Tetra Pak eyes growth in packaged milk

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Brand building, economic growth, retail expansion hold the key

THE TETRA PAK packaging material manufacturing facility at Takwe, near Pune. - R. Balaji
THE TETRA PAK packaging material manufacturing facility at Takwe, near Pune. - R. Balaji

R. Balaji

Pune, Sept. 13

Tetra Pak India, the subsidiary of the Sweden-based Tetra Pak, has set its focus on the dairy industry to promote Tetra Pak packages, the multilayer packaging material of polyethylene, aluminium and board.

After having established itself in the fruits and beverages segment, the company believes the next market for its packaging material is branded milk.

India produces about 100 billion litres of milk a year, of which 13 billion litres are sold in packed form - mostly in pouches.

Tetra Pak packages account for about a tenth of the portion sold in packaged form.

The company sees this as an area of growth. It has launched a generic ad campaign promoting milk in Tetra Pak packages because, as Mr Ashutosh Manohar, Processing Director, Tetra Pak India Pvt Ltd, put it, "if they fail we fail."

Speaking to a group of visiting journalists on a tour organised by the company to publicise the benefits of Tetra Pak technology, officials said that if the quantity of milk produced poses an opportunity, the style and consumption patterns in the Indian market pose a challenge.

According to representatives, milk in Tetra Pak packages is clean milk - aseptically packed, sterile - ready for consumption direct from the carton, as is the practice in many developed countries.

Milk in pouches has to be boiled before it can be consumed. But in India milk is consumed hot, in tea or coffee, and boiling it is no issue - it is incidental to the brewing process.

So, Tetra Pak is pushing its strengths - clean milk and long shelf life. Milk in Tetra Pak packages can last several months unopened at room temperature.

Are they reason enough for people to shift from chilled milk in pouches delivered every morning to the doorstep to milk in Tetra Pak packages picked from supermarket shelves?

Yes, according to Mr Jeff Gratton, Technical Director, Tetra Pak India. Lifestyles and food habits are changing. People are willing to pay more for quality. Organised retailing is growing.

Also, there is the practical aspect. Transporting a product in a Tetra Pak package means that 99 per cent of the truckload is filled with the product - juice or milk.

But in a bottle, only 60 per cent of the load is filled with product, with the rest accounted for by packaging material and empty space.

Mr Manohar also said that milk packaging has evolved with the times. Milk was sold in bottles in the early 70s; in the 80s the pouch was introduced and in 2001, aseptic packaging.

Tetra Pak in India started small in 1998 and has grown to about 150 million packages in 2006. By 2010 it hopes to more than double this quantity.

The drivers of this change are the increase in milk production, increased urbanisation, greater affluence and people looking for value-added products.

Tetra Pak has made a success of it in China - it now sells 10 billion litres milk in packaged form against 1.6 billion in 1995.

In Pakistan it has grown to 615 million litres from 153 million in the last few years and in Turkey the trend is similar.

The common thread in all these cases is brand building, economic growth and expansion of modern retail stores.

But for now, Tetra Pak's users are mostly the dairy co-operatives and except for Nestle, the private sector dairy is yet to evince interest.

Mr Manohar is confident it will happen. After all the co-operatives were the early movers in the dairy industry.

(This article was published in the Business Line print edition dated September 14, 2006)
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