with a production of more than 69.4 hectoliters per year. The Mexican beer Corona is the number-one imported beer in the United States, and the single brand with higher exports in the world. Mexico’s per capita beer consumption is 14.1 gallons per person. It is even higher in the northern region of the country. Beer production in Mexico is controlled by two large groups, Grupo Modelo, the manufacturer of Corona beer, and FEMSA. Together, they control 95% of the total market. The remaining 5% is split between imports and microbreweries.

Beer Production in Mexico (In thousand hectoliters)

Grupo 2005 %

Grupo Modelo 44,820.00 63% FEMSA 25,930.00 37% Total 70,750.00 100%

Source: FEMSA’s annual report. The most popular packaging in the Mexican beer market is the returnable bottle, which accounted for approximately 60% percent of domestic beer shipments in 2005. Experts in the sector estimate that the popularity of the returnable bottle is attributable to its lower price to the consumer. While returnable bottles generally cost about twice as much to produce than non-returnable, returnable bottles may be reused as many as 30 times before being recycled. Therefore, beer producers are able to charge lower prices for beer in returnable bottles.

8.2. Company Ranking by Size

Mexico has a wide number of beverage producers. Other than soft drinks and beer, the country has an important base of tequila bottlers, rum bottlers, juice manufacturers, and water bottlers. In each category, there are a few very large companies with more than 500 employees and hundreds of small producers.

8.3. Key Players In the refreshments industry, FEMSA, the owner of the Coca-Cola license for the country, controls close to 45% of the refreshments market. PEPSI is the second-largest refreshment producer in the country with a 30% share. The dominance of these companies in the soft drinks market is being successfully challenged by Big Cola, which has 5 to 7% of the market. Mexico’s largest beverage bottlers include the following:

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Mexico’s Largest Beverage Companies (sales in million US$) Company Origin 2006 Sales 2005 Sales Growth

Fomento Económico Mexicano / NL MX 11,706.17 9,934.02 18% Coca-Cola FEMSA / NL MX 5,346.11 4,804.94 11% Grupo Modelo / DF MX 5,261.81 4,588.01 15% FEMSA Cerveza / NL MX 3,296.20 2,553.06 29% Pepsico de México / DF EU 3,259.98 3,121.65 4% Arca / NL MX 1,543.73 1,356.19 14% Pepsi Bottling Group México / DF EU 1,298.74 1,187.14 9% Grupo Continental / Tamps. MX 1,061.84 983.69 8% Coca-Cola de México / DF EU 977.59 910.78 7% Grupo Embotelladoras Unidas / Jal. MX 636.61 583.73 9% Jugos del Valle / DF MX 462.78 443.12 4%

Source: Expansión Magazine, Las 500 Empresas de México.

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8.4. Company Profiles

Alpura, S.A. de C.V.

Industry: Dairy Sub Industry: Milk, dairy products, juices,

bottled water and desserts Location: Cuautitlan, state of Mexico Size (sales): Over US $825 million Purchasing Potential: Over US $450,000 (est.) Specific Business Opportunities:

Filling machines

A) Company Description Alpura is a Mexican dairy company established in 1971. Before initiating operations, the company sent technicians for training to Sweden, Denmark and the United States. The plant was built in the Cuautitlan Izcalli area in the state of Mexico at a relatively short distance to Mexico City. The first pasteurized milk products entered the market in 1972. Currently, Alpura is one of the leading companies and brands in the Mexican dairy products market, offering a wide selection of milk types to yoghurts, cream, cheeses, fruit juices and other products sold under the umbrella of a well-received brand. The plant is currently processing 2.32 million liters of milk to manufacture its dairy products. B) Main Products Produced and How They Are Packed

Product Brand Package Pasteurized milk (Alpura Clasica, Semi and Light) Alpura Tetra Rex 1 liter and Tetra Top 1

liter Ultra-pasteurized milk (Alpura 2000 Clásica, 2000 Semi and 2000 Light)

Alpura Tetra Brik 1 liter and 250 ml

Specialized milks (40 and more, Lactose free, Lactose free Light, Light Extra, Cholesterol Free)

Alpura Tetra Brik 1 liter

Fruit milk (Frutal, Frutal Ultra-pasteurized, Frutal togo)

Alpura Frutal Tetra top 1 liter, PET bottles (presentation To Go)

Powdered milk Alpura Polyurethane laminated envelope of 500 g., metal can of 1.8 g.

Flavor milk (chocolate, vanilla and strawberry) Alpura Tetra Brik 1 liter and 250 ml Kid’s milk (with flavor or powder milk) Alpura Kids Tetra Brik 1 liter and 250 ml

Envelope of 500 g. or can of 1.8 g. (powder)

Cream (Alpura, Alpura 2000 or Low Fat) Alpura PET bottle, 200, 450, 900 ml and 4 liter or Tetra Brik 250 ml

Yoghurt (lactose free, with fruit, natural, creamy, Vivendi, C-real)

Alpura PET bottle, 150 g, 900 g or 1 kg

Liquid Yoghurt (Bebible, Lactose Free, Vivendi) Alpura Polyethylene bottle, 250 ml Desserts (fruits with cream, rice with milk and mousses)

Alpura Polyethylene bottle, 125 g

Cheese Alpura In plastic 180 g, 400 g, 700 g, 1 kg, 1.98 kg, 3kKg

Butter Alpura Bars of 225 g. and 90 g, wrapped with paper and packed in a carton box.

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C) Installed Packaging Machinery

Machinery Type Brand Units Origin Average Age

Filling Machine Tetra Brick 24 Sweden 11 Filling Machine Rex 3 Sweden 11 Filling Machine Gasti 8 Germany 15 Filling Machine Federal 2 USA 15 Filling Machine Angelus 2 USA 17 Labeling Machine CCL Label 1 USA 10 Labeling Machine D&H 1 USA 15 Filling Machine for Desserts Benco Pack 1 Holland 2 Cartoning Machine A+S USA

Over the past three years, Alpura has replaced three of its Tetra Brick filling machines from TVA8 to A3. D) Last Packaging Machinery Purchase The most recent packing machinery purchase took place in November of 2007 and consisted of a filling machine.

From 2005 to 2007, the company has invested US $1.5 million for the purchase of packing machinery. E) Future Packaging Machinery Ordering Plans Alpura plans to purchase a new line during 2008 because it needs to expand its production capacity. The company is planning to purchase the following:

Machinery Units Origin Motive of purchase Estimated Budget Filling machine for cream 1 USA Expansion US $350 to 450,000

F) Purchasing Policies and Financial Arrangements Alpura develops a packing machinery purchasing budget that depends upon the company’s analysis of the expected growth in demand for its products. It is common for the company to purchase equipment from brands that it has already used at its plant; the purchase is made directly with the equipment manufacturer. When the company looks for additional equipment suppliers, it focuses on companies with a solid reputation in the market. The company commonly requests three proposals before reaching a purchasing decision to buy from a new supplier. Alpura has an in-house technical staff that provides maintenance and basic repairs to its equipment. When major service or repairs are required, it contracts with the equipment manufacturer. It acquires spare parts from its machine suppliers, and produces a limited number of simple spare parts in-house at its machine shop. Alpura has an equipment supply agreement with Tetra-Pack, which consists of a 10% down payment, and the balance over a 60-month period. With other suppliers, the company pays a 40% down payment and the balance after the machine is in operation at its plant.

Machinery Brand Country Cost Filling Machine A3 Tetra Brick Sweden N.A.

