Chilean Packaging Machinery Market Overview

Chile

Prepared for PMMI April, 2004

Puente Sur Ltda. Condell 376, Providencia, Santiago, Chile

Tel: (56-2) 446-4000, Fax: (56-2) 375-1299, E-mail: info@puente-sur.com

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Table of Contents A. EXECUTIVE SUMMARY .......................................................................................................................................3 B. INDUSTRY PROFILE..............................................................................................................................................5

B.1 Food Industry ......................................................................................................................... 5 B.2 Beverage Industry .................................................................................................................. 7 B.3 Pharmaceutical Industry......................................................................................................... 8 B.4 Personal Care Industry ......................................................................................................... 10

C. MARKET OVERVIEW .........................................................................................................................................11 C.1 Top Products and Packaging Types ..................................................................................... 11 C.2 Top Suppliers ....................................................................................................................... 14 C.3 Distribution Channels and Supplier Marketing.................................................................... 15 C.4 Trade Shows and Internet Utilization .................................................................................. 15 C.5 Purchasing Plans and Budgets ............................................................................................. 16 C.6 Factors Influencing Purchasing Decisions ........................................................................... 17 C.7 Financing Options ................................................................................................................ 18 C.8 Sales Prospects in Packaging Industry................................................................................. 18 C.9 SWOT Analysis ................................................................................................................... 20 C.10 Strategic Recommendations............................................................................................... 21

D. LEGAL ISSUES ......................................................................................................................................................21 E. TRADE BARRIERS / IMPORT DUTIES ............................................................................................................23 F. HS CODE 8422.........................................................................................................................................................24 G. CONTACT DATABASE ........................................................................................................................................25

G.1 Food ..................................................................................................................................... 25 G.2 Beverage .............................................................................................................................. 26 G.3 Personal Care ....................................................................................................................... 28 G.4 Pharmaceutical ..................................................................................................................... 29 G.5 Trade Shows......................................................................................................................... 30

H. APPENDIX I – LIST OF SUPPLIERS .................................................................................................................31 H.1 Paper and Cardboard............................................................................................................ 31 H.2 Metal .................................................................................................................................... 31 H.3 Glass..................................................................................................................................... 32 H.4 Plastic ................................................................................................................................... 33 H.5 Wood.................................................................................................................................... 34

I. APPENDIX II – CHILEAN NORMS OF PACKAGING AND PACKING........................................................34

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A. Executive Summary In 2003 the Chilean packaging equipment sector produced 1.32 million tons (US$1.4 billion) of packaging made from plastic, metal, paper, cardboard, and glass. Of this, over 60%, or more than US$800 million of packaging was used in the exportation of Chilean products. The domestic demand for packaging for exportation of salmon, wine and horticulture products alone is expected to grow at 10% annually. In addition, Chile also exports a small amount of packaging products (US$83.4 million in 2003). Most of the packaging products exports are destined to other Latin American countries and the U.S. For the importation of packaging equipment, Italy is the market share leader with 24%, followed by the U.S. at 17%. A major contributor to the growing need for packaging equipment is the increasing global demand for Chile’s processed food exports, which totaled US$804 million FOB in 2003. For HTS Codes 8422.20 to 8422.90, imports of packaging machinery to Chile were more than US$41 million (CIF value) in 2003, a 26% increase over 2002 levels but still 18% less than the amount imported in 2001. However, the Chilean food packaging equipment industry as a whole is expected to grow 7% in 2004. Packaging products imports that supply Chile’s packaging sector are mostly plastics, followed by wood, paper and cardboard packages, with Brazil being the most significant supplier. Brazil is the main packaging supplier to Chile with a 35% share, while Argentina has 25%, and the US controls 13%.

Production and Importation of Packaging Products (US$ thousands) Year Imports Production 2001 191,908 1,372,820 2002 179,728 1,338,670 2003 188,714 1,403,730

Source: CENEM (Chilean Center for Containers and Packaging) The plastic PET bottle market has the best growth prospects in the pharmaceutical, personal care and beverage sector, followed by flexible packaging such as the Doy Pack in the food sector. In terms of marketing and operations strategies, the following important recommendations standout:

• Employ technical support individuals who speak Spanish • Maintain competitive prices with the ability to supply in high volumes • Offer flexible, easy-to-operate machinery • Meet consistently the lead-time requirements of purchasers • Attempt to sell products through face-to-face meetings in Chile

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Chilean Packaging Production (2002): 1.25 Million Tons

Metals 9%

Glass 23%

Plastics 22%

Wood 12% Cardboard and Paper 34%

Source: CENEM (Chilean Center for Containers and Packaging)

Imports of Packaging Products (Does not include raw materials or machinery) (CIF Value in Thousands of US$)

Sub-Sector 2000 2001 2002 Metal 61,761 61,757 60,866 Glass 20,306 12,014 7,752

Cardboard and Paper 22,990 26,818 29,936 Wood 13,398 17,305 15,538

Plastics 57,862 74,014 65,636 Total 176,317 191,908 179,728

Source: CENEM

Packing Product Sector Total Foreign Commerce Source: CENEM

050

100150200250

1997 1998 1999 2000 2001 2002

US$

Mill

ions

Exports Imports

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Chilean Economy and the Packaging Sector (growth %) Source: CENEM

-5

0

5

10

2000 2001 2002 2003

Chilean Economy Packaging sector

Packaging Suppliers to Chile (2002) : All Sectors

Brazil35%

Argentina23%

USA15%

Others9%

Spain1%

China2%

France9%

Germany3%

Peru2%

Italy1%

Source: CENEM

B. Industry Profile

B.1 Food Industry

There are four principle sub-sectors of the Chilean food industry (listed in order of importance of exported food categories):

• Aquaculture • Food and vegetables • Wine • Meat Processing: Pork, Poultry and Beef.

As Chile has developed into a major player in the international agriculture and processed foods market, the food packaging industry has invested heavily, and should continue to do so, in machinery and equipment in order to meet growing foreign demand.

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During 2003, processed food exports totaled US$804 million FOB. This reflects the growing need for packaging equipment due to increasing global demand for Chile’s processed food. Over 50% of the packaging produced in Chile is destined for export products. Chile processes and exports almost 50 types of fruits and vegetables (frozen, canned and dried) with annual volumes in excess of 200,000 tons. Frozen raspberries and tomato paste represent the principal products and therefore demand the biggest investment in equipment and technology to meet the highest standards of international markets. Chile also exports dairy products to 28 countries, principally to the U.S. market. Another major export product is meat (91,000 tons, or US$172 million FOB in 2002), which includes the following types:

• Pork, with an exportable potential of 56,000 annual tons and annual growth rates above

10% • Poultry • Lamb • Beef, which has been classified as “Zero Risk” by the IOE (International Office of

Epizootics) • Fish and seafood, with salmon being the star product with over US$1 billion in annual

exports In 2004, the Chilean food packaging equipment industry is expected to grow 7% for the following reasons:

• The country’s food processing sector is already a key international player, and should continue to grow given the Free Trade Agreements (FTAs) in effect with the European Union (EU), the U.S., and other countries such as Mexico and Canada.

• Chile has 7,000 fresh fruit producers harvesting approximately 462,000 acres. In 2002 this sector produced 1.6 million tons of fresh fruit, with US$1.6 billion in exports.

• Chile is the world’s second-largest producer and exporter of salmon and trout (over US$1 billion in annual exports), after Norway.

• Chile’s pork, poultry, and exotic meats (e.g. ostrich) industries, as well as its dairy industry, have grown significantly and project further production and export growth.

• Many Chilean processed food manufacturers are finding their export niches with value-added food products, increasing the demand for technology and equipment to implement new projects.

• Chilean companies must maintain rigorous quality control at all production stages to meet international standards, and must also ensure the safe packaging of products for transportation.

• Domestic consumption of processed foods is on the rise, and the ever-increasing presence of women in the work force calls for production of new packaged-food products to replace home-cooked meals.

Paper, cardboard, and plastics are the most important sub-sectors, followed by glass and metal.

