Tetra Pak ramps up capacity in China

The company announced it would spend €30 million on a second laminator at the Beijing plant, which it opened in 2004.

The firm will be able to produce 16 billion packages a year when the new equipment starts production in the first quarter of 2007.

The Swedish firm has now invested CNY2 billion in China since it arrived in 1972, and also runs factories in Shanghai, Kunshan in Jiangsu Province and Foshan, Guangdong Province.

Its early entry to the market coincided with the development of China's dairy industry and it has benefited from the explosion in milk consumption, controlling a majority share of the country's aseptic beverage cartons market.

Dennis Jonsson, Tetra Pak's chief executive, said that although an annual average growth rate of 26 per cent in the dairy industry in recent years would be hard to maintain, "we believe that it will stabilize at an average rate of around 15 per cent for the next five years" .

He added that the firm would not hesitate "to take quick initiatives to put additional investments for capacity expansion where there is a customer need" in order to keep the firm ahead of competition.

The firm has increasing competition from both international players like SIG Combibloc, which opened its first plant in China at the end of 2004, and domestic companies.

It is also looking to grow its share in other categories like beverages where plastic bottles still prove more popular.

Tetra Pak's Beijing plant focuses on the Tetra Brik and Tetra Fino cartons.

Tetra Fino, a pillow-shaped pack, has its biggest market in China where consumers are cost-sensitive and one-child families buy small quantities of milk for their children rather than the larger family sizes typical in Europe.

China accounts for more than 10 per cent of Tetra Pak's global business.