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G) Factors That Influence Purchasing Decisions

1. Machine efficiency and high productivity. 2. Brand reputation. 3. Technical support. 4. Price.

H) Comments on Preferred Brands and Existing Business Arrangements With Packaging Equipment Suppliers

Alpura prefers dealing with its existing suppliers, as experience has been positive in terms of the machine operation, servicing and spare parts. Alpura says that U.S. parking machinery suppliers offer very good technical support with spare part availability and fast delivery. The firm also believes that European machinery is noticeably more efficient, but service and spare part deliveries are quite slow. The following table indicates Alpura’s perception on packaging machinery suppliers in the market by country of origin. Origin Technology Flexibility Service Price United States Good Very Good Good Average Germany Very Good Good Good Poor Italy Very Good Good Average Average Netherlands Very Good Good Good Good Sweden Good Very Good Good Average I) Strengths and Weaknesses of the Installed Machinery Brand: Tetra Pack Strengths:

• Strong experience in filling machines. • Its machines are generally very good.

Weaknesses:

• Very expensive. • Slow technical service.

Tetra Pack has no competitors, and it is the only company that meets the requirements of Alpura. Brand: Gasti Strengths:

• It is very effective on niche applications. Weaknesses:

• Deficient technical service. J) New Origin of Suppliers from Asia Alpura has not been approached by Asian packing machinery suppliers, and does not currently have any interest in Asian machinery. The company says that efficiency is more critical than obtaining a very low price.

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K) Trade Show Attendance / Trade Publication Information Executives from the company visit ExpoPack in Mexico and PackExpo in the United States every year. Occasionally, the executives visit trade shows in Europe, as well. The company also subscribes to several trade publications, and says that it is up-to-date on potential suppliers in the market. As that information is already available to them, they will contact potential suppliers when a specific need or interest arises. L) Specific Interest The company has little interest in receiving information from new interested suppliers. M) Contact Information Company Name: Ganaderos Productores de Leche Pura S.A. de C.V. Contact: Mr. Ismael Frías Position: Plant Logistics Manager Address: Km 37.4 Autopista México-Querétaro Cuautilan, Izcalli 54730, México D.F. Telephone: (52) 5899 2000 Fax: (52) 5899 0083 Mail: eleon@alpura.com (Erika Leon, Assistant) Web page: www.alpura.com

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Bacardi y Cia, S.A. de C.V.

Industry: Beverages Sub Industry: Rum - alcoholic beverages. Location: Mexico City Size (sales): US $300 million Purchasing potential: US $150,000 Specific Business Opportunities:

Filling machines, labeling machines, laser coding machines, etc.

A) Company Description: Bacardi and Company is the preeminent worldwide rum supplier. In addition to being a leading distiller, Bacardi also has evolved into a major alcoholic beverages distributor, with a complete portfolio of products. This places the company at par with other companies, such as Diageo in that business segment. Bacardi began in Cuba in 1862. The company’s internationalization in the 1930s helped to develop international assets in Mexico, Brazil and Puerto Rico. This explains the company’s survival even after its Cuban assets were seized by Fidel Castro. Bacardi operates several distilleries and three bottling plants located in the states of Mexico, Puebla and Jalisco. The company’s headquarters are located at the Tultitlan facility. The company also purchased Cazadores Tequila in 2002, and operates that bottling plant in Arandas. The firm has more than 600 employees. During 2006, it became the alcoholic beverages distribution leader in Mexico, adding brands such as Sauza, Grey Goose and Courvoisier. B) Main Products Produced and How They Are Packed

Product Brand Package Rum Bacardi Blanco,

Añejo, Solera and Oro

Glass bottles, plastic and metal caps, labels and carton boxes.

Tequila Cazadores 4 Vientos and Camino Real

Glass bottles, plastic caps, labels and carton boxes.

Rum cocktails Bacardi Breezer Glass bottles, plastic and metal caps, labels and carton boxes.

Brandy Viejo Bergel Glass bottles, plastic and metal caps, labels and carton boxes.

C) Installed Packaging Machinery

Current Machinery Used Brand Units Origin Average Age

Automatic de-palletizing A-B-C Packaging Machine Corp

4 USA 8

Automatic de-palletizing OCME 1 Italy 6 Procomac 1 Italy 6 Horix AB 1 USA/Italy 7

KRONES, Inc 3 Germany 4 GAI 1 Italy 10

Rinsing machines

US Bottler 4 USA 9

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Air cleaning machine US Bottler 5 USA 10 Horix 3 USA/Italy 19

KRONES 2 Germany 4 Horix AB 2 USA/Italy 7

Filling machine Zalkin 7 France 6

Capen 1 USA 16 Alkoa 1 USA 28 Arol 1 Italy 7

Cap closing machine

KRONES 8 Germany 8 JB 1 USA 8 GAI 1 Italy 15

Cold glue labeling machine

Hoppmann 7 USA 6 Labeling machines OCME 7 USA 8 Ink code printers Videojet 8 USA 8 Ink jet printers Videojet 7 Italy 10 Wraparound case packing machine Akron 2 USA 14

Meyer 1 USA 17 Drop packing machine OCME 7 Italy 4

Automatic palletizing Foxjet 4 USA 9 Carton coding machine Marsh 4 USA 4 Laser Domina 3 France 2

Bacardi’s packing line operates with superb efficiency. The plant at Tultitlan operates a 600- meter-long line with more than 90 packing machines. D) Last Purchase of Packing Machinery The last purchase of packing machinery was in 2006, when the company invested US $3 million on an additional production line for new products that were introduced into the market.

Machinery Brand Country Bottling line Krones Germany Cartoning, thermo shrink sleeve machine, labeling, inspection equipment, among others

N.A. France, Spain and/or Germany

Laser Domina France E) Future Packaging Machinery Ordering Plans The company estimates that it will invest US $ 3million during 2008 in the purchase of equipment to support the improved efficiency of its production lines. This also will include labeling machines. Bacardi said that it was quite satisfied with the equipment it has purchased from Krones. It considers this equipment to be highly reliable. F) Purchasing Policies and Financial Arrangements The company has its worldwide headquarters in Monte Carlo. Headquarters’ involvement in purchasing decisions deals with existing worldwide agreements with equipment suppliers, but final decisions are reached by the firm in Mexico. Headquarters also gets involved in the negotiation of payment terms with suppliers. The company is open to purchasing equipment from new suppliers, but they will need to demonstrate that they are viable and better options than its existing suppliers. Suppliers are expected to install the machinery at the plants and train the company’s employees on the machine’s operation and required maintenance.

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The firm continues to get good results from making custom-made spare parts in Mexico. The savings are significant; they represent more than 70% cost reduction on spare parts. G) Factors That Influence Purchasing Decisions

1. Quality of the equipment. 2. Technology. 3. Reliability. 4. Service and technical support. 5. Price.

H) Comments on Preferred Brands and Existing Business Arrangements With Packing Equipment Suppliers Bacardi prefers European machinery suppliers for most of its processes. The company believes that European equipment is of better quality and has superior technology. Specific brands are sometimes purchased because of a previous good experience with the machinery and service, and because Bacardi would like to standardize its packaging machinery. Bacardi’s policy is to purchase packaging machinery from among the three top companies in each category of machinery. I) Strengths and Weaknesses of the Installed Machinery Brand: Krones Strengths:

• Good service. • Good sechnology. • High security.

Weaknesses: • High price.