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Local manufacture of food processing and packaging equipment is minimal. There is a strong presence of European equipment and machinery; for example, Denmark and Holland dominate the dairy packaging industry, and Italy, Spain and Germany the wine packaging industry. This is mostly due to historical legacies and the 2003 FTA between Chile and the EU. In 2003, Italy was Chile’s most significant supplier of food processing and packaging machinery, followed by the U.S., Spain, Argentina and Germany.

Suppliers of Food Processing and Packaging Machinery and Equipment 2003

U.S.; 17%Germany; 9%

Other; 24%

Argentina; 10% Spain; 11%

Brazil; 5%

Italy; 24%

Source: Chilean Customs Service

B.2 Beverage Industry The Chilean beverage sector (carbonated beverages, juices, nectars and mineral water) grew to 1.64 billion liters in 2003. This represented a year-over-year growth rate of 5%, the highest annual growth since 1998. ANBER (National Association of Refreshment Beverages) expects this sector to increase between 5% and 6% in 2004. According to ANBER, this growth occurred for the following three reasons:

1. New product creation - 25 new products such as Pepsi Twist, Tonic Light, and Watts’s nectar light (apple and apricot)

2. Consumption incentives – i.e. direct street sales 3. New packaging formats, which include those listed below:

• 2.5 liter returnable – 1st worldwide use of this format • 237 cc. returnable, a very inexpensive format • 250 cc cans

Regarding distribution channels, small-store sales represent 50% of the total carbonated-beverages market, while supermarkets represent only 25%. This, according to ANBER, is a trend that will continue in the following years.

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Carbonated beverages represented 88%, or 1.44 billion liters, of total sales (in terms of volume), followed by mineral water, with 123 million liters consumed during 2003, and finally juices and nectars with 91 million liters. The juice industry has been consistently improving by using leading-edge technology to produce high-quality, 100% pure juices. These improvements have driven global demand such that Chile now exports 95% of the concentrated juices that it produces. Chilean exports of apple juice to the U.S. represent 43.6% of the 46.5 million gallons of concentrates imported by the U.S. as of November 1, 2003. The U.S. is Chile’s largest concentrated apple juice export market (over 80% of total exports). Due to the majority of concentrated juice exports being transported in large tank containers, Chile’s concentrated juice industry is more focused on processing equipment than on packaging. Chile’s apple juice processing sector is expecting a 10% increase in apple processing for 2004, according to the latest report from the U.S. Department of Agriculture (USDA). Given this, some growers, mainly in Regions VII (Curico-Talca) and VIII (Chillan), continue to replace and increase their planting capacities. A reduction of duties to zero for apples imported into the EU due to the Free Trade Agreement (FTA) for the period January 1- July 31, 2003 has also had a positive effect on total exports to that market, according to trade sources.

CHILEAN APPLE JUICE CONCENTRATE PRODUCTION (tons) 2002 2003 2004* Delivered to processors 351,806 360,000 375,000 Beginning stocks 333 753 453 Production 43,200 55,200 56,000 Imports 0 0 0 Total supply 43,533 55,953 56,453 Exports 42,280 55,000 55,600 Domestic consumption 500 500 500 Ending stocks 753 453 353 Total distribution 43,533 55,953 56,453 Source: USDA Food News, Volume 32 Nº 4, 23 January 2004 *Forecast

There are plenty of commercial opportunities in the sector; specialists say that there is room for growth in the carbonated beverage, mineral water, nectar and juice sectors. Increasingly, Chilean wines are winning major international competitions and gaining successful exposure to new markets. Chile exports US$600 million in wine per year, with Concha y Toro and Santa Rita being the market leaders. In 2003, the growth rate for Chilean wine exports reached 8.3%, driven by high reviews for the premium wine sector.

B.3 Pharmaceutical Industry

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The pharmaceutical industry registered US$560 million in sales during 2002, which increased 3% in 2003, and is expected to continue this trend during 2004, especially because of a projected increase in over-the-counter (OTC) and non-therapeutic products. Generic medicines reached sales of 65 million units at an average price of US$0.59, while branded medicines registered 36 million units at an average price of US$5.96 each and imitation brands had sales of 63 million units at an average price of US$3.85.

Medicine Type Branded Generic Imitation Sales (Units) 36 million 65 million 63 million Market Value (USD) $214.56 million $38.35 million $242.55 million Average Price (USD) $5.96 $0.59 $3.85

There are 60 laboratories (Chilean and foreign) in the country. National manufacturers have 78% of the market share in volume, 55% in value and over 90% of the institutional market. Seventy percent of all Chilean prescriptions are national medicines, which show the doctors’ high trust in Chilean products. The Chilean pharmaceutical industry is facing new challenges given the latest FTA signed with the EU and the U.S., along with the TRIPS Agreement (Trade Related Aspects of Intellectual Property) with the WTO (World Trade Organization) and the FTAA (Free Trade Area of the Americas) currently under negotiation. All of these are bringing new concepts and a big impact to the local laboratories and the industry in general. The local industry is very sensitive to the licensing topic; the monopolist trend of the worldwide industry worries the Chilean pharmaceutical market. For example, during 2001 there were 350,000 license petitions in the U.S., over 200,000 in Europe and only 3,200 in Chile. According to Enrique Cavallone, director of ASILFA (Industrial Association of Pharmaceutical Laboratories), the industry is interested in increasing exports (currently exporting to more than 10 countries) and also in developing locally. Chile has the lowest-priced medicines in all of Latin America, which shows the high level of competitiveness in the market. This has benefited the Chilean users and Mr. Cavallone believes that this is a key to opening doors in new markets. Main Export Destinations COUNTRY % PERU 24 BOLIVIA 25 ECUADOR 23 PARAGUAY 10 URUGUAY 4 HONDURAS 3 EL SALVADOR 3 ARGENTINA 1

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OTHERS 7 Currently the industry attention is focused on the relationship between the suppliers (Laboratories) and the distribution chains (Pharmacies), which have developed their own brands. They have either created laboratories (Farmacias Ahumada has Fasa and Prater, and Salcobrand has Medipharm, formed by Milan and Minlab) or subcontracted the production as Cruz Verde pharmacy has done. This trend is an answer to the low commercialization margins that the pharmacies have to deal with. The strategy is to compensate the low margins by volumes. The ISP (Public Health Institute) plays an important role in inspecting the national laboratories, ensuring that the medicines are manufactured under the highest quality standards. The investigation field is also quickly developing in the country. Whenever the industry develops a new medicine, it has to undergo an intensive investigation process.

B.4 Personal Care Industry The globalization of personal hygiene and cosmetic product manufacturers, the drive for economies of scale, and a wide variety of imported products have spurred Chilean packaging converters into becoming regional suppliers of laboratories and have driven direct exports. Pablo Garuti, packaging manager of Chilarom, touts that they are now regional suppliers of Avon and supply packages for lotions to the Argentinean market. “All of this requires a big investment in technology,” he added, “especially to get to foreign markets.” Gustavo Palominos, corporative manager of L’Oreal Chile, says that manufacturers and laboratories import most of their materials and products, especially now given the trend of multinational laboratories moving their operations to Chile. The two above statements show both the demand for outside packaging materials and the need for packaging equipment for the producers in Chile. Among the trends, some that stand out include those listed below:

• New formats and sophisticated designs in glass containers • Breakthroughs in plastics for products with high demand • Transparent self-adhesives and coupon-type (two or more faces in order to include more

information, and for promotions) labels • New aerosol valves integrated into the package designs that eliminate lids • Greater use of flexible, stand-up pouches as an alternative to rigid plastic packages

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Beauty Product Distribution (Chilean Market) 2002

Lotion treatments

29%

Men's perfumes

18%

Makeup14%

Women's perfumes

39%

Source: Cosmetics and Perfumes Importers Association (ASIMCO)

Annually US$50 million in shampoo and over US$100 million in beauty products (perfumes, lotion and makeup) are sold in Chile. Studies say that these numbers will increase 5% in 2004 given the recuperation of the national economy. C. Market Overview

C.1 Top Products and Packaging Types Food The top products being produced and packaged are the ones destined for exportation such as salmon, trout, fruits, vegetables, and meat. They predominantly are packaged in cardboard boxes for exportation (e.g. canned goods shipped in cardboard master packs).

