Presentation Abralatas - Aluminium Latin America

1. Aluminum beverage can: competition and sustainability Renault de Freitas CastroExecutive Director Abralatas São Paulo - SP Aluminium Latin America Conference Aug 19th, 2011

2. Abralatas is the trade association of the Brazilian aluminum beverage can manufacturing industry Key Issues Provide congressional andadministrativerepresentationoftheindustry; Promotion and communication of relevant information concerning the industry; Addressandadvocateissuesof common concern.

3. Abralatas – Member Companies Canmakers Suppliers

5. Arrivalof Crown (1996), American NationalCan (ANC) (1996) and Latapack-Ball (1997);

6. Rexam buys ANC (2000) and Latasa (2003);

7. Sales reach 10 billioncans/year benchmark (2002);

8. Recyclinggrowsalongwithsalesandbecomes popular.Firstaluminumcanproduced in Brazil

10. Unpredicteddemandgrowthrequirestemporaryimportsofaluminumcanstocomplementdomesticsupply (10% ofannualsales);

11. Aluminumcanmakersannounce heavy investmentprogramofUS$ 765 million(R$ 1,3 billion) to raiseproductioncapacity in 64%(16,8 billion/yr in 2009 to27,5 billion/yruntilJun. 2012).Firstaluminumcanproduced in Brazil

13. Canmakersinvested over US$ 150 million in 2009 despiteinternationalfinancial crisis;

14. Start ups in 2009: Crown’s new plant in Estância-SE; Latapack-Ball’s new plant in Três Rios-RJ andRexam’sadditionalline in Jacareí-SP;

15. Double surprise: beveragedemand shows onlyslightdecreaseduringcrisisandgrowssharplyafter 4Q 2009;

16. Despitecrisis, 2009 canshipmentsincrease 11.7% over 2008.Firstaluminumcanproduced in Brazil

17. Can industry: economic and political environment in Brazil

19. Taxationstronglyconcentrated in consumptiongoods (58%) ratherthanincome (21%) andothers;

20. Unstableregulatory framework;

24. good for can: increaseofbeerconsumptionat home;

25. newbrandsandbeveragesintroduced in 16oz can;

26. Badweather, taxraiseandbeveragepriceincreaseduringfirsthalfof 2011 cools downbeveragedemand;

27. Fallofexpected performance ofthecan in 2011 to 6%.Beverage market

28. Main chalenges

29. Overall goal: Qualifythealuminumcan as thebest container for a lowcarboneconomy!

31. Atract new can stock producertoBrazil;

32. Reducecan stock importtax (12%);

33. Preventcollectionandrecyclingcostincrease; foster curbside recycling programs nationwide (2010 SolidWastePolicyLaw);

35. Increasealuminumcanshareof total beveragepackagingmarket (2010 recordof20%, in average, 38% for beerand 8% for non-alcoholicbeverages);

37. Brazil. Recycling rate; CSD andbeermarketsharebypackaging2009% *Source: Abralatas/Abal, AbividroandAbipet.

39. environmental awareness of society;

40. full consideration of externalities in the cost of goods;

41. The “invisible hand” needs help to reach externalities:

42. market price mechanism will only reflect externalities with law enforcement (penalties or incentives);

43. taxation systems must also influence market forces in favor of green products;

45. More investment in the production of green goods;

47. Brazil. Aluminum industry The relative importance of the can 1,000 t and % Aluminum Scrap Recovered (2009) Total aluminum consumption (2009) Packagings 30.8% Cans Others Cans 6.1% 24.6% 69.3% * Source: Abralatas/ABAL. Preparation: Abralatas