J) Trade Show Attendance / Trade Publication Information Bacardi visits the ExpoPack trade show in Mexico every year, as well as trade shows in the United States, Germany and Italy. It subscribes to trade publications such as Packaging World and Control Engineering; it also receives information from various equipment manufacturers. K) Specific Interests The company would like to receive information from its existing suppliers and their distributors in Mexico, and about equipment to help increase the efficiency of its lines. L) Contact Information Company Name: BACARDI Y CIA. S.A. DE C.V. Contact: Ing. David Muñoz Alcantara Position: Engineering and maintenance Manager Contact: Ing. Pablo Ismael Martinez Position: Packing maintenance manager Address: Autopista Mex-Qro # 4431 Tultitlan, Estado de Mexico Telephone: (5255) 58 99 09 00, (5255) 5899 09 92 Fax: (5255) 58 99 09 27 e-mail: davidmunoz@bacardi.com pmartinez@bacardi.com Web Page: www.bacardi.com

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Big Cola S.A. de C.V.

Industry: Beverage Sub Industry: Soda, water and fruit juices Location: Mexico City Size (sales): US $300 million Purchasing Potential: US $2 million Specific Business Opportunities:

Complete filling line for PET bottles.

A) Company Description The Big Cola Company belongs to the multinational company Aje Group, which originated in Peru and has achieved significant penetration into the soft drink beverage markets in several countries. The group owns a total of 13 bottling plants, four of which are in Mexico. The company established a subsidiary in Mexico in 2003 under the Ajemex name, and began selling a cola product called Big Cola, competing, among other factors, on price. The success of the product allowed the company to grow and gain control over an estimated 5% of the cola market in Mexico. The company currently operates four bottling plants in Mexico located in the cities of Puebla, Monterrey, Guadalajara and Villahermosa. B) Main Products Produced and How They Are Packed

Product Brand Package Carbonated cola drink Big Cola PET bottles or aluminum cans

Soda (grapefruit or apple) First PET bottles Soda (punch) Big Citrus Punch PET bottles

Water Free World PET bottles C) Installed Packaging Machinery The following table presents a list of the most significant packing machinery used by Big Cola at its Puebla plant. The list provides a useful example for understanding the equipment used at its other facilities.

Current Machinery Used Brand Units Origin Average Age Specification Complete lines: blowing machines, thermo forming machines, packaging machines, wrapping, etc.

Krones 3 Germany 5 90%

Complete lines. Includes a wrapping machine from Okme

Sidel 2 France 5 85%

Complete filling line Mezal 1 Brazil 2 90% Complete filling line for aluminum cans

Krones 1 Germany 1 90%

D) Last Packaging Machinery Purchase The most recent packing machinery purchase took place in 2007 for US $2 million. It consisted of the following:

Machinery Brand Country Complete filling line for aluminum cans.

Krones Germany

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The company’s packing machinery purchases have exceeded US $6 million over the past three years. E) Future Packaging Machinery Ordering Plans The company has no immediate purchasing pans for packing machinery during 2008, but is developing the budget and specifications for a complete new bottle filling line, which it will purchase within two years. The reason for the purchase is to expand production capacity as product demand continues growing. The company said that it has had a very good experience with equipment from Krones and Sidel, and is considering purchasing from these suppliers to maintain homogeneous machinery at its plants. The next expected purchase will consist of the following:

Machinery Units Origin Motive of purchase Estimated Budget Complete filling line 1 Germany or France Expansion US $2 million

F) Purchasing Policies and Financial Arrangements The company has purchased its packing equipment from the representatives in Mexico of the machinery suppliers. Most of the purchases have been from Sidel and Krones, where both companies maintain representation in Mexico. Big Cola’s technical staff is responsible for providing maintenance for the machinery. The staff has been trained by the manufacturer’s representatives in Mexico; they only get involved when there is need for major maintenance or repairs. The company purchases spare parts directly from the manufacturers. The company would not disclose its budget for purchasing packing machinery because it considers this information to be confidential. The budget is developed based upon the expected production capacity expansion needs that are a result of analyzing its expected product demand growth over the following years. The production project area within the company is responsible for defining capacity expansion needs and packing machinery selection. Over the past years, the company has worked on reducing the number of equipment brands to create homogeneity between its plants. The company indicates that this offers significant advantages as it facilitates maintenance, spare part purchases and other manufacturing aspects. The company commonly offers a 50% down payment and the balance once the machine has been installed and is in operation. G) Factors That Influence Purchasing Decisions

1. Previous experience and reputation of the brand. 2. Price. 3. Technical support. 4. Quality and efficiency of the equipment.

H) Comments on Preferred Brands and Existing Business Arrangements With Packaging Equipment Suppliers

Big Cola is not currently using U.S.-made packaging equipment. The company is satisfied with its European machinery. It believes that these machines have the leading technology for its industry. Big Cola said that it is satisfied using machinery from Sidel and Krones, as it considers this equipment to be the leaders for its applications.

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The company made the following assessments of packing machinery: Origin Technology Flexibility Service Price United States Good Good Good Average Germany Very Good Average Good Poor Italy Very Good Very Good Very Good Very Good France Very Good Very Good Very Good Very Good Brazil Good Good Good Very Good I) Strengths and Weaknesses of the Installed Machinery Brand: Krones Strengths:

• Very good technology. • Good technical support.

Weaknesses: • Elevated maintenance cost.

Brand: Sidel Strengths:

• Very good technology. Weaknesses:

• Insufficient spare parts stock in Mexico, lengthy waiting time for some spare parts. J) Comments Related to Asian Packaging Machinery The company has been approached by several Asian suppliers. It has evaluated several machines, and believes that the technology from Asian countries is improving. The company also noted that one of its current suppliers, Sidel, is manufacturing some of its machines in Asia. K) Trade Show Attendance / Trade Publication Information The company regularly visits machinery trade shows in Mexico and the United States, including ExpoPack and PackExpo, and also visits several shows in Europe. The company also subscribes to trade publications from the food and beverage sector and receives information on technology trends from its suppliers. L) Specific Interest The company is interested in receiving information about packaging machinery from suppliers focused on the beverage industry. M) Contact Information Company Name: Big Cola S.A. de C.V. Contact: Mr. Julio Marroquin Position: Quality Control Manager Address: Parque Industrial San Miguel Manzana A lote 8 74160 Puebla, Puebla, Mexico 54730, México D.F. Telephone: (52-227) 275-9000 ext.2224 Fax: (52-227) 275-9000 Mail: jmarroquin@ajemex.com, julmar60@hotmail.com Web page: www.ajegroup.com

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Casa Cuervo, S.A. de C.V.

Industry: Beverage Sub Industry: Alcoholic beverages. Location: Jalisco, Mexico Size (sales): US $200 million Purchasing potential: US $7 million Specific Business Opportunities:

Bottle packing machine, de-palletizer machines

A) Company Description Casa Cuervo is one of the leading tequila bottlers. It was established more than 200 years ago in the state of Jalisco. The company operates three plants in the state of Jalisco; its corporate offices are located in Mexico City. In addition to tequila, the company produces other alcoholic beverages, including rum, vodka, brandy and other beverages. The company exports into 135 countries. B) Main Products Produced and How They Are Packed Casa Cuervo sells nearly 20 product brands and has more than 60 product presentations. The following table presents information about the company’s leading products and how they are packed.

Product Brand Package Tequila José Cuervo, Tradicional

Centenario, 1800, Clasico, Black,Especial (various types from white to diverse aging presentations: reposado to añejo)

Glass bottles, plastic caps, labels and carton boxes

Tequila with flavor

José Cuervo Glass bottles, plastic caps, labels and carton boxes

Rum Cuervo Glass bottles, plastic caps, labels and carton boxes Vodka Cuervo Glass bottles, plastic caps, labels and carton boxes Brandy Cuervo Glass bottles, plastic caps, labels and carton boxes Ready to drink margaritas

José Cuervo Margaritas Glass bottles, plastic caps, labels and four pack carton boxes

C) Installed Packaging Machinery Cuervo operates a total of six complete bottling lines distributed among its three plants. Each facility uses different packaging machinery. The following table provides insight into the types and brands of packing machinery in operation at Cuervo’s plants.