FOOD SECTOR MAIN EXPORTS Product Package Grapes and apples

Cardboard boxes typically from 5kg to 20kg.

Salmon Frozen or refrigerated, also different sizes canned salmon in cardboard boxes.

Tomato Sauce Septic bags of 55 or 300 galleons Raisins 10 Kg boxes with polyethylene bags of 1 kg Raspberries Frozen 10 kg box with polyethylene bags of 1 kg

Perfume Expense Per Capita Country US$ Spain 300 France 230 Chile 35 Source: (ASIMCO)

Shampoo Consumption per Household in Santiago

Period Liters April-September 2002 3.28 October 2002- March 2003 3.65 Source: LatinPanel

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FOOD SECTOR -- LOCAL CONSUMPTION

Product Package Flexible Packages Mayonnaise Doy pack 950 cc , 1000cc, 500cc and 250cc Ketchup Doy pack 950cc, 1000cc, 500cc and 250 cc Tomato Sauce Doy pack and canned 200gr Pasta Polyethylene bags of 1kg and 500gr Others Milk Tetra-pack 1 liters Coffee Tin 170 gr Jelly Fine cardboard

Note: Flexible packages as Doy pack are packages made of polyethylene or polypropylene films plus a paper film plus an aluminum film.

Main Cardboard Users Sub Sector Value(Thousands of US$) %

Fresh/Frozen Food 47Meat 8.320 Fruits and vegetables 103.600 Salmon and Trout 8.000 Processed food 14Canned 18.250 Dehydrated 3.285 Dairy 9.855 Others 39Source: CENEM

For the local market the trend is moving toward flexible packages, especially the Stand-Up Pouches (Doy Pack), new security mechanisms, active packaging (which maintains product quality), and returnables (replacing the can). The top products are ketchup, mayonnaise, margarine, and tomato sauce. For non-perishables such as pasta, cookies, flour, and chocolates, other widely-used flexible packaging is used, such as flexible film. Beverage Wine is the top product in the beverage sector due to exports. Tetrapak and glass are the main packages used, making the glass packaging sector one of the best prospects for the next few years with estimated growth from 3.5% to 6%.

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BEVERAGE SECTOR -- MAIN EXPORTS

Product Package Wine Glass bottles of 750 cc and in bulk Apple Juice Cylinders of 55-66 galleons with double polyethylene bag

BEVERAGE SECTOR -- LOCAL CONSUMPTION

Product Package Carbonated beverages

Thermo-contract plastic bottles. 500cc, 1, 2 and 2 ½ liters (PET)

Beer Canned in six pack and glass bottles 1 lt. Juices 500cc and 1 lt PET bottles, 250cc and 1 lt tetra-pack, pulp in doy

pack equivalent to 1 lt and powder in polyethylene bags for 1 lt to 8 lts.

Wine Glass bottles of 750cc and 500cc, 1 litre and 1,500 cc tetra pack. According to CENEM, during 2002 there were 214 tons of glass bottles for wine, liquor and beer produced and 64 tons of bottles for other beverages. Expressed in US$, there were US$95 million of glass containers produced for wines and liquors and US$26 million for other non-alcoholic beverages. Pharmaceuticals The pharmaceutical sector spends US$1.3 million on vials, equivalent to 85% of the total vials market. Nevertheless, the trend is to package pharmaceuticals in plastic containers, with purchases of US$10 million in laminated film, US$6 million in plastic bottles and jars and US$4.2 million in PET bottles.

PHARMACEUTICAL SECTOR -- LOCAL CONSUMPTION Product Package Aspirin/Pain Medicine Cardboard box with two blister packages, each

package containing 10 pills. Antacid Cardboard box with two blister packages, each

package containing 5 pills Decongestants/Antihistamine

Blister packages containing pills; Plastic or glass bottles of 125 or 120 mg. of syrup; Paper envelopes with powder (water soluble) 5g

Antibiotics

Blister packages; Plastic or glass bottles of 125 or 120 mg.

Vitamin C Cardboard box with blister packages of 10 pills; Plastic bottles with 30 pills

Personal Care The personal care industry mainly packs its products in plastic containers. Laminated film is the principal type, totaling US$13 million. This is followed by jars and bottles with US$12 million in

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packaging. For aluminum packages, the aerosols are the most widely-used representing a US$8.6 million investment.

PERSONAL CARE SECTOR Product Packaging Shampoo 400ml PET Plastic bottles, doy pack and sachet 60ml. Liquid soap Rigid plastic bottles of 500 ml Lotions/creams Pomes 30ml, rigid plastic 230ml Tooth paste Secondary package: fine cardboard Perfumes and colognes Virgin Glass with quartz of 4 or 5 oz

Only high-quality cosmetics such as perfumes are packaged in glass recipients. This represents only US$240,000. The top products are shampoos, lotions and perfumes.

C.2 Top Suppliers Top suppliers are more specialized in each commodity, rather than focused in one sector such as food, beverage etc. Full contact information is given for each company in Appendix I. Main Local Suppliers Paper and Cardboard

• Empresas CMPC • Marinetti Packaging • Eynaudi Impresores S.A. Metal • Industria Nacional de Envases (Inesa) plus Crown Cork & Seal • Condusa • Alusa • Carter Holt • Edelpa (laminated Aluminum) Glass • Cristal Chile • Cristoro (cristalerías Toro) • Vidriomack Plastic • Sigdopack

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• Petrox • Alusa • Chilarom • Empack • Plásticos Burgos • Petroquim • Plasvi • Carter Holt • Tubopack • Elastopac • CHH packaging • Edelpa Wood • CMPC • Ecopallet Chile • Chep Chile

C.3 Distribution Channels and Supplier Marketing Most of the companies prefer local representation. As Rodolfo Miranda, Soprole Importation Manager said, “We prefer to deal with local representation because you can have a fluent conversation which makes things move faster because they can understand our needs without any language problem. The other mechanisms are slower and more complicated because their operators usually don’t speak Spanish, so they don’t understand what we need and that is a waste of time.” Another reason for preferring local representation was local technical support. As Carlos Rivera from Maver says, “We don’t believe any more in the story that the machine will work perfectly for years and that a warranty is enough.” Nevertheless, some large multinational companies do import directly; this is primarily because they receive special treatment from their international suppliers due to their status as global clients.

C.4 Trade Shows and Internet Utilization In general, companies in Chile who are in the market to invest in new equipment generally do not attend shows; they mostly prefer to receive information in catalogues or magazines. However, the national shows that they mentioned were: “Feria Internacional del Empaque y Embalaje Chile” and the “Feria Expo Retail Chile.” Yet, a few of the respondents did state that they use trade shows extensively. For example, Ricardo Cornejo of Carozzi stated that they use the Internet to learn about new types of machinery, and then use trade shows to view the machinery and to meet new suppliers.

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According to Rodolfo Miranda, import manager of Soprole Chile, “Internet helps, but we use more catalogs and magazines and sometimes we attend some shows in Chile. We use Internet to compare the information that we have on hand or to get ideas and then we talk to representatives or the people we know here.” Internationally, the following trade shows were mentioned by Chilean executives:

• Interpack, Germany • http://www7.interpack.com/ • Hispack, Spain

http://www.hispack.com/ • Interphex, New York, USA • http://www.interphex.com • Ipack Ima, Milan, Italy

http://www.ipack-ima.it • Smaller show(s) in Argentina, Chicago, Las Vegas, Sao Paulo, and Barcelona

C.5 Purchasing Plans and Budgets According to Fernando del Solar (General Managing Director of Nestle Chile), Nestle is planning to invest US$150 million in equipment during 2004 to double its annual exports to US$100 million. That will involve expanding production facilities at several of the seven plants in central and southern Chile (4,000 employees total). Nestle Chile manufactures 1,500 products, ranging form breakfast cereals and ice cream to pet food. Likewise, Ricardo Cornejo, a packaging project manager from Carozzi S.A., stated that their capital outlay for each of the next three years is estimated to be US$500,000. Watts Chile plans to buy packaging machinery for juices, mayonnaise and ketchup in a need-based budget. According to Juan Carlos Mante, Watts’s Packaging and Process Manager, “Watts spends an average of US$300,000 per machine, sometimes more, sometimes less.” In the pharmaceutical sector, Maver plans a capital outlay between US$100,000 and $160,000 with a small rate of growth for 2005. These investments will cover mixing machines, as well as equipment for the fabrication of capsules, packaging, and vials. In general, companies do not have an established purchasing plan, as Mauricio Silva from Unilever Foods, says, “We don’t have a plan; it will come depending upon market movement and technological innovation.” It seems that the most important prospects in machinery categories are:

• Food - Any type of flexible packaging machines, e.g. filling machines for flexible packages (ketchup, mayonnaise, juices) as well as all types of cardboard handling machines.

