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Tetra Pak

                   
Tetra Pak
Type Private
Industry Food packaging
Founded Lund, Sweden (1951)
Founder(s) Ruben Rausing
Headquarters Lausanne, Switzerland
Area served Worldwide
Key people Dennis Jönsson (CEO)
Ruben Rausing
Hans Rausing
Gad Rausing
Revenue increase 9.98 billion (2010)
Employees 22,623 (2010)
Parent Tetra Laval
Website Tetrapak.com/

Tetra Pak is a multinational food packaging and processing company of Swedish origin with head offices in Lund, Sweden and Lausanne, Switzerland. The company offers packaging solutions, filling machines and processing solutions for dairy, beverages, cheese, ice-cream and prepared food, including distribution tools like accumulators, cap applicators, conveyors, crate packers, film wrappers, line controllers and straw applicators.[1] Tetra Pak was founded by Ruben Rausing in 1951 as a subsidiary to Åkerlund & Rausing and built on an innovation by Erik Wallenberg, the tetrahedron package, from which the company name was derived.[2] Tetra Pak’s big commercial breakthrough came in the 1960s and 1970s, with the development of the Tetra Brik package and the aseptic packaging technology, which made possible a cold chain supply, substantially facilitating distribution and storage. From the beginning of the 1950s to the mid 1990s the company was headed by the two sons of Ruben Rausing, Hans and Gad, who took the company from a family business of 6 employees, in 1954, to a multinational corporation.[3] Tetra Pak is currently the largest food packaging company in the world by sales, operating in more than 170 countries and with over 22,000 employees (2011).[4][5] The company is privately owned by the family of Gad Rausing through the Swiss based holding company Tetra Laval, which also includes the dairy farming equipment producer DeLaval and the PET bottle manufacturer Sidel.[6] In November 2011, the Tetra Brik carton package was represented at the exhibition Hidden Heroes – The Genius of Everyday Things at the London Science Museum/Vitra Design Museum, celebrating “the miniature marvels we couldn’t live without”.[7][8][9] The aseptic packaging technology has been called the most important food packaging innovation of the 20th Century by the Institute of Food Technologists and the Royal Swedish Academy of Engineering Sciences called the Tetra Pak packaging system one of Sweden’s most successful inventions of all time.[10][11]

Contents

  History

  Ruben Rausing

Tetra Pak was created in 1951 as a subsidiary to Åkerlund & Rausing, a food carton company established in Malmö in 1929 by Ruben Rausing and Erik Åkerlund. Rausing, who had studied in New York at the beginning of the 1920s, had seen self-service grocery stores in America, unknown in Europe at the time, and realised that pre-packaging was part of the future in food retailing as a more hygienic and practical way of distributing staple groceries, all of which was at the time sold in most European countries over the counter in cumbersome glass bottles or impractical paper wraps.[12] At the end of the 1920s he bought a run-down packaging factory in Malmö together with the industrialist Erik Åkerlund.[13] Åkerlund & Rausing was the first packaging company in Scandinavia and eventually became a leading manufacturer of dry food carton packages.[14][15] Initially, however, Åkerlund & Rausing had difficulties making profits and in 1933 Åkerlund sold his share to Rausing, who became the sole owner.[16][17]

  Formation

Åkerlund & Rausing produced all sorts of paper packaging for dry staple groceries, but Rausing was determined to also find a way of pre-packaging liquids such as milk and cream, and spent large sums on developing a viable package. The goal was to provide optimal food safety, hygiene and distribution efficiency using a minimum amount of material, according to the subsequently famous credo that a package should “save more than it costs”.[18][19] The new package had to be sufficiently cheap to be able to compete with loose milk, meaning that a minimum of material waste and a maximum of production efficiency needed to be obtained.

In 1943, the Åkerlund & Rausing lab started to work on developing the milk carton package and in 1944, Erik Wallenberg, a young lab assistant stepping in as head of the research lab, came up with the idea of constructing a tetrahedron shaped package out of a tube of paper.[20] The idea was simple but efficient, making optimal use of the material involved. After some initial hesitation, Rausing understood the potential of the package and filed for a patent on 27 March 1944.[21] The rest of the 1940s were spent developing viable packaging materials and solving the technical problems of filling, sealing, and distribution.