Current Machinery Used Brand Units Origin Average Age

Bottling filling machine MBF 2 Italy 7 Bottling filling machine Irundin 2 Spain 7 Bottling filling machine ZEPF 1 USA 4 Bottling filling machine AVE 1 Italy 3 Labeling machine Auxiemba 3 Spain 7 Labeling machine Krones 2 Germany 7

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Labeling machine AVE 1 Italy 3 Labeling machine SIG 1 Italy N.A. Box filling machine (bottles) Hartness. 3 USA N.A. Palletizing machine Samovi 2 Spain N.A. Codifier machine Video Jet 7 USA 5 Codifier machine Marken 2 USA 3

D) Last Packaging Machinery Purchase The company is in the process of purchasing the following machines.

Machinery Brand Country Packing machine Harnett USA Printing equipment Marken USA Labeling machine N.A. Italy

E) Future Packing Machinery Ordering Plans The company has developed a US $7 million budget for the purchase of packaging machinery for the remainder of 2008, and an additional US $6 to 8 million budget for packaging machinery purchases during 2009. Some of the machines that the company will purchase include the following:

Machinery Units Origin Motive of Purchase Estimate Budget

Depalletizer machine 1 T.B.D. Expansion US $500,000Bottle packing machine 1 USA Expansion US $500,000

F) Purchasing Policies and Financial Arrangements The decision to purchase new packing machinery, as well as the specific machine and supplier, begins with an evaluation of packing needs developed at the individual plant level. The bottling, engineering and maintenance departments develop a technical and financial evaluation that is submitted to the company’s corporate directors for final approval. The company does not have a preference for specific suppliers. It is open to evaluating alternatives that will satisfy its packing needs and help to improve its efficiency. The company may limit the number of suppliers to use similar machines throughout its operations. However, from a specific plant perspective, this is not a key factor in selecting a machine or supplier. Casa Cuervo keeps in stock the most common spare parts it requires in its operations. The technical staff is trained for and responsible for servicing the machines. G) Factors That Influence Purchasing Decisions

1. Brand reputation. 2. Technical support. 3. Price. 4. Ease of operation.

H) Comments on Preferred Brands and Existing Business Arrangements With Packing Equipment Suppliers. Casa Cuervo is always interested in learning about new equipment options and potential suppliers. This does not limit the company from evaluating proposals presented from existing suppliers. The company believes that European and U.S. suppliers are becoming increasingly similar in terms of technology and equipment options, as well as in their commitment to servicing their Mexican clients.

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The company perceives packaging machinery suppliers as follows: Origin Technology Flexibility Service Price United States Good Good Very Good Good Germany Very Good Average Good Poor Italy Good Good Good Good Spain Good Good Good Good I) Strengths and Weaknesses of the Installed Machinery Brand: Krones Strengths:

• Good technology. • Very precise machines.

Weaknesses: • Very expensive.

Brand: Irundin Strengths:

• Simple operation. • Good filling machine with good efficiency.

Weaknesses: • Low flexibility.

J) Trade Show Attendance / Trade Publication Information The company regularly visits packing machinery trade shows, such as Expo Pack in Mexico, and PackExpo in Chicago and Las Vegas. The company also subscribes to trade magazines for the food and beverage industry that provide information on packing machinery trends for these industries. K) Specific Interest Casa Cuervo is not interested in receiving information on packing machinery because it receives all of the information it needs from visiting trade shows and reviewing trade publications. The company says that these are sufficient when it comes to being updated about packaging trends. L) Contact Information Company Name: Casa Cuervo, S.A. de C.V. Contact: Mr. Pedro Jimenez Position: Plant Manager Address: Periférico Sur No. 8500 Col. El Mante 45601, Guadalajara Jalisco, Mexico Telephone: (5233) 3134-3300 e-mail: pjimenez@cuervo.com.mx Web page: www.cuervo.com

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Derivados de Frutas, S.A. de C.V.

Industry: Beverage Sub Industry: Carbonated and non-carbonated

refreshments, bottled water Location: Mexico City Size (sales): US $18 million Purchasing Potential: Not Available Specific Business Opportunities:

Bottling line: 19 liter containers

A) Company Description Derivados de Frutas is a small specialty soft-drink company. It is part of the Mezgo Group, which is a private Mexican company that was established in 1946. The group is composed of several divisions, which include the following: glass manufacturer, a grape mill, a concentrate producer and a distribution company. In addition to its own manufacturing infrastructure, the group has granted 25 franchises to other Mexican companies that bottle their beverages. The beverage brands of the group are well recognized in Mexico and are well received in the middle- and low-end segments of the soft-drink market in Mexico. The company exports beverages to the United States—mainly to satisfy the nostalgic markets, as it focuses on cities that have a large population of Mexican descent. B) Main Products Produced and How They Are Packed

Product Brand Package Grape Carbonated Drink Sangria 600 ml. glass bottles, 1 liter and 2.6 liter, PET

bottles, and 355 ml. cans Grape Carbonated Drink Sangria Light 600 ml. glass bottles, 1 liter and 2.6 liter PET

bottles, and 355 ml. cans Carbonated Fruit Drink Trebol Glass 330 ml., 405 ml. Carbonated Fruit Drink Chaparrita 300 ml. glass bottles. Carbonated Fruit Drink Kist Glass 300 ml. and PET bottles of 600 ml. and 1.5

liters. Bottled Water Oasis 600 ml. and 1.6 liters PET bottles. C) Installed Packaging Machinery

Current Machinery Used Brand Units Origin Average Age

Specification

Wrapping Machine SMI 1 Italy 3 85% Bottle Orienting Machine Lafranki 1 Italy 8 75% Filling Machines Alfil 1 Germany 8 80% Filling Machines BC Flex 1 Italy 8 75% Mixer and Carbonator Alfil 1 Germany 8 80% Rinse and Fill machine Alfil 1 Germany 8 75% Capping Machine Alcoaf 1 Germany 8 75% Coding Machines Image 4 USA 8 75% Coding Machines Domino 2 USA 5 75% Labeling Machines Langut 1 Germany 8 75% Labeling Machines Trine 2 USA 3 75% Wrapping Machines Smith 1 Italy 8 75%

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Wrapping Machines Dimak 1 Italy 8 75% Line for Blowing PET Bottles Dina

Block 1 Switzerland 8 75%

Line for Bottling in Glass Crown 3 USA 8 75% Line forBbottling PET Meyer 2 USA 8 75% Line for Bottling in PET Alfil 1 Germay 8 75% Line for Bottling in PET BC 1 Italy 8 75% Automatic Palletizing Machine

1 USA 5 N/A

D) Last Packaging Machinery Purchase The company’s last purchase was for approximately US $16,000. It consisted of:

Machinery Brand Country Coding Machines Domino USA

E) Future Packing Machinery Ordering Plans, 2008-2009 Derivados de Fruta plans to expand its Mexico City plant with an additional bottling line. This line has been planned for a long time. It will be for PET bottles with a capacity of 19 liters, and the line must be able to handle 500 to 800 bottles per day. There is no specific date as to when this purchase will be made, but it will most likely be in late 2008 or early 2009.

