Tetra Pak embodies the Gestalt principle of being an organization that is greater than the sum of its parts.
While most readers will know the brand as an expert in packaging solutions for the food and beverage industry, which was founded in Lund, Sweden, in 1951 with the launch of tetrahedron-shaped cartons, fewer would be aware that Tetra Pak spans the entire value chain. Today that expertise encompasses the creation and development of new food products and packaging formats, facilitating production and optimizing customer performance via new digital technologies and Industry 4.0. Further, that sustainability is integral to every aspect of the Tetra Pak business.
“We aim to be a full service provider to the entire food industry, from farm to fork and beyond that,” states Laurence Mott, executive VP, development and engineering.
Tetra Pak’s end-to-end solutions were recently showcased to its customers and press during a two-week long Inside Tetra Pak event, hosted at the company’s Swedish research facilities.
Chris Huntley, head of communications for Tetra Pak worldwide, emphasized the importance of collaboration to meet future challenges. “We are showing some 300 customers from across the globe what we are doing to help them succeed and to understand their concerns about where they see challenges,” he said. “In many areas we are setting the pace. In others we are barely off the starting grid and in others we are not even on the right race track.”
Mott shared some of Tetra Pak’s latest developments and key market trends including the growing influence of Millennials, who were 1.6 times more likely to use grocery apps to purchase. Digital natives are tech savvy and three times more likely to buy products and services with greater regularity online, Mott said.
“When companies work out the right way to engage with them, they will be the biggest spenders,” he said.
Mott highlighted the growth in AI, robotics, data and devices including the Microsoft HoloLens, which Tetra Pak is deploying to connect with its customers remotely. Mott said Tetra Pak has invested in AI, automation and data exchange in order to optimize the operational performance of its customers.
“The idea of connected manufacturing is becoming pervasive,” Mott suggested, and referenced Tetra Pak’s new digital management solution, Plant Secure, which is designed to boost customer profitability. In one scenario, a Tetra Pak customer had reduced operational costs by 10% as a result.
Sustainability is also rising up the agenda, given the growth in the world population, which is set to reach 8.4bn people by 2030. According to Mott, 40% of customers are more likely to consider brands with environmentally sound profiles and companies are under pressure to cut their environmental impact. “Food and beverage companies look to us to make products that are better for customers and the environment,” he said.
Tetra Pak innovations in sustainable packaging include Tetra Rex, carton packaging made entirely from plant-based materials. “We integrate sustainability into everything we do,” Mott stressed.
Differentiate and grow
Lars Bengtsson, VP packaging, showcased how Tetra Pak is partnering with customers to identify and develop new business opportunities to differentiate from the competition, while staying true to its mission to “make food safe and available everywhere”.
Matthew Hatton, director of competitor intelligence presented the key industry trends. They include:
- Demographic patterns – a rising world population, urbanization and growth of mega cities, which are creating unprecedented demand for convenience and consuming on the go
- Generation C – connected consumers
- Sustainability – the need for a sustainable culture
These trends are impacting consumption and promoting healthier and ethical choices plus products for now. By 2021, for example, it is forecast that 80% of all beverages will be in the water category, while 20% of all releases in the cheese category will be for immediate consumption. Hatton pinpointed four key growth categories going forward: plant-based, waters, food supplement nutrition and cheese.
In the first, oats, soya, almond, coconut and even pea-based products are driving 10% growth in Europe and America in a 27bn litre market.
The waters category is a 288bn litre market and growing by 5%, while cheese is a 27.2kg category and rising by 3%. Food supplements, which include medical food, special dietary foods, sports nutrition and meal replacement products, is projected to be a 7.5bn litre category by 2021, up from 6bn litres today, representing a CAGR of 25%.
Suzanne McKinley, marketing manager, presented Tetra Pak’s evolving marketing approach in food and beverages, developed at customer innovation centres and product development centres in 10 countries around the world. The business adopts a five step plan:
- diagnosis – understanding customer needs
- discover – insights
- refine – prototyping
- deliver – pack design
- evolution – establish the product in the minds and hearts of the consumer
The process also includes ingredients sourcing and online concept testing with panels of consumers via partner company Zappi.
Riccardo Castagnetti, product director, showed how Tetra Pak right sizes and reshapes packaging formats to meet consumer need, provides added functionality and product differentiators. In terms of pack size, Tetra Pak has developed a 900ml carton for the Japanese market to meet consumer demand; while innovative new pack shapes are enabling a customer in Saudi Arabi to print the most popular children’s names along the side of juice packs for personalization. External differentiators, meanwhile, include digital printing and embossing on carton caps to provide a new mechanic for customer engagement and interaction. New effects have also been introduced including Tetra Pak Reflect, holographic effects; Tetra Pak Metallized, metallic effects; and Tetra Pak Craft, a natural look of bare paperboard with wood fibres.
New packaging functionality comes in the shape of new tear openings for ice lollies, cartons with lids that remain attached to the pack and pack formats designed especially for drinking yogurts containing large fruit pieces. New pack openers have been added too including ones featuring QR codes lasered on the inside of the lid; while paper straws are promised to be introduced by the year end.