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• Pharmaceutical - Fabrication equipment, blisters, mixers and capsule packagers. • Beverage and Personal care - All machinery related to PET bottles as well as automated

machinery for packaging wine into cases.

C.6 Factors Influencing Purchasing Decisions The five main factors found are listed here: price, service, reputation, lead time, and flexibility of machinery use. Price By far the most important factor for most of the purchasing managers is price. Given that the other four qualifying factors have been met, many suppliers are competing on price. Thus, a supplier must be large enough and be able to deliver sufficient volume to maintain a competitive price point. Furthermore, the credit terms offered (the more, the better) is definitely a competitive weapon that foreign suppliers can use. Service Although price is the number one driver of purchasing decisions in this industry in Chile, many of the items that executives spoke of relate to service issues. For example, having local technical support goes far beyond just having a local Spanish-speaking staff. It also includes rapid response times, which often requires having replacement parts in stock locally. Reputation Chilean executives mentioned reputation quite often in regards to the confidence that the purchasing managers have in certain brands of equipment. Although this seems quite obvious, it is important to note that companies with local experience and strong global or regional brands present a barrier to entry of sorts for new market entrants. Lead Time As is the case in most highly competitive industries, organizations compete on price, with certain lead times and service levels being qualifiers that are necessary to gain entry to the market. Flexibility of Machinery Usage This item was mentioned by a number of the interviewees. This includes not only the flexibility of the equipment in terms of its relevancy to numerous tasks, but also its ease of use and maintenance needs. Overall, an example of a typical response comes from Hector Fuentealba, Nestle Chile Packaging Manager. He states that the decision depends on several factors such as those listed here:

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• Type of product • Estimated Volume – “It is different if it is a new product with estimated sales or if it is an

old product with known volumes.” • Return on investment (ROI) • Local Technical Support

In the pharmaceutical sector there is another factor, as Carlos Rivera, Packaging Director of Maver laboratory says: “Initially the presentation and volume are important, but then the final purchasing decision depends on the price and the fulfillment of the Good Manufacturing Practice (GMP) norm (established by the World Health Organization), especially for primary packages such as pomes.”

C.7 Financing Options This can be the key to attracting and maintaining clients in Chile. Credit is an extremely important aspect of Chilean business culture. The more credit (monthly installments) one can offer the better. Most companies interviewed were accustomed to working with letters of credit, but payment via monthly installments is generally the preferred system. For example, Ecusa, a beverage company, uses the following terms for their foreign suppliers: Fifteen percent down payment prior to release, with 65% due in 60 days, with the final 15% when the client is satisfied with the equipment’s performance.

C.8 Sales Prospects in Packaging Industry In general terms, the growing sub-sectors in the packaging industry are glass, paper and cardboard, and plastics. The wood and metal sectors are being displaced by the aforementioned sectors.

Physical Production Value of the Physical Production

Sub-Sector Growth (%) Sub-Sector Growth (%) Packages 2002-2003 Packages 2002-2003 Metal 2.6 Metal 1.3 Glass 7 Glass 4.6 Paper and Cardboard

7 Paper and Cardboard

6.9

Wood 2.7 Wood 2.7 Plastics 5 Plastics 5.0 Total Sector 4.8 Total Sector 4.1 Source: CENEM

According to María José Galotto from Laben Chile (Santiago University packaging laboratory), the general trend is on the “Smart Packages.” These technologies support the product-package interaction in a way that the package does not modify the product characteristics, or, if it does, it has to be beneficial for the product.

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The most important technologies incorporated in the Chilean packaging market are in the following list:

• Vacuum packs and modified atmospheres - vacuum sealed products or products packaged with inert or combined gases as per the product specifications.

• Time-Temperature Indicators - self-adhesive tapes, incorporated in the package which by a change in the color indicate if the product has suffered an increase in temperature that might break the cold chain during its transportation and storage.

• Anti Microbial films - incorporation of anti-microbial agents in the polymeric net. This would inactivate micro-organisms that cause diseases or decomposition of the product.

• Films able to indicate tampering - to control possible “food terrorism”. For example, films that change color once they are perforated.

• Oxygen absorbers - iron dust absorbers, oxidize polymers and photo-reduction reaction systems.

• Bar code information - incorporate as much information as possible in the bar codes, for example, risks, side effects in medicines, usage instructions, etc.

Shown below are examples from each Chilean industry which illustrates the usage of new technologies in the packaging sector:

• Food:

Flexible packages, Doy Pack, Flow Pack machines, FFS Vertical machines Exports: fruits and vegetables, imported cardboard boxes

• Beverage: PET Bottle machinery Wine: Glass bottles, packaging machinery (automated wine casing)

• Personal Care: Flexible Packages such as Doy-pack and sachets Transparent labels and coupons Value-added glass

• Pharmaceuticals: PET Plastics bottles Plastic bottles and jars

In the food as well as the personal care sectors, the best prospects are in flexible packages, such as Doy packs, because of its efficient processes and materials. In the personal care sector, shampoo and liquid soap are beginning to utilize flexible packages, with Laboratorios Bellerina being one of the first to develop the idea. According to Samuel Pérez, from Empack (Volpak representation in Chile), “these types of packages were considered only as ‘re-fillers’ not long ago, but now they are considered as a valid alternative to the rigid plastic bottles because of their low prices and more efficient packaging processes.”

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The sachet package is expected to undergo the new “stick bag” style, which is used in Europe. Pérez believes that this new format will have a fast expansion in Chile because “…we save over 30% in material compared with the sachet, and its package process is very fast.” The beverage sector is dominated by the rapidly-growing exportation of wine in glass bottles, while the plastic PET bottles dominate in the non alcoholic beverage sector. The pharmaceutical market, according to Cenem, was controlled by glass bottles and jars. Now, there is a strong trend to switch from glass to the plastic. Currently, plastic bottles and jars are the best prospects in the sector, especially the PET bottles.

C.9 SWOT Analysis Strengths The CCFTA (Canada-Chile Free Trade Agreement) and the U.S.-Chile FTA signed allows most Canadian and U.S. products to enter Chile duty free. German equipment has a reputation for being expensive, which is not attractive for local buyers. Furthermore, U.S. and Canadian machinery has an excellent reputation in Chile, being recognized as sturdy and easy-to-use machinery. Given the capital intensity of initiating operations (due to the increased use of high technology), barriers to entry exist due to the existence of entrenched and established players who have already made these investments. This is a current weakness for underinvested North American firms, but a strength for invested American or Canadian firms who are not yet players in the Chilean market. Weaknesses The major weakness for U.S. and Canadian companies in this sector is their reputation for having poor knowledge of the Chilean market as well as being inflexible in terms of service, credit terms, and negotiations in general. In terms of brand recognition, some food industry executives noted a lack of knowledge of American and Canadian products. Furthermore, although less expensive than German products, the U.S. products are generally more expensive than those of Brazil, Argentina, and Italy. Opportunities: The packaging market is full of opportunities because of market growth. Given the U.S.-Chile FTA and the economic and political stability in Chile, several foreign companies are locating their branches here as well as relocating their South American headquarters to Chile. The economy is growing and exports are becoming the most important and lucrative sector. All of this relates to the packaging sector, which suggests a good forecast for this sector for the years to come.