Machinery Units Origin Motive of Purchase Estimate Budget Water Bottling Line 1 T.B.D. New product Line NA

F) Purchasing Policies and Financial Arrangements The company takes into consideration standard factors, including equipment quality, flexibility and price, when it comes to selecting suppliers. The company’s management defines the need to increase production capacity, the technical department selects the supplier and equipment options, and the purchasing department handles the negotiation and contracting. The company defines a set of three potential suppliers and travels to their plants to view the proposed machinery. The company has had a preference for European suppliers, but because of the current appreciation of the euro, will seriously consider viable options from other countries. It has an in-house technical staff responsible for maintenance and small repairs, and for changing spare parts. The firms purchases directly from the manufacturer, which is expected to install the equipment at the plant and train the technical staff on the operation. Derivados de Frutas has received financing from suppliers and has used bi-lateral credit lines. The firm purchased an Italian bottling line, for which it paid in cash and received a discount. G) Factors That Influence Purchasing Decisions

1. Efficiency. 2. Price. 3. Service. 4. Low maintenance cost. 5. Local presence and spare parts availability.

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H) Comments on Preferred Brands and Existing Business Arrangements With Packing Equipment Suppliers The current perception of Derivados de Frutas is that in general, European machinery is superior to U.S. equipment. It believes that Europeans are more experienced and that their machines offer greater flexibility and more advanced technology than U.S. suppliers. The company values the fact that U.S.manufacturers are closer to Mexico and that it is easier to obtain spare parts and service. The company indicated that it would not hesitate to select a U.S. supplier if it could meet its requirements. The company mentioned Smith, Dimac, Alfil and BC as its favorite brands. Origin Technology Flexibility Service Price United States Good Good Average Good Germany Very Good Good Very Good Expensive Italy Very Good Very Good Good Expensive Switzerland Very Good Very Good Good Expensive I) Strengths and Weaknesses of the Installed Machinery Brand: Alfil Strengths:

• Robust. • Flexibility. • Long-lasting. • Quality.

Weaknesses:

• Spare parts. • Price. • Slow service.

Brand: Smith Strengths:

• Robust. • Flexibility, long-lasting. • Quality.

Weaknesses:

• Spare parts. • Price.

J) Comments Related to Asian Packaging Machinery Derivados de Frutas has not been approached by Asian packing machinery suppliers. It says that it does not have an interest in Asian packing machines. K) Trade Show Attendance / Trade Publication Information Derivados de Frutas obtains information on manufacturing trends from reading advertisements in various trade publications, including; El Reportero Industrial, Beverage World, Manufactura and the Bebidas Mexicanas magazine.

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The company learns about new potential suppliers by visiting ExpoPack in Mexico and PackExpo in Chicago, and by visiting the packaging expo in Milan, Italy. L) Specific Interest The company would like to receive information about packaging machinery for the 19-liter bottle lines that it is interested in installing. M) Contact Information Company Name: Derivados de Frutas Contact: Alfonso Ibarra H. Position: Production Manager Address: Calzada de Tlalpan 3222 Sta. Ursula Coapa, 04910 Mexico City Telephone: (5255) 5677 0022, 5677-1522 ext. 5473 Fax: (5255) 5677 1522 e-mail: aibarra@mezgo.com Web page: www.mezgo.com

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Grupo Embotelladoras Unidas S.A. (GEUSA)

Industry: Beverages Sub Industry: Carbonated soft drinks,

purified and flavored water Location: Zapopan Jalisco

(headquarters) Size (sales): US $630 million Purchasing potential: US $ 4million. Specific Business Opportunities:

Carbonated soft drinks and water bottling line.

A) Company Description The Mexican corportation Grupo Embotelladoras Unidas, S.A. de C.V (GEUSA) ranks as the second-largest soft drink bottler in Mexico after FEMSA, which bottles Coke in Mexico. The company was established in 1938, and has been publicly traded in the Mexican stock exchange since 1980. The company operates the Pepsi franchise in Mexico, and bottles under Pepsi, Pepsi Light, Pepsi Max, 7 UP, Kas and other brands. The company also produces under proprietary brands, especially for bottled water and flavored water. The company operates 15 bottling plants and 10 distribution centers, which are located in the cities of Guadalajara, Celaya, Morelia, Puebla, Veracruz, Tuxtla Gutiérrez, Oaxaca, Villahermosa and Tepic. The company has 4,500 employees and has an estimated 25% share of the bottled soft-drink market in Mexico. B) Main Products Produced and How They Are Packed

Product Brand Package Carbonated soft drinks

Pepsi, Mirinda, 7Up, Kas, Manzanita Sol, Sangría Casera, Rey, Okey, Tri Soda, Plus, and Monte Bello.

Glass and PET bottles of 12 oz, 600 ml, 1.5 liters, 2liters, and 3 liters; cans of 355 ml.

Non- carbonated soft drinks

Be Light, H2O, Lipton, Power Punch, Spin Sweet, Spin Light, Sobe Rush (energy drink)

Glass and PET bottles of 12 oz, 600 ml, 1.5 liters; cans of 355 ml.

Pure drink water

Santorini, Aqua di Roma PET bottles of 250 ml, 1 liter, 1.5 liters; plastic containers of 19 liters..

C) Installed Packaging Machinery GEUSA uses complete bottling lines at each of its production facilities. These lines include the following:

• Empty bottle conveyor belt. • Bottle cleaning machine. • Bottle inspection machine. • Filling machine • Capping machine. • Final product transporting band. • Labeling machine. • Bottle and can code machine. • Wrapping machine. • Palletizing unit.

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Each of the production lines is developed considering the estimated growth in demand over the following 15 years. This enables the company to find easy solutions for increasing production volumes. GEUSA believes that minimizing the number of suppliers improves efficiency, and decreases maintenance and spare part costs. The company also believes that having fewer suppliers allows for a faster response from the supplier. The company operates 14 bottling lines. The following table presents a general description of the equipment at the various plants of GEUSA.

Current Machinery Used Brand Units Origin Average Age Bottling line Procomac 11 Italy 4 years Bottling line KHS 2 Germany 10 years Bottling line Berchi 1 Italy 6 years Thermoforming machines (12-24 bottles)

Zambelly 14 Italy 10 years

Coding machines Domino 25 USA 8 years Sleeve labeler for special glass and pet bottles

KO-Pack 2 Korea 3 years

The company has not purchased equipment separately for more than 10 years. The company contracts with an integrator that is capable of putting the complete line together. It says that it recently purchased, separately, the thermoforming and the coding machines. Both brands have efficient representation in Mexico, which provides service to all of GEUSA’s plants. D) Last Packaging Machinery Purchase The company is about to receive a complete bottling line from the supplier Berchi, representing an investment estimated at US $3.8 million. The line will be installed at the production center in Colima, which will be the 15th for the company. It is expected that the line will be operational at the end of May. In addition, the company purchased one thermoforming machine and five Domino coding machines—two for the new line and three to replace machines at other lines.