  Modern retailing: Woman with Tetra Classic packages, 1950s

It was reportedly Rausing’s wife Elisabeth who came up with the idea of continuously sealing the packages through the milk while filling the tube in the manner of stuffing sausages, to prevent oxygen entering the package.[22] In 1946 a model for a packaging machine was presented by engineer Harry Järund, and in collaboration with Swedish paper mills and foreign chemical companies a viable paper for packaging was finally produced when coating carton paper with polythene, making the paper water-proof and allowing for heat-sealing during filling.[23][24]

  Operating history

  Exporting the Tetra Classic: Italy, 1960s

AB Tetra Pak was established in Lund, Sweden, in 1951. In May of that year, the new packaging system was presented to the press, and in 1952 the first filling machine producing 100 ml cream tetrahedrons was delivered to Lundaortens Mejeriförening, a local dairy.[25][26] In the subsequent years, the tetrahedron packages became more and more frequent in Swedish grocery stores, and in 1954 the first machine producing 500 ml milk packages were sold to a Stockholm dairy.[27] That same year the first machine was exported to Hamburg, Germany, soon to be followed by France (1954), Italy (1956), Switzerland (1957) and later the Soviet Union (1959) and Japan (1962).[28] Rausing relentlessly strove to improve the tetrahedron system, wrought with many technical problems during the 1950s, and spent enormous amounts on development. The different projects – the tetrahedron, the aseptic packaging technology, Tetra Brik – all demanded extremely large resources and the company had financial troubles well into the 1960s.[29] Indeed, Tetra Pak's commercial break-through did not arrive until the mid-60s with the new Tetra Brik package, introduced in 1963, and the development of the Aseptic technology.[30] To liberate capital, Åkerlund & Rausing was sold in 1965 while AB Tetra Pak was retained.[31] International expansion began already at the beginning of the 1960s, when the first production plant for packaging material outside of Sweden was established in Mexico in 1960, soon to be followed by another one in the United States (1962).[32] In 1962 the first Tetra Classic Aseptic machine outside of Europe was installed in Lebanon.[33] The late 1960s and the 1970s saw a global expansion of the company, much due to the new Tetra Brik Aseptic package, launched in 1969, which opened up new markets in the developing world and sparked off a virtual explosion in sales.[34]

  Mergers and acquisitions

In 1981 Tetra Pak relocated its corporate headquarters to Lausanne, Switzerland for tax reasons, however retaining all R&D functions in Lund, Sweden.[35] For the equivalent of $2.5 billion, Tetra Pak acquired Alfa-Laval AB in 1991, a venerable Swedish company producing industrial and agricultural equipment and milk separators, world-leading in its industry, in what was at the time Sweden's largest take-over deal.[36][37] Since the deal allowed Tetra Pak to integrate the Alfa Laval competence within processing, the merger eventually made it possible for Tetra Pak to offer entire packaging and processing solutions to its clients. The deal drew anti-competitive scrutiny from the European Commission, but the takeover went through after various concessions from both companies.[38][39] After the merger with Alfa Laval, Tetra Pak announced plans to return the headquarters to Sweden, and in 1993 Group Tetra Laval was created with joint headquarters in Lund and Lausanne. Alfa Laval's liquid processing unit was absorbed into Tetra Pak and the unit specialising on machinery for dairy production was organised separately in Alfa Laval Agri.[40] Alfa Laval Agri was later renamed DeLaval, after Alfa Laval's founder Gustaf de Laval, and is still a part of the Tetra Laval group.[41] The part of Alfa Laval that was not directly linked to Tetra Pak's activities – heat exchangers and separation equipment among others – was sold in 2000 to Swedish finance group Industri Kapital. In 2001 Tetra Laval acquired the French plastic packaging group Sidel. The merger was prohibited by the European Commission on the grounds that both Tetra Pak and Sidel were market leading in their field and operated in related business areas.[42][43] The European Court of Justice eventually ruled in favour for Tetra Laval in a high profile case.[44] The Tetra Laval Group is controlled by the holding company Tetra Laval International, whose board of directors include the three children of Gad Rausing.[45]

