Toward sustainable management
Food packaging giant Tetra Pak offers model for eco-friendly business
By Jung Sung-ki
Global investments in green technologies and renewable materials are growing slowly but surely with the concept of green growth emerging worldwide from growing awareness of environmental issues and pressure on natural resources.
Governments and enterprises around the world cannot avoid this new paradigm and are actively engaged in their sustainable environmental efforts. So are the government of Korea and local companies, who seek to form a “green growth alliance” with others countries or international firms to become role models for the so-called green management.
In this context Tetra Pak, the 60-year-old Swedish multinational food processing and packaging solutions company, is a case in point for Koreans’ pursuit of green growth initiatives. The Lee Myung-bak administration adopted a “low carbon, green growth” vision in 2008 to increase energy self-sufficiency and raise the use of renewable energy to 30 percent over the next four decades.
In a recent interview with Business Focus, against that backdrop, Tetra Pak Korea CEO John Stromblad stressed his firm’s long-term commitment to collaborating with Koreans in terms of managing green growth.
“Collaboration with the Korean government in the sector of environment and sharing knowledge about our sustainable management is happening to a large extent now, and we’re ready to increase such cooperation further,” said Stromblad.
He referred to his company’s acquisition of the Carbon Footprint Labeling Certification in April from the Korean Environmental Industry & Technology Institute, affiliated with the Ministry of Environment, as a good example of Tetra Pak’s successful green growth initiatives in Korea. Tetra Pak was the first company to be given the certification measuring the CO2 emission levels of the Korean food and beverage packaging industry.
The company has reduced its absolute emissions by 12.9 percent over the last five years, exceeding its original target of 10 percent, while increasing production by over 23 percent.
The company had already received a carbon labeling certification in 2008 for six “vegemil” soy milk products manufactured by Dr. Chung’s Food, the main customer of Tetra Pak Korea, as a result of its joint sustainable growth efforts with local partners.
“Our founder Ruben (Rausing) said that package should save more than it costs. That was the basic foundation of creating the company,” said Stromblad, who took office in 2007. “We’re talking about the costs in terms of dollars or won but it’s also a question of the cost to society, such as the impact on environment.”
“The realm of the environment is so vast, and different strategies need to be catered for the specific environmental pillars,” the CEO added. “Tetra Pak has announced ambitious targets to reinforce the company’s commitment to deliver solutions that achieve sustainable, profitable growth for both Tetra Pak and its customers.”
Under a 10-year plan, Tetra Pak aims to cap carbon emissions at 2010 levels by the end of 2020 while continuing to grow, he said. This target not only includes Tetra Pak’s operations, but those across the entire value chain, meaning that it will ask suppliers to meet agreed-upon targets and support customers’ activities to reduce their own emissions, he added.
The company is also committed to helping double the global recycling rate of its beverage cartons to provide valuable raw materials for a host of new products by 2020.
With an estimated 5-percent compound annual growth rate, achieving this goal would see about 100 billion used cartons recycled in 2020 alone.
In addition, the company aspires to develop packaging materials based on 100-percent renewable materials, though its cartons are almost based on paperboard from a renewable resource, such as wood fiber, according to Stromblad.
“The essence of our Strategy 2020 is growth in all markets, accelerating value-driven innovation, driving environmental excellence and strengthening operational performance,” the representative noted.
The strategy was devised based on various changes over the next 10 years, such as a rapid demographic change, emerging BRIC (Brazil, Russia, India and China) countries, natural resources under threat, stricter legislation and taxes related to protecting the environment, and technology developments going green, he said.
Stromblad attributed his firm’s achievements in Korea to a close partnership with local firms.
“The key reason for our success in Korea is the close collaboration with our customers. That’s the way we have operated globally,” he said. “We try to listen very carefully to their needs, to their analysis of market, and that’s why we have been successful here.”
Tetra Pak products were first sold in Korea in 1972, and Tetra Pak Korea was established in 1983. Since then, it counts some of the biggest Korean milk and beverage companies as its customers, including Maeil Dairy, Lotte Chilsung Beverages, Namyang Dairy, Seoul Dairy and Korean Yakult.
The firm supplies hundreds of different types of carton packaging products, including Tetra Brick, Tetra Prima, Tetra Top, Tetra Wedge and Tetra Gemina.
Last year, 1.1 billion Tetra Pak packages were sold in Korea, according to the CEO. He declined to comment on the figures on the company’s sales. Tetra Pak sells its products in about 170 countries worldwide and has 41 local branch offices. Its net sales last year reached nearly 10 billion euro.
The total market size of Korea’s stilled liquid food is 8.3 billion liters, and the market for liquid milk products, juice, coffee and soy drinks in which Tetra Pak Korea is involved is 3.6 billion liters, he explained.
Most of all, Tetra Pak is the pioneer of aseptic technology, which enables perishable foods like milk, to be processed and packaged under sterile conditions. This allows products to be kept at room temperature without the need for preservatives, maintaining the products’ full health benefits. This technology also enables products to be distributed and displayed without the need for refrigeration.
The company also develops its own state-of-the-art processing solutions as well as designing and servicing complete plants.
There are many companies able to conduct food processing with aseptic technology developed in the 1960s, but Tetra Pak is still at the forefront when it comes to the performance of relevant equipment given how economical and environmentally friendly these systems are.
“As for the packaging side, he said the biggest challenge is the growth of the PET bottle market,” he noted.
Stromblad described the Korean market as not only efficient and competitive but also demanding and sophisticated.
“Korea is a kind of unique market in many aspects, but also a market that is embracing global attitudes and structures,” he said. “Therefore a strong local team with an astute global understanding is critical to balance the best of both worlds.”
Under the corporate motto “Protect what’s good,” Tetra Pak Korea in March launched a CSR program, the Little Champ Campaign.
The campaign aims to encourage children to nurture healthy eating habits that are beneficial to their growth. To deliver the message, the company is operating fitness and cooking classes under professional guidance every month.
The program targets children aged 4-10 still in the growth development stage, where the consumption of milk and soy milk is vital.
Over the last four months, Tetra Pak Korea has met over 5,000 kids and parents through on-site events at kindergartens and partnership events.