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Specifically, each sector has opportunities that U.S. and Canadian companies can exploit. In the personal care as well as the food industry, the best prospects are in flexible packages, such as Doy packs, because of its efficient processes and materials. In the beverage industry, glass bottles as well as PET bottling machinery are areas of interest. In pharmaceuticals, plastic bottles and jars are the best prospects in the sector, especially the PET bottles. Threats: Competition is very strong in the Chilean packaging market. As an example, Germany represents a threat because of its reputation of good quality products. Meanwhile, Italy, the market share leader, enjoys a competitive advantage due to its price points while Brazil and Argentina are beginning to make inroads into the Chilean machinery market as well. Italian equipment is perceived as smaller and less technically advanced by some buyers such as Juan Carlos Mante from Watts packaging department but it is recognized by its lower prices combined with consistent quality which makes them very attractive for the local market. The general reputation for European products being more flexible was expressed by Jorge Roblero, Import Manager at Ecusa, a Chilean bottler, who stated that, “The European market offers, in general, equipment with better flexibility for packaging, and less down time necessary to change functions.” Canadian and especially U.S. machinery enjoy solid reputations, but behind German machinery. Nevertheless, this is not directly expressed in import statistics because German equipment is in many cases priced out of the market.

C.10 Strategic Recommendations Mr. Fuentealba from Nestle indicates, “Basically I would recommend U.S. suppliers to follow the European example, which is good local representation with strong technical support and that visit us constantly.” The language factor is very important. Chilean businessmen like to do business in Spanish and buy equipment “according to our reality, which means small or medium size and multi-use,” as Mr. Rivera from Maver says. In general, the recommendations from Chilean executives for U.S. and Canadian manufacturers are that they should offer more of their products in Chile, combined with brochures or office visits and a personal presence in the country. D. Legal Issues The Sanitary Regulation of Foods, approved by decree of Law Nº 977/96, establishes in its article Nº107 that all packaged nutritional products that are kept in storage , transported or sold in packages must have a label containing the following information:

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Name of the food: The name must specifically indicate the true nature of the food. This condition must be clearly indicated in substitute products. Net Content: Expressed in the decimal metric system or the international system with the symbol of the unit or with the complete word, without terms with ambiguous meanings. In foods packaged in liquid it must indicate the drained weight of the food. Name or Trade name and address: Of the manufacturer, packager, distributor or importer of the food, according to the case. Country of origin: It must be clearly indicated for national products as well as international. Number and date of the resolution and name of the Health Service: Authorizes the establishment that packages the product; in the case of imported products, the number and date of the resolution of the Health Service authorizing the internment of the product. Elaboration date or packaging date of the product: It must be legible; it will be located in a place of easy location on the package, indicating the day by two digits; the month by two digits or the first three letters of the month and the year by the last two digits. In case of canned goods, said information must go on one of the covers. In those products whose minimum duration is equal to or less than 90 days, the year can be omitted. In those products whose minimum duration is equal to or greater than three months, the day can be omitted. The date of elaboration can be identified with the key corresponding to the production lot. Due date or term of duration of the product: It must be indicated in the form and order established for the elaboration date. The products labeled with “indefinite duration” must necessarily indicate the elaboration date. Ingredients: The list of all the ingredients and additives that compose the product will have to appear on the label, with their specific names in decreasing order of proportions. In addition, the following items must be present on the packaging: Storage instructions: Special conditions that are required to preserve the food. In case the product needs refrigeration or another special care once the package is opened, this has to be indicated on the label. Instructions for use: The necessary instructions on the use must be written on the label, including the reconstruction if that is the case to assure the correct use of the food. In those packages whose greater surface is less than 10 cm2, () could omit the number of the lot, the list of ingredients, declaration of nutrients and the instructions for its use as this is data that will have to be put in the greater package that contains them. Optional Information: Those declaration on nutrients (except in cases of foods that emphasize certain condition of a nutrient, case in which is obligatory), the relation or enumeration, the

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Importing into Chile: Example(US$)

Expenses Recoverable Taxes

FOB Value A 100,000 Ocean Freight B (estimate) 3,000 Insurance C (estimate) 300 CIF Value D = A + B + C 103,300

Custom Duty E = (0%) x D 0 Cost Base F = D + E 103,300 VAT Paid G = (19%) x F 19,627

Landed Cost 103,300 % over FOB 9.5%% over CIF 6.0%

nourishing properties, health properties, must be based on scientific studies and must be framed within the nutrients directives approved by the competent sanitary authority. Pharmaceutical: The Ministry of Health has published in the Official Newspaper the approval of the regulation of the national form. Among other considerations, it emphasizes the one to assure the availability and the access to medicines to the whole population indispensable for an effective and safe therapy and an effective access to the population compatible with the resources at their disposal. This is made up of a list of pharmaceutical products that are considered indispensable. The list is structured by groups and sub-groups and must be available throughout the country. The Health Authority will have to guard for the availability of those products which are not commercialized in the country.

(See Appendix II: Chilean Norms of Packaging and Packing) E. Trade barriers / import duties • Is there a program to change duties in the next years? No. All countries that have signed a FTA with Chile have 0% duty on the majority of products. If the products come from a country that doesn’t have a FTA signed with Chile, the flat tariff is 6%. VAT is currently 19%. • An example of how the Total Landed Cost (final cost of an imported product) is calculated, assuming importation originates from the U.S. (0% import tariff):

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F. HS Code 8422 • What taxes, tariffs and duties are necessary to import a product under HS code 8422? Machinery imported under HS code 8422 from the U.S., Canada or the European Union, only pay the recoverable 19% VAT, because they are free of duty charges given the FTA signed with each. The importing company may qualify for VAT recuperation if the equipment is a capital good being used to package an export product. • What machines were imported under the HS code 8422.20 to 8422.90 in the last three years? HS Codes: 84222000 - Machinery for cleaning or drying bottles or other containers 84223000 - Machinery for filling, closing, sealing or labeling bottles, cans, boxes, bags or other containers; machinery for capsuling bottles, jars, tubes and similar containers; machinery for aerating beverages: 84223090 - 84223030 - 84223020 - 84223010 84224000 - Other packing or wrapping machinery (including heat-shrink wrapping machinery) 84229000 - Parts: Of dishwashing machines: 84229010 - 84229020 - 84229090. For HS Codes 8422.20 to 8422.90 imports to Chile were more than US$41 million (CIF value) in 2003, a 26% increase over 2002 levels but still 18% less than was imported in 2001. However, the Chilean food packaging equipment industry as a whole is expected to grow 7% in 2004.

Imports for HS Code 8422.20 to 8422.90

$50,511,886

$32,937,194$41,659,304

0100000002000000030000000400000005000000060000000

2001 2002 2003

US$

(CIF

Val

ue)

Please see the four attached files (Excel) for all of the machine brands, names, and descriptions that were imported from 2001-2003 for these HS Codes.

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G. Contact Database

G.1 Food Nestlé Chile S.A. Tax Id: 90703000-8 Roger de Flor 2800 Las Condes - Santiago Phone: (56-2) - 3384000 Fax: (56-2) 2316953 Contact: Lorenzo Chavalos Title: Project Engineer Email: Lorenzo.chavalos@cl.nestle.com Web Site: http://www.nestle.cl SOPROLE Sociedad de Productores de Leche S.A. Tax Id: 91492000-0 Diagonal Santa Elena 2605 San Joaquín - Santiago Phone: (56-2) - 4203000 Fax: (56-2) 5520555 Contact: Rodolfo Miranda Title: Import manager Email: rmiranda@soprole.cl Web Site: http://www.soprole.cl Watt’s Watt's Alimentos S.A. Tax Id: 92220000-9 Avda. Pdte. Jorge Alessandri 10501 San Bernardo - Santiago Phone: (56-2) 4414000 Fax: (56-2) 4414149 Contacto: Juan Carlos Mante Title: Package and process chief. Email: jcmante@watts.cl Web Site: http://www.watts.cl Unilever Bestfoods Chile S.A. Tax Id : 96568090-K Panamericana Norte 5981 Conchalí – Santiago Phone: (56-2) 6552100