Machinery Units Brand Country Motive of purchase Bottling line 1 Berchi Italy New production

facility Thermoforming machines

1 Zambelly Italy New production facility

Coding machine 5 Domino US Replacement E) Future Packaging Machinery Ordering Plans GEUSA is constantly evaluating the performance and productivity of its lines and estimating future product demand to plan modifications to the lines or to incorporate new lines to increase production and meet demand. The company is in the process of installing a new production line in Colima; there are no additional equipment purchasing plans during 2008. The next upcoming purchase is related to replacing or upgrading the bottling line in Guadalajara, which has been in operation for 20 years. The estimated budget is US $4 million. Purchasing will take place in 2009. The company also is considering upgrading its machinery at the Guadalajara production center. As mentioned, the next large purchase will be to renew a line in Guadalajara. It will require the following:

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Machinery Units Brand Country Motive of purchase Cost Bottling line 1 TBD TBD Upgrade production

facility US $4 million

(approximately)Thermoforming machines

1 TBD TBD Upgrade production facility

TBD

Coding machine 3 TBD TBD Upgrade production facility

TBD

The significant price impact of the euro makes this company interested in locating U.S. suppliers. The goal is to replace obsolete equipment throughout its bottling lines, which were purchased from European suppliers. Under current price conditions, it would not make sense to stay with the same suppliers. The company is not interested in separate equipment. It will only evaluate proposals for complete bottling lines. The company said that it has received information from the German company KHS, noting that it is manufacturing in Brazil, which could represent significant cost savings over other European manufactured equipment. It also talked about supply options from Australian companies, but were emphatic that current exchange rates will impact the decision for a particular supplier. F) Purchasing Policies and Financial Arrangements GEUSA has developed supplier selection guidelines that have been in place for more than 10 years. The first step is to evaluate potential suppliers that have been recommended by the PEPSCO headquarters in the United States. The company makes an economic evaluation to define whether the supplier would be a good fit for Mexico, and then makes a purchasing decision. All purchases are conducted directly with the equipment manufacturer. Senior management at GEUSA is free to reach its own decisions, which are taken by the company in Mexico. Another purchasing guideline is that the company evaluates proposals for complete bottling lines, as it is against policy to acquire equipment separately. The purchase of complete lines helps the company achieve significant savings and reach a homogeneous standard of quality and reliability throughout the bottling lines. The company maintains a corporate engineering and maintenance department, which is responsible for developing preventive maintenance programs and providing service to process and packing equipment. About 20% of maintenance services are contracted to third parties, mostly with the suppliers of the equipment. This contracting for outside maintenance is mainly for the robotic and highly automated equipment operating in the bottling lines. GEUSA usually negotiates a 50% down payment and three-year interest-free terms for payment of the balance. G) Factors That Influence Purchasing Decisions

1. Technology. 2. Brand reputation. 3. Post sale service. 4. Price. 5. Maintenance and spare parts cost. 6. Have a direct presence in Mexico.

H) Comments on Preferred Brands and Existing Business Arrangements With Packing Equipment Suppliers At present, the company prefers Italian bottling line suppliers as it believes that they are the leaders in integration and automation of the lines. Selecting those lines is expensive, but the firm believes they are the clear leaders in that segment of the bottling industry.

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GEUSA has been working for more than one year to locate potential supply alternatives, which must be companies with state-of-the-art technology for bottling lines. The potential suppliers must also have a solid reputation in the industry, and be able to showcase the lines in operation at other facilities. The company has not signed exclusive supply agreements with any distributor and is free to make any selection. In the case of specialty servicing, the company signs maintenance and servicing contracts with the equipment suppliers. The company maintains the following opinion about equipment based on its origin: Origin Technology Flexibility Service Price Italy Very Good Very Good Very Good Expensive Germany Very Good Good Good Expensive United States Very Good Good Good Very Good I) Strengths and Weaknesses of the Installed Machinery Brand: Procomac Strengths:

• Excellent technology. • Low maintenance costs. • Flexible. • Robust.

Weaknesses:

• Slow availability for technical support. • Price.

Brand: Zambelly Strengths:

• Excellent technology. • Easy to operate. • Flexible.

Weaknesses:

• Price. • Low spare parts availability.

J) Comments Related to Asian Packaging Machinery The company said that it has received information from the corporate offices of PEPSICO in the U.S. about a Chinese company that is manufacturing bottling lines for PEPSICO in China. That is the extent of the information it has received. There has been no contact between the parties, and the firm does not know if PEPSICO considers this company as having the same quality as the Italian suppliers. K) Trade Show Attendance / Trade publication Information For the selection of new equipment and potential suppliers, GEUSA has several strategies. The company believes that the best ways to find this information is to attend packing machinery trade shows, and to receiving information from current and potential suppliers.

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GEUSA follows up with new technology developments in its industry by visiting trade shows in Germany, specifically Interbrau. The company also has visited ExpoPack and PackExpo in Mexico and Chicago, respectively. The company receives trade publications, but it is more interested in the information that is sent by potential suppliers. L) Specific Interests GEUSA would like to receive information on state-of-the-art technologies for soft drink and water bottling complete line equipment. It also would like to get information on thermoforming pack and washing machines, pasteurizers, conveyors, palletizers, packaging and fridge pack equipments. M) Contact Information Company Name: Grupo Embotelladoras Unidas, S.A. de C.V (GEUSA) Contact: Ing. Francisco Zarate Position: Corporate Engineering Director Address: Esther Tapia de Castellanos # 555 Col. Santa Fe 45168, Zapopan Jalisco, Mexico Telephone: (5233) 3836-0400 Ext. 5133 Fax: (5233) 3836-0400 Ext. 5135 e-mail: fzarate@geusa.com.mx web page: www.geusa.com.mx

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Jugos del Valle S.A. de C.V.

Industry: Beverages Sub Industry: Fruit juices and nectars, soft

drinks, sports drinks and other beverages

Location: Cuautitlan, state of Mexico Size (sales): US $454 million Purchasing Potential: More than US $8.5 million Specific Business Opportunities:

Complete filling and packaging lines

A) Company Description Jugos del Valle was established in Mexico in 1947. It is currently the second-largest fruit juice based business in the country. The company produces fruit juices and nectars, sports drinks, soft drinks and other beverages, and is the largest fruit juice producer in the Brazilian market. The company operates four manufacturing plants in Mexico and one in Brazil. The company also maintains a business presence in a series of international markets, including the United States, Puerto Rico, Venezuela and other Latin American markets. In 2007, the company was purchased by a venture between the Coca Cola Company and its largest bottler in Mexico, Coca Cola Femsa. B) Main Products Produced and How They Are Packed The company produces a long list of products under various brands and product presentations. Some of the products with the largest production volumes are presented in the following table:

Product Brand Package Fruit Juice (Soya, Light, Practi Pack) Del Valle Glass bottles, aluminum

cans or Tetra Pack Flavored beverages Frutsi Plastic bottles Juice Florida 7 Tetra Pack Fruit juice Bebere Plastic bottles Soft drinks Barrilitos PET bottles Tomato juice Clam Club Glass bottles Grapefruit juice Del Valle Toronja PET bottles

C) Installed Packaging Machinery Del Valle would not provide information (brands) with regard to its installed packaging machinery because it considers that information to be a trade secret.

Current Machinery Used Units Origin Average Age

Filling, closing and packing 5 Germany 11 Coder machine 15 USA 11 Depalletizing machine 1 USA 15 Fill and cap machine 6 Italy 13 Labeling machine 6 USA 22 Tray forming machine 6 USA 14 Shrink tunnel 6 USA 19 Palletizing machine 7 USA 14

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Bottle handling equipment 2 Spain 12 Filling machine 5 USA 17 Tapping machine 5 England 17 Complete packaging line 5 Italy 7 Labeling machine 5 Spain 9 Wrapping machine 2 USA 16 Filling machine 1 USA 13 Can sealers 1 USA 13 Nitrogen injector 1 USA 13 Bottle level inspector machine 1 USA 13 Shrink tunnel 1 USA 13 Forming and packing system 1 USA 13 Tunnel 1 USA 13 Glass bottle filling machine 1 USA 13

D) Last Packaging Machinery Purchase The company’s last purchase of packing machinery was made during 2007. The investment was approximately US $1 million. The company acquired the following:

E) Future Packaging Machinery Ordering Plans The packing machinery plans for this company during 2008 include the following:

Machinery Units Origin Motive of purchase Estimated Budget Complete bottling line 1 T.B.D. Expansion US $7.5 million