  Operations

  Business and markets

  The Tetra Pak packaging portfolio

Tetra Pak operates globally through 40 market companies, which are subsidiaries to Tetra Pak International SA, doing business in over 170 countries.[46] Because of the low relative cost of its end products, the developing world has been an important market for Tetra Pak from the start. In 2010, Tetra Pak reported a 5.2 % increase in sales, with an annual turnover of almost €10bn.[47] In the Tetra Laval annual report 2010/2011, Tetra Pak announced particularly strong growth in China, Southeast Asia, Eastern Europe and Central and South America.[48] Rising income levels on these markets enable higher consumption of protein-rich foodstuffs such as dairy products, and Tetra Pak has announced that it will increase investment in the emerging markets with 10% to over €200m (2009).[49] After investing close to €200m in new packaging plants in Russia (2007) and China (2008), in 2011 Tetra Pak announced the construction of new packaging plants in India and Pakistan to meet increasing demand.[50][51] The new plants on the Indian sub-continent are thought to supply the growing demand in the Middle East area. Financial Times reported that the rise in milk consumption in the emerging markets particularly regarded the UHT milk, facilitating transportation and food safety, something which is favourable for Tetra Pak whose aseptic packages represent two thirds of its sales.[52][53] Tetra Pak's most popular product is the Tetra Brik Aseptic, a best-seller since the 1970s.[54][55] In May 2011 Tetra Pak launched the first aseptic carton bottle for milk, the Tetra Evero Aseptic.[56]

  Competition

In an interview in Swedish business monthly Affärsvärlden in 2006, Tetra Pak CEO Dennis Jönsson defined Tetra Pak's current main competitor to be Swiss manufacturer SIG Combibloc, however adding that Tetra Pak's main competition generally no longer comes from companies producing similar packaging but from industries and companies producing other types of packaging with a lower cost of production, like the PET bottle.[57] Indeed, Jönsson perceived the PET-bottle as Tetra Pak's biggest threat on the European market at the time.[58] SwedishElopak/Pure-Pak produces similar style carton packages and has historically been Tetra Pak's principal competitor. The newly established Chinese packaging company GA Pack is producing spin-offs of Tetra Pak products and are challenging Tetra Pak on the important Chinese market.[59]

  Key figures

Key figures (2012):[60]

  • Packaging material plants: 42
  • Number of countries in which the company operates: 170
  • Market companies: 38
  • Sales offices: 79
  • Number of employees: 22,896
  • Packages produced in 2011 (m): 167,002
  • Net sales in 2011 (m€): 10,360

  Products

  Aseptic technology

  Aseptic technology: Tetra Brik Aseptic, 1960s

The aseptic packaging technology is Tetra Pak's key innovation and has to a large extent paved the way for the Tetra Pak system's success. In aseptic processing the product and the package are sterilized separately and then combined and sealed in a sterile atmosphere, as compared to canning, where product and package are combined and then sterilized. When filled with ultra-heat treated (UHT) foodstuffs (liquids like milk and juice or processed food like vegetables and preserved fruits), the aseptic packages can be preserved without chilling for up to one year, with the result that distribution and storage costs, as well as the environmental impact, is greatly reduced and product shelf life expanded.[61]

  Packages

  • Tetra Classic is the name of the first, tetrahedral package, launched by Tetra Pak in 1952, with an aseptic version released in 1961 and still in use, mainly for portion-sized cream packages and children's juices.[62]
  • The brick-shaped Tetra Brik was launched in 1963 after a long and costly development process. An aseptic version, Tetra Brik Aseptic was launched in 1969. In terms of entities sold, it is the most popular of the Tetra Pak packages.[63]
  • The pillow-shaped Tetra Fino Aseptic was introduced in 1997, aiming to provide low cost and simplicity.[64]
  • Tetra Gemina Aseptic was introduced in 2007 as the "world's first roll-fed gable top package with full aseptic performance".[65]
  • The Tetra Prisma Aseptic was launched in 1997. It has an octagonal shape with the aim of providing a more ergonomic experience.
  • The Tetra Rex is rectangular with a gable-top. It was launched in Sweden in 1966.
  • Tetra Recart is a newly launched package that is meant to provide an alternative to previously canned foodstuffs such as vegetables, fruit and pet food.
  • Tetra Top was launched in 1986 as a reclosable, square package with rounded corners. The lid, moulded in polyethylene in a single mold, makes it easy to open and reclose.
  • Tetra Wedge Aseptic was developed to keep packaging material to a minimum while retaining a square surface underneath. It was introduced in 1997.
  • The Tetra Evero Aseptic is the latest of the Tetra Pak packages, launched in 2011 and marketed as the world's first aseptic carton bottle for ambient milk.[66]

