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KEY NOTE Market Report Glassware UK : July 2004

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This report covers:glassware, department stores, variety stores, supermarkets, home interior stores, direct selling, tourist attractions, promotional market, British Glass Manufacturers' Confederation, Comité Permanent des Industries du Verre Européennes, The Giftware Association, International Crystal Federation, Society of Glass Technology,

Companies covered include:Dartington Crystal Group, The Edinburgh Crystal Glass Company, Newell Cookware Europe, Rayware, Royal Doulton, Villeroy & Boch, Waterford Wedgewood UK, Caithness Glass, The Ravenhead Company, Demaglass, Stuart & Sons, British Glass Manufacturers, Portmerion, Swarovski Crystal, recylcing of glass, Arc International, Bormioli Rocco e Figlio SpA, Calp spA, Crystalex AS, Krosno SA, Lancaster Colony, Libbey, Newell Rubbermaid, Noritake, Riedel Glass gmbH, Royal Doulton,

EXECUTIVE SUMMARY

This Key Note Market Report discusses the UK glassware industry. In 2002, the value of the hollow glassware market in the UK was £477.8m. The sectors covered are soda-lime glass, crystal glass and heat-resistant glass.

Household penetration of glassware is high with over three-quarters (75.8%) of UK households possessing at least some glassware. Replacement is fairly frequent, keeping the market buoyant, but the availability of cheap, functional glassware means that value growth of retail sales is limited. At the other end of the price spectrum, demand for fine crystal is erratic with fewer people now seeing crystal stemware as relevant to their lifestyles. Nevertheless, attempts to modernise the image of crystalware by introducing contemporary designer collections have met with some success.

There have been several casualties in UK glassware manufacturing in recent years. In April 2004, it was confirmed that Edinburgh Crystal Glass Company Ltd had acquired Caithness Glass Ltd from the receivers for an undisclosed sum, but not before one of its factories had been closed. Caithness Glass blamed changing market conditions, particularly cheap imports from the Czech Republic, for its recent difficulties. The UK glass manufacturing industry, as in other UK manufacturing sectors, is renowned for its quality and has a number of prestigious brands with traditions spanning centuries. However, the UK industry remains hard-pressed to compete with the low overheads of overseas operators.

While most households would regard some glassware as a necessity, any drop in disposable household income rapidly affects expenditure on such items. Many economists argue that the days of low inflation and cheap borrowing are now in the past. There have been four rises in interest rates since November 2003 and it seems likely that the base rate will be at least 5% by the end of 2004. Hardly the double-digit figures seen in the past but high enough to cause a problem for some consumers who may have overstretched their budgets. Higher oil prices immediately affect the consumer's wallet in that transport and factory running costs spiral and need to be recouped from the end user of goods and services, who is also paying more to fill his car with petrol. It seems inevitable, therefore, that household expenditure on items such as tableware will suffer as people pay more for necessities and, for this reason, growth in the value of retail sales of glassware as covered by this report is expected to be modest.

In common with other industries, glassware manufacturing faces the challenges of increasing globalisation, possible problems with the cost and accessibility of energy and raw materials and the need to meet environmental demands cost-effectively. Of particular importance is the issue of recycling. The glass industry must meet a 60% glass-recycling target by 2008 under the EU Packaging and Packaging Waste Directive. Although levels of recycling have improved, the UK still lags behind other European countries in its recycling efforts and it is generally accepted that more must be done to encourage the UK public by providing a greater number of bottle banks and kerbside collections and by communicating the message that glass is infinitely recyclable.

TABLE OF CONTENTS

Executive Summary

1. Market Definition

Report Coverage

MARKET SECTORS

Market TRENDS

Transferring Production Overseas

Fashions in Glassware

Changes in Drinking Habits

Economic Trends

Gross Domestic Product

Table 1: UK Gross Domestic Product at Current Prices (£m), 1999-2003

Inflation

Table 2: UK Rate of Inflation (%), 1999-2003

Household Disposable Income

Table 3: Average Annual UK Household Disposable Income (£), 1998-2002

Unemployment

Table 4: Actual Number of Unemployed Persons in the UK (million), 1999-2003

Population

Table 5: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003

MARKET POSITION

The UK

Table 6: UK Manufacturers' Sales of Glassware by Value (£000), 2001 and 2002

Table 7: Household Expenditure on Glassware, Tableware and Household Utensils and on Furnishing and Household Goods by Value at Current Prices (£m and %), 1999-2003

Overseas

2. Market Size

THE TOTAL MARKET

Manufacturers' Sales

Table 8: UK Manufacturers' Sales of Hollow Glassware by Value (£m), 1998-2002

Retail Sales

Table 9: The Total UK Market for Tabletop and Ornamental Glassware by Value at Current Prices (£m at rsp), 1999-2003

By Market Sector

Table 10: Estimated UK Retail Sales of Tabletop and Ornamental Glassware by Sector by Value at Current Prices (£m at rsp and %), 2003

OVERSEAS TRADE

Table 11: UK Balance of Trade in Glass by Value (£m), 1999-2003

Table 12: UK Balance of Trade in Hollow Glassware by Value (£m), 2002 and 2003

Imports

Table 13: UK Imports of Hollow Glassware by Type by Value (£000), 2003

Table 14: UK Imports of Hollow Glassware by Value by Country of Origin (£000), 2003

Exports

Table 15: UK Exports of Hollow Glassware by Type by Value (£000), 2003

Table 16: UK Exports of Hollow Glassware by Country of Destination by Value (£000), 2003

3. Industry Background

RECENT HISTORY

Industry Synopsis

Table 17: Average Financial Results for UK Manufacturers of Hollow Glass by Turnover and Pre-Tax Profit (£000, % and £)

NUmber of COmpanies

Table 18: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Hollow Glass and Other Glass Articles by Turnover Sizeband (£000 and number), 2003

Employment

Table 19: Number of UK VAT-Based Local Units Engaged in the Manufacture of Hollow Glass and Other Glass Articles by Employment Sizeband (number of employees), 2003

Regional Variations in the Marketplace

DISTRIBUTION

Manufacturers

Traditional Retailers

Specialist Tableware Retailers

Department Stores

Variety Stores

Supermarkets

Home Interior Stores

Direct Selling

Tourist Attractions

Promotional Market

HOW ROBUST IS THE MARKET?

LEGISLATION

Key TRADE ASSOCIATIONS

British Glass Manufacturers' Confederation

Comité Permanent des Industries du Verre Européennes

The Giftware Association

International Crystal Federation

Society of Glass Technology

4. Competitor Analysis

THE MARKETPLACE

Market Leaders

Dartington Crystal Group Ltd

Company Structure