Complete packaging line 3 T.B.D. Expansion US $1 million All machine purchasing plans depend upon the marketing and sales strategies of Coca Cola, which is responsible for maintaining and developing market share for Del Valle’s products in the market. F) Purchasing Policies and Financial Arrangements With the purchase of Del Valle by Coca Cola FEMSA and the Coca Cola Company, all of the purchasing decisions are made by these companies following the requests of Del Valle, which are based on production expansion or machinery replacement needs. The company said that it commonly works with suppliers with which it has previous experience. On the other hand, it indicated a desire to analyze new types of equipment, which opens the opportunity for new suppliers. The company purchases machinery directly from the equipment manufacturer, which also is responsible for training Del Valle’s staff in the operation and maintenance of the equipment. The company acquires machinery from the manufacturer and considers vendor financing if available. G) Factors That Influence Purchasing Decisions

1. Brand reputation and previous experience with the supplier. 2. Technical support. 3. Price.

Machinery Brand Country Complete Bottling Line USA

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H) Comments on Preferred Brands and Existing Business Arrangements With Packaging Equipment Suppliers

The company preferspreference to purchase from its existing suppliers, with which it has experience in using its machinery. The company believes that European machines have better technology, with adequate price and service in Mexico. I) Trade Show Attendance / Trade Publication Information The company visits trade shows to learn about new technologies and equipment, including ExpoPack in Mexico and PackExpo in the United States. J) Specific Interest The company is interested in reviewing information about packing machinery options for the beverage industry. K) Contact Information Company Name: Jugos Del Valle Contact: Mrs. Mariana Aguila Position: Head of Purchasing Department Address: Insurgentes No. 30 Barrio Texcoaca, Tepozotlan

54600, Edo. De México Telephone: (52) 5899 1000 ext. 1072 Fax: (52) 5899 1000 Mail: maguila@jvalle.com.mx Web page: www.jvalle.com.mx

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Novamex, S.A. de C.V.

Industry: Beverages Sub Industry: Soft-driks Location: Mexicalli, Baja California Size (sales): Over US $200 million Purchasing Potential: US $5 million Specific Business Opportunities:

Bottle filling machines for glass or plastic bottles

A) Company Description Novamex is a Mexican company established in 1987 to become a distributor for Mexican food product brands in the U.S. market. At present, the company is the leading distributor of several types of Mexican food products in the United States. Among the products represented by this company in what is defined as the “nostalgic market,” we find several traditional soft-drink brands, including Jarritos, Sangría Señorial, Sidral Mundet, and Mineragua. The company also distributes the leading hot pepper sauce Cholula, which belongs to Cuervo Tequila, and sells Ibarra chocolates and D’Gari products. The company’s U.S. headquarters is in the city of El Paso, Texas.

Over the past years, Novamex has become one of the top five exporters of Mexican food products into the U.S. market. From two initial soft-drink products; Jarritos and Sangria Señorial, the company now represents more than 11 brands. Its sales and growth rates are considered confidential by the company, but from separate pieces of information received, we estimate that its sales must exceed US $200 million, and are growing at a rate of 2.5 times the U.S. GDP growth rate.

The Mexican headquarters for the company are located in Ciudad Juarez in the state of Chuhuahua. The company operates two manufacturing facilities, one in the same city and another in Mexicali in Baja California.

B) Main Products Produced and How They Are Packed Some of the leading products by sales volume are the following:

Product Brand Package Functional beverages Bionature PET bottles Fruit flavored soft-drinks Jarritos PET or glass bottles Apple soft-drinks Sidral Mundet PET or glass bottles Sangria soft-drinks Sangria

Señorial PET or glass bottles

Mineral water Mineragua PET or glass bottles C) Installed Packaging Machinery

The following table presents the most relevant packing machines installed at the company’s plants:

Machinery Type Brand Units Origin Average Age

Complete filling line for glass bottles Krones 1 Germany 1 Complete filling line for glass and PET bottles Krones 1 Germany 6

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D) Last Packaging Machinery Purchase The most recent purchase of packing machinery took place in 2007. The purchase, for about US $5 million, was for the following:

E) Future Packaging Machinery Ordering Plans The company has aggressive plans to introduce new products into the market. Future packing machinery purchases are linked to these new products, but because of confidentiality issues, the company did not provide information on the new product plans nor on the related packing machinery that will be required. F) Purchasing Policies and Financial Arrangements The company is very secretive and was not willing to provide information on the amount of its current purchasing budget for packing machinery during 2008. Purchasing decisions are reached by the corporate office in Mexico, which compares proposals from various suppliers that represent clear options for meeting its technical and production requirements. The company receives training on equipment operation and maintenance from the manufacturers, and then provides maintenance with its in-house technical staff. The company purchases only original spare parts. These are purchased from the equipment manufacturer or from its distributor in Mexico. G) Factors That Influence Purchasing Decisions

1. Previous experience with the supplier 2. Brand reputation 3. Price 4. Technical service

H) Comments on Preferred Brands and Existing Business Arrangements With Packaging Equipment Suppliers

Novamex prefers European suppliers, as it considers that in its segment, U.S. suppliers have little to offer. Origin Technology Flexibility Service Price Germany Very Good Very Good Very Good Poor Even while European machinery is significantly more expensive, this company is willing to purchase it as it considers that the technology offered by the machines is irreplaceable.

Machinery Brand Country Complete filling line for glass and PET bottles Krones Germany

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I) Strengths and Weaknesses of the Installed Machinery Brand: Krones Strengths:

• Efficient. • Very good technology. • Very good technical service.

J) Trade Show Attendance / Trade Publication Information The company visits ExpoPack in México every year, and some packing machinery trade shows in Europe. K) Specific Interest Novamex would be interested in receiving information about packing machinery for the beverage industry. L) Contact Information Company Name: Novamex S.A. de C.V. Contact: Mr. Marco Antonio Martinez Position: Maintenance Manager Address: Mexicali Telephone: (52 686) 557 6400 Fax: (52 686) 557 6400 Mail: marco.martinez@novamex.com Web page: www.novamex.com

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Tequilera Corralejo, S.A. de C.V.

Industry: Beverages Sub Industry: Alcoholic beverages Location: Penjamo, Guanajuato Size (sales): N.A. Purchasing Potential: US $1.25 millon Specific Business Opportunities:

Rinsing machine and plastic wrapping machines

A) Company Description Tequila Corralejo is part of the new generation of tequila producers that began production in response to a continued growth in demand, worldwide, for tequila. The company is embarked on an aggressive marketing campaign in Mexico and internationally, which will result in the need to increase its production and packing capacity. The company has defined a product image based on a tall and slender blue glass bottle, which sets it aside in terms of retail presentation image. B) Main Products Produced and How They Are Packed

Product Brand Package Tequila Corralejo Blanco Glass Bottles, Labeled Tequila Corralejo Reposado Glass Bottles, Labeled Tequila Corralejo Añejo Glass Bottles, Labeled Tequila Corralejo Triple Destilación Glass Bottles, Labeled Tequila cream Corralejo Glass Bottles, Labeled Beer and tequila beverage Horus Glass Bottles, Labeled Vodka based coolers Burbs Aluminum Cans

C) Installed Packing Machinery The following table provides information about the packing machinery installed at the Corralejo production and bottling plant.

Current Machinery Used Brand Units Origin Average Age Bottle washing, filling, labeling and codifier machine (complete bottling line)

Equitopack 3 Spain 3-4

Filling machine, dryer machine, plastic wrapping machine (complete line for can bottling)

Fruso 1 Argentina 1

D) Last Packaging Machinery Purchase The most recent purchase of packing machinery was from Argentinean supplier FRUSO. The company indicated that the FRUSO machine offered a small production volume that had a perfect fit with what Corralejo needed. Other options from Europe or the United States had much larger production capabilities and would imply over-capacity from the onset.