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Fax: (56-2) 6232373 Contact: Mauricio Silva Title: Manufacturing leader and excellence manager. Email: Mauricio-c.Silva@unilever.com Web Site: www.unilever.com Empresas Carozzi Tax Id: 90269000-K Av.Presidente Jorge Alessandri Rodríguez 5201 Km.23 Longitd.Sur, San Bernardo, Santiago Phone: (56-2) 3776400 Fax: (56-2) 3776645 Contacto: Ricardo Cornejo Title: Plant development engineer

Email: rcornejo@carozzi.cl Web Site: http://www.carozzi.cl/ Lucchetti Chile S.A. Tax Id : 96568370-4 Avda. Vicuña Mackenna 2600 Macul - Santiago Phone: (56-2) 2382711 Fax: (56-2) 2386592 Contact : Alejandro Marchan Title : Supplier manager Email: amarchan@lucchetti.cl Web Site: http://www.lucchetti.cl

FEPACH (Federación de Procesadores de Alimentos) Chilean Canned Food Exporters Association, Chilean Dehydrators Association, Chilean Frozen Products Exporters Association, Chilean Juice Concentrate Exporters Association. Ahumada 254 Of. 1209 Santiago – Santiago Phone: (56-2) 6995400 Fax: (56-2) 6963506 Web Site: www.fepach.cl

G.2 Beverage Embotelladora Andina S.A. Tax Id: 91144000-8 Avda. Carlos Valdovinos 560 San Joaquin - Santiago Phone: (56-2) 4622486 Fax: (56-2) 5509342 Contact : Leopoldo Falconi

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Title : Finance manager Email: lfalconi@koandina.com Web Site: http://www.andina.cl Viña Concha y Toro Tax Id: 90227000-0 Nueva Tajamar 481, Piso 15 Las Condes - Santiago Phone: (56-2) 4765000 Fax: (56-2) 4765000 Contact : Juan Pablo Herreros Title : Production manager Email: jpherreros@conchaytoro.cl Web Site: http://www.conchaytoro.cl ECUSA (Embotelladoras Chilenas Unidas S.A.) A CCU Company Tax Id: 96524410-7 Avda. Pdte. Eduardo Frei Montalva 1500 Renca - Santiago Phone: (56-2) 4274000 Fax: (56-2) 4274256 Contact : Jorge Roblero Title : Imports manager Email: jroblero@ccu.cl Web Site: http://www.ccu-sa.com Industria Corchera / Amorim (Movil packaging Cork industry) Tax Id: 90950000-1 Jorge Cáceres 220 La Cisterna - Santiago Phone: (56-2) 5255655 Fax: (56-2) 5255555 Contact: Enrique Bombal Title: General Manager Email: ebombal@corchera.co.cl Website: www.corchera.co.cl Viña San Pedro Tax Id: 91041000-8 Avda. Vitacura 4380, Piso 6 Vitacura - Santiago Phone: (56-2) 4775300/4273000 Fax: (56-2) 4775307 Contact : John Lamond Title : Buyer manager

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Email: jlamond@ccu.cl Web Site: http://www.vinosdechile.cl ANBER (Asociación Nacional de Bebidas Refrescantes) Tax Id: 73042400-0 Avda. Vitacura 2909 Of. 207 Las Condes - Santiago Phone: (56-2) 3351323 Fax: (56-2) 3355971

G.3 Personal Care Laboratorios Davis Tax Id : 93681000-4 Avda. Los Pajaritos 6366 Estación Central - Santiago Phone: (56-2) 3892220 Fax: (56-2) 7420714 Contact: Ernesto Rodriguez Title: Machinery chief Email: erodriguez@laboratoriosdavis.com Web Site: http://www.laboratoriosdavis.com Laboratorio Sanibel Ltda. (Cosmetics for hotels, hospitals and airlines) Tax Id : 78624220-7 Los Canteros 8511 La Reina - Santiago Phone: (56-2) 2732727 Fax: (56-2) 2750390 Contact: Lucía Tomas Title: General manager Email: ltomas@sanibel.cl Web Site: www.sanibel.cl Procter and Gamble Tax Id : 59033700-5 Nueva Tajamar 481 Of. 901, Piso 9 Las Condes - Santiago Phone: (56-2) 4285000/3503000 Fax: (56-2) 4285001 Contact : Mario Rodriguez Title : Buyer manager Website: http://www.pg.com

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G.4 Pharmaceutical Laboratorios Prater Tax Id: 95730000-6 Avda. Pedro Aguirre Cerda 5291 Cerrillos - Santiago Phone: (56-2) 8707500 Fax: (56-2) 5574336 Contact: Peter Stuedemann Email: pstuedemann@labprater.cl Web Site: http://www.labprater.cl Laboratorio Maver Ltda. Tax Id : 92121000-0 Lota 2267,Of.303 Providencia - Santiago Phone: (56-2) 3724100 Fax: (56-2) 6510526 Contact: Carlos Rivera Title: Technical Director Email: CRivera@maver.cl Web Site: http://www.maver.cl Laboratorios Andromaco Avenida Quilín # 5273. Peñalolen. - Santiago Phone: (56-2) 5108500 Fax: (56-2) 5108502 Contact: Victor Martinez Title : Maintenance manager Email: vmartinez@andromaco.cl Web Site: www.andromaco.cl Asociación Industrial de Laboratorios Farmacéuticos Chilenos (ASILFA) Tax Id: 71289500-4 Avda. Vitacura 2771 Of. 301 Las Condes - Santiago Phone: (56-2) 2139446 Fax: (56-2) 2139446 Web Site: http://www.asilfa.cl Cámara de la Industria Farmacéutica de Chile A. G., (CIF) Tax Id : 70012900-4 Hernando de Aguirre 1981 Providencia - Santiago Phone: (56-2) 2252959

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Fax: (56-2) 2052060

G.5 Trade Shows II Exposición Internacional de Tecnología Aplicada al Procesamiento y Embasado de Alimentos y Bebidas Date: September 22nd to 25th – 2004 Place: Casa Piedra – Santiago Frecuency: Every two years Mts2: 8000 Expected Visitors: 5.000 More Info: Expotrade: Web Site: www.expotrade.cl Ardes: Luis Rodríguez Velasco Nº 4717 Of. 213 Las Condes - Santiago Phone: (56-2) 3785999 - Fax: (56-2) 4264071 Congreso Latinoamericano de Envase y Embalaje Latin American Packaging Congress. Date: Octubre del 2005 Place: Espacio Riesco - Ciudad Empresarial Huechuraba Frecuency: Bienal MT2.: 1.000 Expected Visitors: 6.000 More Info: Expotrade: Web Site: www.expotrade.cl Ardes: Luis Rodríguez Velasco Nº 4717 Of. 213 Las Condes - Santiago Phone: (56-2) 3785999 - Fax: (56-2) 4264071 Salón Internacional de Tecnologías y Soluciones para Retailers Date: Octubre del 2005 Place: Espacio Riesco - Ciudad Empresarial Huechuraba Frecuency: Bienal MT2.: 800 Expected Visitors: 9.000 More Info: Expotrade: Web Site: www.expotrade.cl Ardes: Luis Rodríguez Velasco Nº 4717 Of. 213 Las Condes - Santiago Phone: (56-2) 3785999 - Fax: (56-2) 4264071 Expo Agro Date: From May 13th to 15th Place: Espacio Riesco, Santiago. Phone: (56-2) 530-7000 Fax: (56-2) 5307272 E-mail: expoagro@fisa.cl

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Web Site: www.expoagro.cl H. APPENDIX I – List of Suppliers