  Processing and distribution solutions

While the original idea was to provide hygienic pre-packaging for liquid food stuffs, Tetra Pak is now providing a range of different packaging and processing solutions due to its acquisition of Alfa Laval in 1991, consequently supplying complete systems of processing, packaging and distribution within fields as various as ice cream, cheese, fruit and vegetables and pet food.[67] In addition to its various packaging solutions, Tetra Pak thus provides integrated processing and distribution lines for different kinds of food manufacturing, including packaging machines and carton paper, equally providing distribution equipment like conveyors, tray packers, film wrappers, crates, straws and roll containers. The company additionally offers automated production solutions and technical service.

  Environment

  Environmental policy

Tetra Pak has a very pronounced sustainability profile and claims to continuously strive to improve best practice for itself and for its customers.[68] Ruben Rausing's in many ways preclusive mantra from the 1940s that a package should save more money than it costs has over the years resulted in a highly sustainable product that makes efficient use of all resources involved.[69] The use of materials and waste management are indeed, says Financial Times, "big issues" for the company.[70] In 2011, Tetra Pak published a new set of sustainability targets, which included maintaining the CO2 emission levels on the same level until 2020 and increasing recycling with 100% in the same period.[71] Previous Tetra Pak sustainability targets (2005–2010) were met and exceeded with exceptional results reported the WWF, with whom Tetra Pak has a long time collaboration, affirming that Tetra Pak's use of energy was lower in 2006 than in 2002, despite a production growth of 23%.[72] Maintaining current CO2 emission levels until 2020 would result in a total of 40% relative cut in emissions with an average growth rate of 5 % per year, Food Production Daily reports.[73] Tetra Pak said it will increase its use of Forest Stewardship Council (FSC) certified paper to 100% in 2020, with an interim target of 50% by 2012.[74] The new targets will encompass the whole value chain, from suppliers to customers, putting pressure on partners to perform coherently.[75]

  Carton raw material: Swedish pine forest

The company reported that it secures raw material for the paper carton in cooperation with the World Wide Fund for Nature (WWF), the Global Forest & Trade Network (GFTN) and Forest Stewardship Council (FSC) and that it strives to source polyethylene made from sugarcane from sustainable suppliers in Brazil.[76] In 2010 40% of Tetra Pak's carton supply was FSC certified.[77] Slowly, sectors where glass bottles have been paramount, like the wine and spirits industry, have begun to look at carton bottles as a possible packaging solution as the carbon footprint of a carton container is said to be about one tenth of that of an equivalent glass bottle.[78][79]

  Recycling

Tetra Pak has been committed to recycling since the mid 1980s, introducing a recycling program for its cartons in Canada as early as 1990.[80][81] In 2000, Tetra Pak invested Bt20m (€500,000) in Southeast Asia's first recycling plant for aseptic packages, in Thailand.[82] Recycling of the aseptic packages has indeed been one of Tetra Pak's big challenges.[83] Since the aseptic packages contain different layers of plastic and aluminium in addition to raw paper, they cannot be recycled as "normal" paper waste, but need to go to special recycling units for separation of the different materials. Once separated, the aseptic carton results in aluminium and pure paraffin which can be used in industry.[84] Even without separating the carton materials, however, the aseptic carton can be reused, a Tetra Pak spokesman said, for example in engineering equipment.[85] In 2010 30 billion used Tetra Pak carton packages were recycled, a doubling since 2002.[86] The company stated that it aims to help double the rate of recycling in the next ten years, something that will require an engagement within the whole recycling chain.[87] As per 2011, 20 % of Tetra Pak cartons are recycled globally, with countries like Belgium, Germany, Spain and Norway showing local recycling rates of over 50%.[88] To increase the level of recycling and meet the targets, Tetra Pak has engaged in driving recycling activities such as facilitating the development of collection schemes, launch new recycling technologies and raise the awareness about recycling and sustainability.[89] Used Tetra Pak packages have been used as construction material in different design projects, with varying results.[90][91][92]

