Predicting Future Directions

One company that has had success in Asia is SIG Combibloc. In 2005, the company installed 14 new fi lling lines in Inner Mongolia—each with an output of 12,000 asepticallyfi lled carton packs per hour—for China dairy giant Yili, at its Jin Chuan Plant. The production focus was on pure milk, milk products and yoghurt drinks, fi lled in combiblocSmall (200 milliliter and 250 milliliter). With fi lling machines for family-size and singleserve products in six of its production plants, Yili also has seven highspeedfilling machines.

The next year, competitor Mengniu Dairy also invested in seven of SIG Combibloc high-speed fi lling machines for its newly-constructed production facility in Baoji (Shaanxi Province). Each one fi lls as many as 12,000 cartons per hour, primarily with UHT milk and yoghurt drinks. Mengniu has now decided to further commission twelve highspeed fi lling machines from SIG Combibloc for its new production plant at the groups’ headquarters in Hohhot, Inner Mongolia. This April, SIG Combibloc helped Mengniu to become the fi rst company to launch UHT milk containing pieces of real fruit in aseptic carton packs. The products, in Strawberry, Peach, Coconut and Aloe Vera varieties, are offered in combiblocMini 250 milliliter with a drinking straw.

This year also signifi ed an important year for SIG Combibloc as a whole. At the time of the press deadline, Rank Group Holdings had nominated billionaire Graeme Hart and current SIG CEO Dieter Rademacher to the newly-proposed SIG board of directors. The announcement, which is to be approved at the May 2007 AGM, ended over half a year of takeover talks between SIG, CVC/Ferd and late entry Rank Group. Recently Luc Viardot, Klaus Andresen and Matthias Enste left discussions of the buyout behind and spoke with Asia Food Journal about the future directions of fi lling, as well as the important distinction between effi ciency and output. The discussion took place in April 2007.

Asia Food Journal: When it comes to fi lling, how are processors falling short? Andresen: Processors forget that many components coexist within the ecosystem of a fi lling line. The fi lling machine is not a standalone system—it is only one part of a larger entity. The UHT, the utilities, the straw applicators, buffers, and tray packers—all of these technologies are interdependent. In order for the total line to operate at optimal levels, they all need to work in concert. So when beverage manufacturers consider the specs of a fi lling machine as a separate entity, they have failed to understand how it is integrated within existing components. A fi lling machine is capable of producing 20,000 packs per hour, but how much of that is waste? How long can you run at those speeds without the downstream jamming? How often can you run at those speeds on the limited capacity of the upstream or utilities?

Viardot: In the past, the preoccupation with fi lling machines was about sheer speed; but today there is increased focus and importance placed on output. The difference between the two is more than mere semantics. Speed does not describe the effi ciency of the machine—the factor that counts the most. In contrast, output accounts for wastage rates. So when we look at the scenario in this light, it becomes clear that higher output is good for a beverage manufacturer. This fi gure indicates total line effi ciency, as well as the total cost of ownership.

Andresen: I believe that manufacturers are becoming more sophisticated in their calculations. They are only just beginning to understand that in order to maintain profi tability they need to run a highly-effi cient facility. That means not just higher output, but lower wastes and more stable systems overall.

Determining the total cost of ownership is becoming increasingly popular. This is done by factoring in the cost of operations—from manpower, to utilities, to cost of the packaging material itself. It is easier to compare apples to apples. This overall picture allows manufacturers and suppliers alike to see the blind spots that have been overlooked in the past. For example, one optimization that we have been able to provide customers has been improved fi lling-line layout. By maximizing space and manpower, we can see signifi cant cost savings as well as improved performance.

Asia Food Journal: What are your customers saying? Enste: They are very much caught in a bind where they are being forced to act as both operational champions and brand producers. They really have to deliver on both accounts. The driving force of the market is ‘value for money’, whether you’re at the high end or at the lower end of the pricing scale. You must deliver value-added products that can be recognized and experienced by the fi nal consumers if you want to charge more than your competition. Value-added can be defi ned in terms of quality, but image also plays a big role. Recently, we conducted our own U&A study in Thailand that confi rmed that ‘value for money’ was consistently ranked as the top reason for consumers to purchase a product. This was cited as important for both ‘operational champion’ products, as well as premium brands.

Asia Food Journal: Tell us where we’re headed. Viardot: In the past, there was always a struggle to strike a balance between speed, efficiency, and output; often at the expense of reliability. Today we are at a crossroads in applied technologies, where in the near future it will become possible to make what relates to a quantum leap in output. We will no longer be talking about an additional 4,000 or 6,000 packs per hour, but doubling the output of a 3rd generation fi ller without having a detrimental impact on wastage rates or line efficiency.

Though there are still obstacles to overcome in realizing this ‘Next Generation’ of fi lling machines, the technologies already exist today for us to see signifi cant increases to output. By increasing the number of tracks on our multi-track fi lling system, for instance, or simply by using new servo motors, we can improve reliability and output.

Asia Food Journal: Anything else to add? Enste: Here’s what beverage manufacturers need to remember: No matter how you dissect your consumer demographic, your product and brand must be viewed as offering ‘value for money’, which is where we—as packaging suppliers—enter into the equation. We play a major role in enabling beverage manufacturers to stay competitive and profi table. By keeping their total cost of ownership competitive, we can help manufacturers to meet that bottom line. And increasingly we feel the pressure from our customers to push the machines further—to run them for longer production cycles, to get more output, all while reducing waste rates.

No other single factor has infl uenced the way we design our machines more than the manufacturers’ need to achieve greater output while maintaining the advantages of the aseptic carton system. We no longer look just at the price of packaging material or the speed of a fi ller. Beverage manufacturers are consumer-centric and marketing savvy. They look at the total line effi ciency and total cost of ownership. In the end, the bottom line is that they have to offer value to the consumer. As packaging suppliers, we want and need to be an important part of that value chain.

Viardot: There needs to be a clear indication from the markets that justifi es the investment and R&D costs. We are not in the business of innovation for the sake of innovation. It is possible to imagine a high speed fi lling machine that produces 30,000 packs an hour, but would it be economical or effi cient to produce at those speeds? These are questions we are tackling as we look to the future. They are the fundamental questions that need to be addressed before we can begin to even postulate what the next generation of fi lling machines will be. We will move in the direction that the market trends indicate and we will try to stay ahead of those needs. What we will not do is develop a solution for a non-existent problem.

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