H.1 Paper and Cardboard EMPRESAS CMPC Agustinas 1343, Piso 6 Santiago, Chile Phone: (56 2) 441 2000 Fax (56-2) 671-1957 http://www.cmpc.cl Marinatti Packaging Américo Vespucio Norte 1751 Santiago, Chile Phone: (56 2) 364-8888 Fax: (56 2) 364-8868 http://www.marinetti.cl/ Eynaudi Impresores S.A. Avda. Zañartu 1145 - Macul Phone: (56 2) 238 17 07 Fax: (56 2) 238 09 47 Email: eynaudi@entelchile.net INESA - INDUSTRIA NACIONAL DE ENVASES S.A. 1 Poniente 123, office 501 Phone: (56) 32 - 264500 Fax: (56) 32 – 974245 Viña del Mar, Chile http://www.inesa.cl Condesa, Conducciones y Derivados, SA C/ San Prudencio, 8 A - 2ª Planta 01005 VITORIA (ALAVA) ESPAÑA Phone: (34) 945 15 03 60 Fax: (34) 945 15 03 61 E-mail: jjjuarros@grupo.condesa.com http://www.condesa.com

H.2 Metal Alusa Av Pdte Eduardo Frei M. 9160

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Santiago, Chile Phone: (56 2) 679-3200 Email: info@alusa.cl http://www.alusa.cl/ Carter Holt Harvey Packaging, SA Av. Américo Vespucio 1470 Santiago, Chile Phone: (56-2) 6035666 Fax: (56-2) 6034062 Email: chh.packaging@chilnet.cl http://www.chilnet.cl/carterholtharvey/ Edelpa, Envases Del Pacifico S.A. Camino a Melipilla 13320 Santiago, Chile Phone: 562-3854542 Fax: 562-3854540 Email: comercial@edelpa.cl http://www.edelpa.com

H.3 Glass Cristal Chile (Cristalerías de Chile, S.A.) Hendaya 60, Oficina 201, Las Condes. Santiago, Chile Phone: (56-2) 7878888 Fax: (56-2) 7878800 http://www.cristalchile.com/ Cristalerías Toro, SAIC Dagoberto Godoy 145 Cerrillos Santiago - Chile Phone: (56-2) 683 3971 Fax: (56-2) 683 3971 Email: cristoro@cristoro.cl http://www.cristoro.cl/ Vidriomack (Mackenna y Mackenna S.A.) las araucarias 2801 quilicura – santiago, Chile Phone: (56 2) 623-0102 http://www.vidriomack.cl

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H.4 Plastic Sigdopack, SA guacolda 2151 quilicura – santiago, chile (56) - (2) – 4872200 http://www.sigdopack.com Petrox (Refinería de Petroleo Petrox S.A.) Camino a Lenga 2001 Talcahuano, Chile (56) - (41) – 506000 http://www.petrox.cl Alusa Av Pdte Eduardo Frei M. 9160 Santiago, Chile Phone: (56 2) 679-3200 Email: info@alusa.cl http://www.alusa.cl/ Chilarom SA (Plásticos Vespucio) Avda. Américo Vespucio Sur 789 La Cisterna – Santiago, Chile Phone: (56 2) 527-8181 No email or website listed – see http://www.chilnet.cl/rc/company/results_company_mbr.asp?meco_code=0300076651 Empack (Agencias de Representaciones Ltda.) Los Militares 4221 Las Condes – Santiago, Chile Phone: (56 2) 440-7800 http://www.empack.cl Plásticos Burgos S.A. LAS DALIAS 3180, MACUL SANTIAGO, Chile Phone: (56 2) 391-9100 http://www.burgoplast.cl Ipiranga Petroquimica Chile Ltda. Hernando de Aguirre 268, 4th floor Santiago, Chile Phone: (56 2) 367-6546 http://www.ipq.cl

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Plasvi (Plasticos and Vidrios Ltda.) Dagoberto Godoy 250 Santiago, Chile Phone: (56 2) 683-2427 Tubopack Cordillera 198 Santiago, Chile Phone: (56 2) 582-2001 http://www.cepri.cl/tubopack Elastopac S.A. Arturo Prat 2910 Santiago, Chile Phone: (56 2) 463-9800 Email: info@elastopac.cl http://www.elastopac.cl

H.5 Wood EMPRESAS CMPC Agustinas 1343, Piso 6 Santiago, Chile Phone: (56 2) 441 2000 Fax: (56-2) 671-1957 http://www.cmpc.cl Ecopallets Chile Avda. Andres Bello 2777 Office 2002 Santiago, Chile Phone: (56 2) 252-0321 Email: info@ecopallets.cl http://www.ecopallets.cl Chep Chile S.A. Avda. Del Parque 4980 Office 236 Santiago, Chile Phone: (56 2) 387-3400 Email : info@chep.cl http://www.chep.cl I. APPENDIX II – Chilean Norms of Packaging and Packing NORMS DESCRIPTION

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NCh1013.Of1980 Powder milk and instantaneous milk - Requisites NCh1025.Of1990 Compressed Gases – Gas cylinders for medical use and sterilization Identification marks of the content and the

inherent risks NCh1066.EOf1974 Metallic packages for preserved fruits, vegetables and meats – Cylindrical packages composed of three pieces –

Normal dimensions and format NCh1131.EOf1976 Glass – Bottles for milk - Specifications NCh1132.Of1976 Corrugated cardboard packing for nutritional products in metallic packages NCh1160.Of1999 Calcined plaster - Packages and marks NCh1194/1.Of1997 Liquid chlorine for industrial use - Part 1: Specifications NCh1251.Of1977 Kraft paper packages for sugar NCh1262.Of1976 Packing – Complete and full packing for transports - Identification

Of the parts for test packing NCh1263.Of1976 Packing – Complete and full packing for transport, – Conditioning for test packing NCh1264.Of1976 Packing – Complete and full packing for transport, - Piling up packing tests NCh1265.Of1977 Packing – Complete and full packing for transport – Vertical impact for free fall NCh1266.Of1976 Packing – Complete and full packing for transport – Tests for vibration NCh1267.Of1977 Folding wood packing NCh1268.Of1977 Rigid rectangular packing - Dimensions NCh.127.Of1959 Vial for syringes- Extraction of samples and verification of the glass used in its manufacture NCh128.Of1953 Vials for syringes of round bottom and conic stem NCh129.Of1953 Vial for syringes , of flat bottom and strangled stem NCh130.Of1953 Vial for syringes , of flat bottom and extended stem NCh1305.Of1977 5 Liters glass parking for wine – Specifications NCh131.Of1953 Vial for syringes, flan bottom, with mouth for cork diaphragm NCh1377.Of1990 Compressed gas – Gas Cylinders for industrial use – marks for content identification and inherent risks NCh1541.Of1985 Glass bottles for wine, 750 ml Bordeaux design - Requisites NCh1542.Of1985 Glass bottles for wine, 750 ml Burgundy design - Requisites NCh1543.Of1985 Glass bottles for wine, 750 ml Carmayola design - Requisites NCh1544.Of1985 Glass bottles for wine, 750 ml Rhin design - Requisites NCh1689.Of2002 Security matches - Requisites NCh1690.Of2002 Security matches - Sampling and testing method NCh1782/1.Of1985 Welded portable cylinders for liquefied petroleum gases – Distribution - Part 1: Requisites and net content of

LPG control NCh1812.Of1980 Plastic bags for trash recollection – Requisites NCh2051.Of1999 Net content in packages NCh2106.Of1987 Welded portable cylinders, made of steel for liquefied petroleum gases as fuel for motorized vehicles – General

manufacturing and maintenance requisites NCh2107.Of1987 Welded portable cylinders made of aluminum , for liquefied petroleum gases as fuel for motorized vehicles - -

General manufacturing and maintenance requisites NCh2108.Of2000 Liquefied petroleum gases (LPG) – Welded steel tanks for use of LPG as fuel for motorized vehicles - General

requisites of design, manufacturing and maintenance NCh2137.Of1992 Dangerous substances – Parking/Packaging – Terminology, classification and designation NCh2162/1.Of1991 Flexible and laminated packages - Vocabulary – Part 1: flexible packages NCh2162/2.Of1991 Flexible and laminated packages - Vocabulary – Part 2: plastic packages NCh2162/3.Of1991 Flexible and laminated packages - Vocabulary – Part 3: film and laminated packages packages NCh2162/4.Of1991 Flexible and laminated packages - Vocabulary – Part 4: Characteristics NCh2162/5.Of1991 Flexible and laminated packages - Vocabulary – Part 5: Defects NCh2162/6.Of1991 Flexible and laminated packages – Vocabulary – Part 6: Processes