Johan Nilsson, VP digitalisation and Industry 4.0, showed how Tetra Pak solutions and expertise are helping customers achieve operational excellence and efficiency through the power of complete systems, which boost productivity. It included an overview of Tetra Pak’s new Plant Secure plant management solution, which spans the manufacturing footprint of its customers, their logistics and end customers ie retailers.
“Tetra Pak has experience in running liquid food manufacturing plants and Tetra Pak Plant Secure is the umbrella brand for that,” he said.
The new service starts with a detailed audit of all the equipment and systems across the customer’s value chain. This analysis, combined with Tetra Pak’s deep knowledge of the industry and benchmark data on food manufacturing, enables its specialists to identify opportunities and implement improvements across the customer’s entire operation. All Tetra Pak Plant Secure contracts come with targets around operational expenditure reduction and capital expenditure optimisation.
According to Tetra Pak, optimisation is being driven by the trend to e-commerce, which is squeezing manufacturing companies. They in turn are looking to cut costs, improve quality and product differentiation. However, procurement led-cost saving is not sustainable as productivity in the food and beverage industry has declined to an average utlization of just 30%, the company maintains. Plant Secure is designed to combat that challenge by providing a factory-wide opportunity analysis to identify improvement areas plus insights to benchmark against the best in class.
Tetra Pak explored the impact of Industry 4.0 on the food and beverage industry and suggested the sector was “yet to fully pick up and benefit from 4.0” versus other sectors such as retail, automotive, oil and gas and agribusiness in terms of using data to drive better decisions. Productivity is also a challenge for food and beverage manufacturers, the company added.
Industry 4.0 shifts the profit pools and is focused on nine foundation technologies, Tetra Pak says. These are: Big Data and analytics, AI, advanced robotics, AR tools, system integration, industrial IoT, simulation, additive manufacturing eg 3D printing and cyber security.
Tetra Pak showcased how digital technologies could be deployed within a manufacturing plant to optimise performance such as sensors on equipment to predict potential breakdowns, devices to interact with customers rather than them waiting on engineers and robots in warehouse environments to reduce human error.
Ko Hoepman, VP commercial portfolio and technology development, demonstrated Tetra Pak’s expertise in developing high quality food via an exploration of current and future consumer products from around the world. Hoepman emphasized the need to provide the right products for processing, packaging and end of line solutions. Work is carried out across Tetra Pak’s customer innovation centres and product development centres with up to 15 customer brain storms per month and focused on a number of different food applications. Product developments currently under the spotlight include an ambient yogurt with a four to six month shelf life, an oat based drink and a cream cheese product.
Anders Lindgren, VP Tetra Recart, Tetra Pak’s next generation packaging for canned food, suggested the can – currently 150bn are sold worldwide per year – is dead. The Recart alternative offers numerous consumer, retailer and environmental benefits – it is 65% lighter than tin and offers a 40% space saving versus round packaging. The paperboard cartons produce up to 78% less CO2 equivalents than other formats and the Tetra Recart packages are widely recyclable.
In Denmark, the leading grocery retailer Coop has recently announced it is phasing out the sale of cans in favour of cardboard and paper alternatives. Amazon Prime in the US is already using Tetra Recart for its own brand products and the format has been adopted by the recipe kit service HelloFresh, Lindgren reports. Major food producers are starting to recognize that the can is going and it will be a major industry transformation, he said.
Secure sustainable business
Mario Abreu, VP sustainability, revealed how sustainability drives good business over time and how to achieve it all along the value chain. Tetra Pak has highlighted four areas for collaboration on sustainability: food availability and security, responsible sourcing, circularity and recycling plus environmental impact. On food availability and security, Tetra Pak works with partners to ensure food is safe and accessible for people around the world and supports a school feeding programme to help combat malnourishment. Responsible sourcing is gaining momentum, the company said. It reports that 43% of customers state that environmentally sound packaging can drive brand preference compared to 39% in 2015. Further, 81% of customers say they look for environmental logos on pack. Tetra Pak was the first to market with the FSC logo in 2007 and has gone on to sell 420bn packs since then. In terms of circularity and recycling, Tetra Pak cartons are fully recyclable – the paperboard, which accounts for 75% of the carton, is recycled into paper products; while the remaining PolyAl (polyethylene and aluminium) can be recycled into building boards and roof tiles.
On environmental impact, Tetra Pak aims to use 100% renewable electricity by 2030 and is half way to achieving that goal. It has also introduced an online Carton CO2 calculator to help customers monitor their carbon footprint.
In terms of its own products, the Tetra Rex is the only fully renewable packaging on the market. Designed for chilled products, it is made entirely from plant-based materials and has a 35% lower climate impact than standard packs. The Tetra Brik Aseptic Edge with bio-based LightCap has a 23% lower climate impact; while the Recart has an 80% lower impact.
Looking to the future, Tetra Pak said it planned to use recycled plastics in packaging once they have proven to be safe.