Europe's packaging giants feast on China

By Dominique Patton

- Last updated on GMT

Related tags Tetra pak Milk China

European makers of dairy and beverage packaging are planning
further expansion in China as they continue to sign some of their
biggest orders in this booming food market.

Swiss group SIG said earlier this month that it will expand its production capacity in China to meet rising demand for aseptic cartons.

"Investments worth €55-60 million over the period of 2006 and 2009 have been approved for the purpose,"​ said the firm, which plans to install a local extrusion line in 2008. Coated packaging materials have previously been supplied by SIG's Thailand facility and then finish-processed in its plant in Suzhou, near Shanghai, which opened in 2004.

It also plans to add capacity for printing and finishing under the additional investment.

SIG's growth in China is being driven largely by demand from the rapidly growing domestic dairy industry. One of the top producers, Mengniu, bought seven high-speed filling machines from SIG at the beginning of the year and has now committed to a further 12 for a new model production plant being built at its headquarters in Hohhot, Inner Mongolia.

It has also supplied more than 30 lines to the other major dairy, Yili, helping net sales in the first half of 2006 to increase by 120 per cent over the previous year's same figures.

In an interview earlier this year, Jan Schuermann, head of marketing and business development for SIG's China operations, told​ that Chinese dairies are creating 'state-of-the-art' plants.

"Traditionally, in more developed markets, you start with a certain number of lines and add more as business expands. But in China, the sheer size of growth is driving this kind of large investment in one go,"​ he added.

SIG rival Tetra Pak also has plans to expand in China. The company's executive vice president Nils Bjorkman told those attending the IDF dairy conference in Shanghai last weekend that the firm plans to open another two factories in China in the next few years to boost production capacity in one of its largest markets.

The Swedish asecptic carton producer said that it aims to open five new plants in the world over the next three to four years, two of which will be built in China if growth in the country's dairy industry stays strong, reported the Shanghai Daily.

"We've settled seven major strategic points for Tetra Pak's global market, and China is one of them,"​ Bjorkman told the paper.

Tetra Pak said in August that it would spend €30 million on an expansion at its Beijing plant. China's dairy industry has been expanding by 27 per cent each month for the past half year, according to the International Dairy Federation. Around 60 per cent of its 60 per cent of all milk sold is UHT milk packaged in aseptic cartons like those made by Tetra Pak and SIG.

However suppliers to other segments of the food and beverage industry are also reporting major contracts. Tetra Pak sister firm Sidel said this week that it is installing its largest ever order, 20 complete PET bottling lines, at Chinese food giant Ting Hsin.

The Chinese company, which is the country's leading instant noodle maker and a recent entrant to the beverage sector, is aiming to capture a leading share of the country's bottled water market, which has an annual growth rate of over 11 per cent.

Scheduled to go into production in December, the Combi 20 machines ordered by Ting Hsin will package 0.6 litre bottles of mineral water with a combined output of 36,000 bottles per hour (bph).

The order also included a hot filling line with an output of 9,100bph, comprised of a Simonazzi filler and Gebo conveyor, as well as three SBO Universal 20 HR blowing machines. These will be used to package tea - a new segment for Ting Hsin - into square 0.5 litre PET bottles at a rate of 26,000bph.

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