Machinery Brand Country Cost (Approximately) Complete can bottling line Fruso Argentina US $1 million

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E) Future Packing Machinery Ordering Plans, 2008-2009 Over the following 18 months, the firm has defined a purchasing budget in excess of US $1 million, which will be used to purchase the following:

Machinery Units Origin Motive of Purchase Estimate Budget Rinsing Machine 1 Italy Expansion US $1 million Plastic Wrapping Machine 1 Argentina Expansion T.B.D.

F) Purchasing Policies and Financial Arrangements The company does not have a specific preference for particular packing machinery suppliers. The company looks for machines that can fit into its production volumes and offer the most attractive pricing. Corralejo indicated that machinery suppliers seldom offer financing plans for the purchase of equipment. The final purchasing decisions are made by the managing director of the company after reviewing the proposals presented by interested suppliers that were selected by the company’s technical staff. The equipment purchasing agreement includes the company’s request for operation and maintenance training of the machinery being purchased. G) Factors That Influence Purchasing Decisions

1. Production output corresponds to company needs. 2. Price. 3. Technical support.

H) Comments on Preferred Brands and Existing Business Arrangements With Packing Equipment Suppliers The company does not have a preference for any specific supplier. Supplier selection is based on the characteristics of the proponed machinery and how it fits into the desired performance guidelines defined by the company. The company believes that European suppliers are easier to deal with, as they will always find a Spanish-speaking person to communicate with the company. This has not happened with U.S. suppliers. The company mentioned that U.S. suppliers offer much better prices than European suppliers. The company made the following comments about its perception of packing machinery suppliers based on their nation of origin: Origin Technology Flexibility Service Price United States Poor Very Poor Very Poor Good Germany Very Good Very Good Very Good Good Italy Good Poor Poor Average Spain Good Good Average Good Argentina Good Good Average Good Japan Very Good Very Good Very Good Good I) Trade Show Attendance / Trade Publication Information The company said that the only packing machinery event it visits is ExpoPack in Mexico City. The company also looks for packing machinery information by reviewing the web pages of potential suppliers.

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J) Specific Interest The company is interested in receiving information from equipment suppliers about bottling lines. The company also would like to evaluate the possibility of producing its own glass bottles, and is interested in receiving information from suppliers about the equipment required for such an endeavor. K) Contact Information Company Name: Tequilera Corralejo SA de CV Contact: Ing. Miguel Roa Position: Plant Manager Address: Ex Hacienda Corralero s/n 36921 Penjamo, Guanajuato Mexico Telephone: (52 469) 696 4104 Fax: (52 469) 696 4106 e-mail: miguelr@tequilacorralejo.com.mx Web page: www.tequilacorralejo.com.mx

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Valle Redondo, S.A. de C.V.

Industry: Beverages Sub Industry: Fruit Juices and Wines Location: Aguascalientes, Mexico Size (sales): More than US $100 million Purchasing Potential: More than US $300, 000 (est.) Specific Business Opportunities:

Complete filling line for glass containers

A) Company Description

Valle Redondo was established in 1964 in the state of Aguascalientes in central Mexico. It is dedicated to the production of additive-free grape and apple juice concentrates. The company has expanded the fruits that it processes to include apricots, mangoes and guava, in addition to grapes and apples. With a processing capacity of 35,000 tons per year, it generates 14 million liters, of which 25% is refrigerated. The company also operates 7 million square meters of vineyards, growing various varieties including rubi red, carignan and Chenin Blanc, among others. The company also produces wines and cider, and is a leader in juice, wine and liquor production. The company has a storage capacity of 3.7 million gallons and exports mainly to the Latino markets in the United States. The company has a minimum market share of approximately 5% of the Mexican juice production and sales segment. B) Main Products Produced and How They Are Packed The following table presents some of the company’s leading products and its packing presentations for the consumer:

Product Brand Package Fruit Juice Sonrisa PET or Tetra Pack containers (1 liter, 200

ml. and in prism form) Apple Juice Tree-Top PET bottles of 1.89 liter, 1 liter and Tetra

Pack 200 ml Apple, Peach, Orange, Tomato, Pineapple, Mango or Guava Juice

Con-Frutta Tetra Pack of 1 liter, 200 ml. and aluminum cans

Wine Vinos California Glass bBottles or Tetra Pack of 1 or 4 liters. Wine Canepa Glass bottles of 750 ml. Wine Don Angel Glass bottles Wine Fratello Glass bottles of 1 or 4 liters Cider Valle Redondo Glass bottles of 700 ml. or 1.7 liters

C) Installed Packaging Machinery The company has a very large base of packing machinery at its manufacturing plants. The following table presents some of the most representative machines in its operations:

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Machinery Type Brand Units Origin Average Age

1 liter filling machine (complete line) TetraPack 1 Sweden 5 1 or 1.5 liters filling machine (complete line)

TetraPack 1 Sweden 5

Filling machine for prism presentation (complete line)

TetraPack 1 Sweden 5

200 ml. filling line (complete line) TetraPack 2 Sweden 5 PET filling machine (complete line) Bertolaso 1 Italy 12 Glass filling machine (complete line) Bertolaso 1 Italy 20 Aluminum can filling machine (complete line)

Various brands

1 USA 15

Filling machine with laminate (complete line)

Bertolaso 1 Italy 20

Wine filling (complete line) Bertolaso 1 Italy 10 D) Last Packaging Machinery Purchase The last packing machinery purchase was made in November 2007. It included the following:

Machinery Brand Country Rinsing machine for PET and glass Irundin Spain Filling machine for PET and glass Irundin Spain Capping machine for PET and glass Irundin Spain

E) Future Packaging Machinery Ordering Plans. The company develops a packing machinery purchasing budget based on growing product demand and the need to replace equipment. This year, it plans to purchase the following:

Machinery Units Origin Motive of purchase

Complete bottling line for glass bottles 1 Italy Expansion The company also will purchase ultra-filtration systems within the next two years. F) Purchasing Policies and Financial Arrangements The technical staff at the plant makes the initial selection of the machines that would achieve the manufacturing objectives originating the need for the machinery purchase. The final decision on the purchase and financing is reached by the corporate division. The company commonly requests up to four proposals from potential suppliers, and is inclined to select suppliers with which is has a positive working relationship. G) Factors That Influence Purchasing Decisions The factors considered for the selection of new machinery include:

1. Price. 2. Technical support.

H) Comments on Preferred Brands and Existing Business Arrangements With Packaging Equipment Suppliers Valle Redondo believes that U.S. machinery is more sturdy and reliable than European machines, but considers it to be more expensive than Italian machinery, which it says offers better pricing and service.

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The company’s perception on packing machinery options based on origin is as follows: Origin Technology Flexibility Service Price United States Good Fair Fair Poor Italy Good Good Good Good Spain Fair Good NA Good The company did not provide comments about the service quality of Spanish machines, as they have just recently purchased machines from Spain and are still unfamiliar with their service. I) Trade Show Attendance / Trade Publication Information Valle Redondo visits packing machinery trade shows, occasionally, in Mexico, the United States and Europe. J) Specific Interest The company is interested in receiving information on new trends, processes or machinery options specializing in the beverage industry. K) Contact Information Company Name: Valle Redondo S.A. de C.V. Contact: Mr. Juan Ramon Santoyo Position: Plant Manager Address: Km 6.5 Carretera Calvillo, Aguascalientes Telephone: (495) 976 4202 Fax: (495) 976 4202 Mail: jrsantoyo@valleredondo.net Web page: www.valleredondo.com