The liquid packaging industry is developing well, but hidden risks remain

In today's food industry, the liquid food sector - beverages, pure milk and the like - is developing extremely rapidly, and the profitability of this sector is very high. As a result, it is attracting more and more companies to enter and take notice, and the accompanying liquid food

packaging has naturally become a huge piece of cheese in the eyes of packaging companies. So while this market has bright prospects and high profit margins, what risks or hidden pitfalls actually exist?

First, the equipment entry threshold is high. At this stage, the main production equipment of many large domestic food companies comes from multinationals such as Tetra Pak and SIG, and these multinational giants have very prominent advantages in product quality, technical strength, financial strength, after-sales service and market operations. Many domestic food companies are typically dependent on these foreign suppliers for equipment procurement, spare parts supply and maintenance services. To ensure normal and stable production and reduce operating risks, at this stage they rarely change their existing equipment and packaging material suppliers easily.

Second, insufficient material supply. At present, the production of paper-based composite materials for liquid food packaging has not yet formed a complete industrial chain in China. For example, although some domestic companies are attempting to produce the paper and heat-seal strips (or sealing strips) used to make Tetra Brik, the quality still has major defects. Paper and heat-seal strips (or sealing strips) are raw materials and supporting materials that Tetra Pak focuses on locking down, and domestic printing companies find it very difficult to buy paper from the paper suppliers that supply Tetra Pak. The creasing and perforating machine is indispensable equipment for producing Tetra Brik, and the creasing and perforating components produced by domestic machinery manufacturers are not yet very mature.

Third, multiple technical constraints. The technical constraints are mainly reflected in two aspects: first, in carton manufacturing technology. The cartons used for liquid food have very high requirements in printing, lamination and forming, as well as in paper, ink and adhesive, requiring excellent and specialized equipment as well as professional technical strength and production experience. At present, very few domestic companies can reach this level.

Fourth, heavy pressure from the price ratio. Faced with rising manufacturing costs and a wave of price cuts in the market, the cost of Tetra Pak cartons, Combibloc cartons and gable-top cartons is clearly much higher than that of plastic bottles, plastic bags and glass bottles. According to industry insiders, the average profit margin of the dairy industry is currently only about 10%, and for liquid milk, because of the costs of advertising, packaging materials and sales, the profit margin is even lower, at only about 3% to 5%. Among these, pure milk, which has the largest sales volume, has the lowest profit, and quite a few dairy companies make no money at all on white milk.

For printing companies, it is necessary to continuously reduce packaging costs, improve service levels and the freshness-preservation and packaging technologies for dairy products and beverages, help food companies extend shelf life, break through the limits of the freshness-preservation radius and form a unified market. In addition, companies must also consider various changing factors such as the impact of national macroeconomic policies, fluctuations in raw material prices, rising logistics costs, shortages of technical personnel, and mergers and acquisitions in the dairy industry.

This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-372811.html. All rights belong to the original author; this article is for industry exchange and learning only.