Mergers and acquisitions in the global packaging industry are on the increase. According to BMO Capital Markets in Chicago, in the first half of 2007, there were 180 transactions around the world. The pending union of Graphic Packaging and Altivity Packaging is one example, while the big deal in the offing can be a buyout of Alcan’s packaging business by Bemis.

The global flexible packaging market can be classified into two categories – the mature markets of North America, Western Europe and Japan where overcapacity and saturation is the hall mark. The newly emerging markets are India, China, South East Asia, and Latin America.

The packaging market in general is witnessing a retailer-driven industry consolidation. The example is Tetra Pak’s two biggest customers, Mengniu and Yili who are from China. Coming into business some seven years ago and they have emerged as big players in the dairy sector. This is a pointer to the shape of things to happen in the liquid packaging industry.

Despite decades of modernisation 85 percent of the world’s food is still hand-packed, and half of the white milk produced is still unpackaged. The two Asian markets – India and Pakistan – are considered to be pots of gold once the liquid food packaging opportunities in those countries start evolving.

Tetra Pak’s top 10 customers represent 20 percent of its revenues, and in that group there is none from the US. The US represents Tetra Pak’s fifth largest market with 6.72 billion containers. China used 24.6 billion Tetra Pak cartons last year. The market in China centres mainly on the 250 ml single-serve size.

On the environment-front, recycling is gaining priority. Some 21 billion cartons from Tetra Pak were recycled in 2006, and the target is to stretch this to 25 percent of total production by 2008. The recovery facility in Brazil yields the materials from used cartons.

Patterns of Growth

In developed countries, beverage carton growth is essentially flat, and ranges from 0-3 percent. In the US market, the growth is more in the high-end juices, transported within the chilled distribution chain. Obviously, the US leads in on-the-go drinking, with 58 percent of consumers sipping a drink while walking or driving, compared to the global average of 27 percent. Very soon cartons that will fit into car cup holders will hit the developed markets.

The number of new products introduced in Tetra Pak containers in 2006 was a whopping 7,000. The company’s development and engineering wing have yielded 5,000 patents worldwide. Tetra Pak has also succeeded in reducing the carton footprint and the number of kilowatts needed to produce each package by 60 percent in the last 25 years. It anticipates reducing this to 80 percent.

Tetra Pak has campaigned well in the market to convince how a Tetra Brick Aseptic package can be far more efficient than a plastic bottle holding a similar product volume. Even in the worst-case scenario, the former is said to be efficient by 30 to 40 percent more than the mundane bottle.

Three-fourths of the packaging material Tetra Pak uses are renewable – made from paper and traceable to accepted forest sources. Package-to-forest traceability has reached 100 percent throughout the European Union compared to 76 percent globally. The company adheres to ISO 14001 standards in regard to environmental efforts.

In India, Tetra Pak India, is exploring the nutrition platform as a brand new line of business opportunity. The company which packages juices, milk and pharma products, in easy-to-carry and preserve wrappings, is aiming at getting into nutrition products for school kids, according to Brian Hinchliffe, Director, South India.

Soups, delicacies such as basundi, desserts and a range of kitchen products will also be available in Tetra Pak packages. At present more than 50 percent of milk and juices are packed in Tetra Pak containers.

The company’s main manufacturing plant in Pune produces 3.5 billion packs per annum. While the domestic market is consuming just over a billion packs, the rest is exported to countries such as China, Africa and South-East Asia.

Alcohol in Cartons

Pharma and spirits are two other areas, which promise to grow in the future. The UB Group’s Spirit Division launched alcohol in Tetra Pak cartons in Maharastra last year and in Karnataka early this year. Four brands — Bagpiper, Director’s Special, Green Label and Celebration Rum are now available in 180 ml Tetra Pak cartons in these states.

Globally, Tetra Pak packages are popular with wines. Table wine in Argentina is widely sold in Tetra Paks. The packages are light, have zero breakage and once opened cannot be resealed, which gives them a big advantage with the consumer.