Swiss food packaging solutions giant Tetra Pak International is to invest INR5bn (US$101 million) in the construction of a second processing plant in India.
Burgeoning demand for packaged dairy products and beverages, on the back of booming economic growth and middle class expansion, has placed a strain on Tetra Pak's existing Pune facility, and the new plant - in Maharashtra - will more than triple current capacity.
Tetra Pak's Pune facility produces 1.8bn standard 1-litre packages annually, across the Tetra Brik, Tetra Classic Aseptic and Tetra Fino Aseptic ranges.
The plant caters to India's leading dairy and beverage companies - common uses of Tetra Pak technologies because of the advantages they offer in terms of storage hygiene and longevity - including Amul, Parle, PepsiCo and The Coca-Cola Company.
With demand from these clients rising, as they look to cater to greater beverage industry diversification, such as a growing interest in bottled waters and fruit juices for example, Tetra Pak has struggled to keep pace.
This has been exacerbated by growing demand from smaller industry players, who are increasingly following the trends of their larger counterparts, in terms of product innovation, in a bid to keep pace.
The Pune plant also caters to buyers in South Asia and the Middle East, with an estimated 40% of output exported.
Tetra Pak recently took steps to better cater for this region when it invested EUR90mn ($117US.8mn) in a new facility in Pakistan.
The new Maharashtra plant will further support export growth, with dairy packaging materials demand rapidly rising throughout the Middle East and with demand for non-traditional soft drink packaging options increasing elsewhere in South Asia.
If capacity growth is an immediate priority for Tetra Pak in India, Business Monitor Internationl would expect material and processing innovation to be an important medium-term goal for the company.
As more and more Indian beverage and dairy manufacturers adopt the best practice packaging processes employed by the likes of Tetra Pak, innovative differentiation will become harder and harder to come by for the likes of PepsiCo and The Coca-Cola Company.
Although such companies will of course retain the enormous advantage of competitive pricing and global branding, Tetra Pak could play an important role in helping such producers to cost effectively remain at the front of the pack in terms of innovative and aspirational product packaging.
An Eye On Innovation
In other Tetra Pak news, the Swiss-headquartered firm has invested EUR15mn ($19US.6mn) in its research and development (R&D), test and assembly factory in Modena.
The Italian plant was established in 1979, but Tetra Pak's investment in the unit has accelerated in recent years (EUR25mn ($32US.7mn) was committed between 2002 and 2007), as R&D has risen to the forefront of the company's agenda.
A primary focus of this latest investment in Modena is the development of materials and products that could reduce costs for Tetra Pak customers.
This is particularly relevant in light of the pressure that manufacturers are under from soaring input costs, particularly in relation to the production of energy intensive packaging materials.
Source: Packagingdigest.com