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NCh2162/7.Of1991 Flexible and laminated packages – Vocabulary – Part 7: Additives NCh2162/8.Of1991 Flexible and laminated packages – Vocabulary – Part 8: Woven packages NCh2170.Of1991 Flexible and laminated packages - Guide for the preparation of specifications NCh2224/10.Of1993 Preservatives – latex rubber preservatives - Part 10: Packages and labels NCh2247.Of1995 Cylinders for compress gas – Test of hydrostatic pressure NCh2276.Of1997 Lubricant oils – Package labeling NCh2300/4.Of1994 ISO 6196/4 Mycograph - Vocabulary - Part 4: Materials and packages NCh2349.Of1999 Cylinders and portable tanks for compressed gases, liquefied or dissolved by pressure – Symbols of property NCh2476.Of2000 Petroleum liquefied gases – Welded stationary steel tanks for storage of LPG – Tanks of capacity smaller than

500 dm3 – General requisites of design and manufacture NCh2618.Of2002 Dangerous substances - Liquefied anhydrous ammoniac - Security meassures for transportation in tanks and

cylinders NCh262.Of1954 Paper bags NCh263.Of1954 Extraction and sample tests of paper destined to the preparation of bags NCh2701.Of2002 Metallic packages for preserves – Doble lock- Requisites and testing methods NCh328.Of1983 Welded portable cylinders for petroleum liquefied gases – Testing methods NCh392.Of1960 Packages for storing and transporting explosives and ammunitions NCh450.Of1970 Metallic packages – Terminology and classification NCh454.Of1970 Metallic packages for eatable oils – Shapes and dimensions NCh455.Of1970 Metallic packages for food preserves - Shapes and dimensions NCh583.Of1969 Glass for drinks packages – Terminology and specifications NCh588.Of1969 Glass - Packages – Color determination by comparison NCh589.Of1969 Glass - Packages – Verification of dimensions NCh590.Of1985 Glass packages - Vocabulary NCh591.Of1969 Glass – Bottles for drinks – Extraction of samples NCh592.Of1969 Glass – Bottles for drinks – Test by internal hydrostatic pressure NCh593.Of1969 Glass – Bottles for drink - Test by abrupt temperatura changes NCh594.Of1969 Glass- Bottles for drink - Determination of perpendicularity NCh595.Of1969 Glass – Bottles for drink - Determination of thickness NCh596.Of1969 Glass - Bottles for drink - Determination of the capacity NCh597.Of1970 Glass – Bottles for drinks- Mouth - Characteristics NCh598.Of1985 Glass bottles for wine- General requisites NCh599.Of1969 Glass – Bottles for wine – Shape and dimensions- Burgundy - 700 ml - Specifications NCh600.Of1970 Glass – Bottles for wine - Shape and dimensions- Burgundy - 350 ml - Specifications NCh601.Of1970 Glass – Bottles for wine - Shape and dimensions- Burgundy – 200 ml - Specifications NCh602.Of1970 Glass – Bottles for wine - Shape and dimensions - Bordeaux 1000 ml - Specifications NCh603.Of1970 Glass – Bottles for wine - Shape and dimensions - Bordeaux 700 ml - Specifications NCh604.Of1970 Glass – Bottles for wine - Shape and dimensions - Bordeaux 350 ml - Specifications NCh605.Of1970 Glass – Bottles for wine - Shape and dimensions - Caramayola 700 ml - Specifications NCh606.Of1970 Glass – Bottles for wine - Shape and dimensions - Caramayola 350 ml - Specifications NCh607.Of1970 Glass – Bottles for wine - Shape and dimensions - Caramayola 250 ml - Specifications NCh608.Of1970 Glass – Bottles for wine - Shape and dimensions - Caramayola 150 ml - Specifications NCh609.Of1970 Glass – Bottles for wine - Shape and dimensions - Champagne 750 ml – Specifications NCh610.Of1975 Glass – Bottles for wine - Shape and dimensions - Champagne 350 ml – Specifications NCh611.Of1970 Glass – Bottles for wine - Shape and dimensions - Oporto 700 ml - Specifications NCh612.Of1970 Glass – Bottles for wine - Shape and dimensions – Extended Rhin 700 ml - Specifications

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NCh613.Of1970 Glass – Bottles for wine - Shape and dimensions – Extended Rhin 350 ml - Specifications NCh614.Of1970 Glass – Bottles for wine - Shape and dimensions - Vermouth 1000 ml - Specifications NCh615.Of1970 Glass – Bottles for wine - Shape and dimensions - Vermouth 900 ml - Specifications NCh642.Of1999 Cement - Packages – Valve bags - Specifications NCh746.Of1972 Processed food - Packages- Terminology, classification and y general characteristics NCh747.EOf1970 Metallic packages – Sealing compounds - Specifications NCh748.EOf1970 Metallic packages – Determination of the characteristics NCh749.EOf1970 Metallic packages- Locks - Specifications NCh750.EOf1970 Metallic packages - Bottoms – Shapes and dimensions NCh752.EOf1970 Metallic packages - Body edging – Shapes and dimensions NCh78.Of1999 Steel cylinders , welded for petroleum liquefied gases (Types: 5; 11; 15 and 45) – General requisites of design

and manufacture NCh854.EOf1971 Fused glass packages for pharmaceutical products – Mouth – Characteristics NCh900.EOf1972 Glass – Fused glass packages for liquid pharmaceutical products – Specifications NCh901.EOf1972 Glass – Fused glass packages for solid pharmaceutical products – Specifications NCh2387.Of1997 Paper and cardboards – Normal atmosphere for pre-conditioning and test NCh2388.Of1997 Paper and cardboards – Measurments units and conversion factors NCh2389.Of1997 Paper and cardboards – Determination of the resistance of the paper to ring compressive strenght NCh2390.Of1997 Papers and cardboard – Corrugated cardboard - Determination of the resistance to flat compressive strenght

NCh920.Of1997 Papers and Cardboards – Corrugated cardboard and boxes – Vocabulary NCh2391.Of1997 Papers and Cardboards – Corrugated cardboard - Determination of the resistance to adhesion between cover

and wave – Wrapper method NCh2396.Of1997 Papers and cardboards - Corrugated cardboard boxes – Determination of the resistance to compressive

strenght NCh2397.Of1997 Papers and cardboards – Determination of the humidity content – Gravimetric method NCh2398.Of1997 Papers and cardboards – Corrugated cardboards – Determination of the resistance to the bursting strength NCh2399.Of1997 Papers and cardboards – Corrugated cardboards – Determination of the resistance to the column compressive

strength NCh264.Of1958 Papers and cardboards - General considerations NCh265.Of1997 Papers and cardboards – Sampling and acceptance of lots NCh266.Of1958 Papers and cardboards - Method to determine the impermeability to water NCh267.Of1958 Paper and cardboards – Method to determine the permeability to water vapor (humidity) NCh268.Of1958 Papers and cardboards - Method to determine the composition and quality of the glue NCh269.Of1958 Papers and cardboards – Method to determine the composition NCh270.Of1958 Papers and cardboards – Method to determine the texture NCh271.Of1958 Papers and cardboards – Methods for testing the mechanical properties NCh272.Of1958 Papers and cardboards – Methods for testing the hair ascent NCh495.Of1969 Papers and cardboards – Expression of dimensions and sense of manufacture NCh500.Of1970 Papers and cardboards – Cellulose pastes - Terminology and classification NCh652.Of1970 Papers and cardboards – Paste for paper – Determination of alpha, beta and gamma cellulose

NCh654.Of1997 Papers and cardboards – Determination of grams

NCh687.Of1970 Papers and cardboards – Conditioning of samples for tests NCh689.Of1997 Papers and cardboards – Determination of thickness NCh957.Of1985 MOD.1989 Welded portable cylinders for petroleum liquefied gases – Periodic inspection and repair

NCh981.EOf1973 Glass – Packages conformed by glass tubes for injectable pharmaceutical products – Specifications

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