  Criticism

Tetra Pak's sustainability work has gained recognition from industry and retailers alike and in 2010 Tetra Pak was rewarded the Swedish Forest Industries Climate Award with the motivation that the company takes global responsibility for the forests that provides its raw material.[93][94] The recently introduced Tetra Recart has equally been hailed by large retail groups like Sainsbury's as "the 21st Century alternative to canned foods" as the carton's rectangular shape make transportation, storage and distribution more efficient, taking up 21% less space and weighing 2/3 of a tin can of equivalent volume.[95][96] Tetra Pak cartons have been criticized for being more difficult to recycle than tin cans and glass bottles.[97] The difficulty lies in the fact that the process demands specific recycling plants that are not easy to access (for example, it is unclear if there is even one in the United States) and that if not recycled, the cartons end up in landfills or waste-to-energy plants. Tetra Pak has stated that it is currently working on joint ventures with local governments around the world to increase the number of recycling facilities.[98]

  Community projects

  Food for development

Tetra Pak was early in engaging in community projects and the company has supported School Milk and School Feeding programmes for 45 years.[99] In the late 1970s Ruben Rausing engaged himself personally in Operation Flood, a joint venture between the World Food Programme, the World Bank and Tetra Pak to supply western milk surplus to Indian households.[100]

  School milk in Thailand

The Food for Development programme (FfD) was initiated to improve nutrition and health and alleviate poverty globally. The FfD programmes is mainly focusing on school nutrition and school milk for children, but also on projects improving agricultural practices and dairy handling, providing training for farmers to enhance efficiency, productivity and food safety. This is also beneficial for Tetra Pak as it builds relations and secures supply on less developed markets.[101][102] Tetra Pak works tightly with local governments and NGO:s to secure and develop the programmes.[103]

  School milk

The School milk programmes are part of the Food for Development projects and aim at providing milk to school children to help improve nutrition. Tetra Pak supplies the cartons for the school milk at cost and does not make any profit on sales. UNDP and World Bank case studies of Tetra Pak school milk programmes in Nigeria showed that vitamin deficiency, energy, growth and cognitive skills were improved and that children were more interested in their school work after taking part in the programme.[104][105]

  Disaster relief support

Tetra Pak has supported disaster relief after the earthquakes in Haiti and Japan in 2010 and 2011, in forest fires in Russia in 2010 and during the flooding in Pakistan in 2010 and Thailand in 2011.[106] In China, Tetra Pak helped improve food safety, sustainability and best practices in the dairy industry after the 2008 contamination scandal that, although Tetra Pak had nothing to do with the scandal, seriously damaged the market for packaged milk in China. As states Financial Times, it was not solely a philanthropic act but a way of securing the future for the market, helping the industry become safer, more sustainable and more efficient.[107] The training programme was reported to be very successful with substantial elevation of standards in dairy handling and farming.[108]

  Controversy

  Monopoly

Tetra Pak has occasionally been subject to controversy, most notably regarding its near monopoly position on certain markets for many years.[109] Especially attempts at mergers have been subject to scrutiny.[110] Its merger with French PET-production company Sidel in 2001 drew anti-competition allegations from the European Commission.[111] The court case was drawn out for many years and twice appealed to the European Court of First Instance before the European Court of Justice ruled in favour of Tetra Laval.[112] In 2004, Tetra Pak was accused of using its near monopoly in China, where it held 95% on the market for aseptic carton packaging.[113] The allegations were contested by Tetra Pak.