49. Jacareí (SP) : 2 un.

50. Cabreúva (SP)

51. Santa Cruz (RJ)

52. Extrema (MG)

53. Gama (DF)

54. Cuiabá (MT)

55. Manaus (AM) : 3 un. (1 underconstruction).

56. Recife (PE) : 2 un.

57. Simões Filho (BA)

58. Estância (SE)

59. Três Rios (RJ)

60. Ponta Grossa (PR)

61. Alagoinhas (BA) (underconstruction)

62. Pouso Alegre (MG)

64. Jacareí (SP) : 2 un.

65. Cabreúva (SP)

66. Santa Cruz (RJ)

67. Extrema (MG)

68. Gama (DF)

69. Cuiabá (MT)

70. Manaus (AM) : 2 un.

71. Recife (PE) : 2 un.

72. Simões Filho (BA)

73. Estância (SE)

75. Jacareí (SP) : 2 un.

76. Cabreúva (SP)

77. Santa Cruz (RJ)

78. Extrema (MG)

79. Gama (DF)

80. Aracajú (SE)

81. Recife (PE) : 2 un.

83. Jacareí (SP) : 2 un.

84. Cabreúva (SP)

85. Santa Cruz (RJ)

86. Extrema (MG)

87. Gama (DF)

88. Cuiabá (MT)

89. Manaus (AM) : 3 un. (1 underconstruction).

90. Recife (PE) : 2 un.

91. Simões Filho (BA)

92. Estância (SE)

93. Três Rios (RJ)

94. Ponta Grossa (PR)

95. Alagoinhas (BA) (underconstruction)

97. Extrema (MG)

98. Jacareí (SP) : 2un.

99. Simões Filho (BA)

100. Cabreúva (SP)

101. Aracajú (SE)

102. Recife (PE) : 2un.

104. Brazil. Aluminumcanproductionandproductioncapacity - 1997-2011millioncans * Estimate2011 and 2012. Source: Abralatas

105. 90,0% 20,000 18,798 80,0% 17.406 18,000 77.0% 70,0% 16,000 67.7% 14.811 63.3% 63.2% 60,0% 14,000 13.260 12.254 50,0% 12,000 10.218 10.749 40,0% 10.154 8.625 9.769 9.450 9.361 35.4% 10,000 9.260 31.7% 30,0% 8.259 24.9% 8,000 17.5% 14.0% 20,0% 6.547 14.4% 6,000 11.7% 11.2% 10,0% 10.0% 8.2% 7.4% 4.008 8.0% 4.4% 4,000 1.1% 0.6% 2.961 0,0% 0.0% - 4.2% 1.673 1.340 2,000 - 9.4% -10,0% 821 738 440 -20,0% ,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011* Aluminumcanshipments Brazil. Aluminumcanshipments1990 - 2010millioncans *Estimate 2011. Source: Abralatas

106. Brazil. Beverage Market SharebyFillerDez10/Jan11 (%) CSD Beer Source: AC/Nielsen. Preparation: Abralatas

107. Brazil. Aluminumcanshipments by typeofbeverage 1997 and2010(%) Beer CSD Others Source: Abralatas

108. Brazil. Consumptionofbeerand CSD1997 - 2010millionliters Source: 1997 to 2008 – ABIR and Sindicerv ; 2009 and 2010 – Article published in the journal Estado de São Paulo in March 5, 2010. * Estimated growth of 7.5% for beer and 7% for CSD.

109. Brazil. CSD market share by packaging 2005-2010(%) Source: AC/Nielsen. Preparation: Abralatas.

110. Brazil. Beer market share by packaging 2005-2010(%) Source: AC/Nielsen. Preparation: Abralatas.

111. Brazil. CSD andbeermarketsharebypackaging 2005-2010(%) Source: AC/Nielsen. Preparation: Abralatas.

112. Brazil: AluminumcanmarketsharebydistributionchannelDec04/Jan05;Dec10/Jan11 (%) CSD Beer Dec04/Jan05 Dec10/Jan11 Self Service Traditional Bar Source: AC/Nielsen. Preparation: Abralatas.

113. Thank you!renault.castro@abralatas.org.br