  The Parmalat scandal

In January 2004, Italian dairy giant Parmalat was caught in a multibillion-euro accounting scandal, culminating in the arrest of the owner Calisto Tanzi. Parmalat CFO Fausto Tonna told the Italian business daily Il Sole 24 Ore that Tetra Pak had made substantial payments to Tanzi and his family and to a company in the Cayman Islands belonging to Parmalat.[114][115] Tetra Pak acknowledged having made payments to Parmalat but stated that the payments had been made as discounts to subsidize marketing operations and pricing, as is usual practice with large customers.[116] Tetra Pak was asked by Italian authorities to provide documentation on the transactions, and found that payments had been made since 1995 as part of regular operations but that no payments had been made specifically to the Tanzi family.[117] Calisto Tanzi was eventually sentenced to 8 years imprisonment for fraud by the Italian high court in Milan after several appeals in lower instances.[118]

  The tetrahedron legacy

Upon visiting the Tetra Pak factory in Lund in the 1950s, Danish physics professor and Nobel Prize laureate Niels Bohr allegedly claimed to "never have seen such an adequate practical application of a mathematical problem" as the tetrahedron package and the innovation of the milk tetrahedron, the basis for Tetra Pak, has indeed given rise to differences in view as to who is to be credited for the invention.[119] Erik Wallenberg did not get any formal recognition until 1991 when he was awarded the Royal Swedish Academy of Engineering Sciences Great Gold Medal for outstanding achievement for the invention.[120]

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  97. ^ Is Tetra Pak better for the environment than tin cans? The Guardian, retrieved 30th November 2011
  98. ^ Environment and Recycling Tetralaval.com, retrieved 1st December 2011
  99. ^ Food for Development Tetrapak.com, retrieved 2nd December 2011
  100. ^ Andersson, Peter and Larsson, Tommy, Tetra. Historien om dynastin Rausing, Stockholm: Norstedts 1998 (ISBN 91-7263-014-0), p. 292ff
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  102. ^ Responsible Neighbours Invest in Local Causes Financial Times, retrieved 2nd December 2011
  103. ^ A School Feeding Program in Nigeria: Tetra Pak's Business and Development Goal World Bank Case Study Series, retrieved 9th December 2011
  104. ^ Food for Development in Nigeria David-West, Olyinka, UNDP-GIM Case Study No. B094, New York: United Nations Development Programme, 2010
  105. ^ A School Feeding Program in Nigeria: Tetra Pak's Business and Development Goal World Bank Case Study Series, retrieved 9th December 2011
  106. ^ Tetra Laval Annual Report 2010/2011 Tetralaval.com, retrieved 2nd December 2011
  107. ^ How to Restore Faith in an Industry Financial Times, retrieved 2nd December 2011
  108. ^ How to Restore Faith in an Industry Financial Times, retrieved 2nd December 2011
  109. ^ Tetra Pak International SA vs Commission of the European Communities EUR-Lex, retrieved 9th December 2011
  110. ^ Italy's Antitrust Body Fines Tetra Pak Food Production Daily, retrieved 9th December 2011
  111. ^ Boxed In. Where next for Europe's biggest food packager? The Economist, retrieved 9th December 2011
  112. ^ Tetra Laval II: the Coming of Age of the Judicial Review of Merger Decisions Matteo F. Bay and Javier Ruiz Calzado in World Competition 28(4), p. 433-453, 2005
  113. ^ Country fighting against monopolies China Daily, retrieved 9th December 2011
  114. ^ Parma Splat The Economist, retrieved 30th November 2011
  115. ^ Tetra Pak defends Parmalat payments New York Times, retrieved 30th November 2011
  116. ^ Tetra Pak defends Parmalat payments New York Times, retrieved 30th November 2011
  117. ^ Swedish Company Traces Parmalat Money New York Times, retrieved 30th November 2011
  118. ^ La Cassazione riduce la pena per Tanzi a 8 anni Il Sole 24 Ore, retrieved 30th November 2011
  119. ^ Andersson, Peter and Larsson, Tommy, Tetra. Historien om dynastin Rausing, Stockholm: Norstedts 1998 (ISBN 91-7263-014-0), p. 23
  120. ^ Leander, Lars, Tetra Pak. A Vision Becomes Reality. A company history with a difference, Lund: Tetra Pak International 1996 (ISBN 91-630-4789-6), p. 28

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