Healthy expansion at Ecolean – investing half a billion in expanding capacity

Company News - Monday, June 16, 2014

Ecolean has successfully established its packaging solutions in Asia and Russia down the years, although the markets in the west have been a tougher proposition. A number of breakthroughs are now under way in these markets through brand owners and dairies, in other words there’s every reason to call out “Finally!” The trend is now so strong that they are investing around half a billion Swedish kronor to expand capacity in Sweden and China. We met Peter L Nilsson, CEO of the company, for a situation update.

Text and photo: Bo Wallteg, nord emballage.

Ecolean CEO Peter L Nilsson in front of the Helsingborg plant in Sweden.

Ecolean’s smart packaging and system solutions for the dairy and beverage industry currently have a strong foothold in Asia and Russia. So far, this has been the foundation of the company’s rapid growth, reaching levels of forty to fifty per cent in recent years. It is primarily the Chinese market where growth is strong, in particular in 200 ml and 250 ml portion packs, which are filled with product in the aseptic EL4 machine. One of the major, national dairy giants, Bright, will soon be commissioning machines number three and four. They have already had a number of machines for the chilled segment for some time. Another major, but more regional player is the Hua Hua Niu dairy, which has fourteen lines for chilled products plus one aseptic line.

“They’ve stated clearly that they want to use our packaging solutions to position themselves, and things are going amazingly well for them,” observes Peter L Nilsson.

In recent years Ecolean has been working hard to broaden its presence in Asia on a purely geographical level, one good example being Pakistan, one of the world’s biggest dairy markets.

“We now have four aseptic lines there with Engro Foods and their brand Olpers, and they’re now going to broaden their use of our technology by introducing new products. We’re now also seeing geographical expansion into new markets in Asia.”

Full speed ahead in Europe

In other words, growth in Asia is nothing to grumble about, and now things are really starting to pick up in the European market too. About one year ago, Orangina Schweppes started to use a portion pack for their Orangina Petit P´tit Oasis fruit juice, which is aimed primarily at younger people and is available in five flavours.

“They have two aseptic lines in France and have achieved good results in the market, which naturally has a knock-on effect. This means that we now have a number of installations under way in Europe for similar products, and by the summer we’ll have doubled our presence in Europe when it comes to beverages. This will be achieved via two new customers, but it’s a bit too early to go into any more detail just now. There’ll be another two or three new businesses opening after the summer.”

Introducing a new packaging solution to a world that is used to traditional solutions is obviously not easy, but if you can just gain a foothold there can be a good knock-on effect, which is clearly the case here. Ecolean has also had an independent research agency in France test how consumers perceive their packaging solutions. They tested both regular users and totally new ones.

“It involved everything from handling and the general perception on the shop shelf to disposal, and the results were actually overwhelmingly good.”

European dairy industry

The dairy industry is also generating positive vibrations in Europe. There has long been a partnership with Danone in Russia on chilled products, and this has now spread to Danone in Portugal, who are packaging drinking yoghurt in one-litre containers. In the past they had used six small bottles.

One previously unexploited area of the world is South America, where they are now gaining a foothold.

“The market leader in UHT milk in Colombia, Alqueria Dairy will be the first in the world to use our resealable packaging, and during the year we also expect to see launches in more countries in that region.”

It is evident that things are moving at a high tempo for Ecolean right now, and they are quickly spreading all over the world.

“We hope that Ecolean’s packaging systems will be found in all parts of the world in the not too distant future,” says Peter L Nilsson. “Not in leading positions of course, not yet. That’s not our strategy either. We want to achieve a critical mass from which to grow.”

Investing half a billion

In other words, the winds of success are blowing for Ecolean, and Peter L Nilsson says that he will soon have much more to tell. At the same time, success causes challenges in the form of capacity. Now that things are more or less booming, more production capacity and employees are needed.

“To cope with this, we’ve just launched a massive investment programme worth around half a billion Swedish kronor,” says Peter L Nilsson. “Investments have been initiated both at the production facility in TEDA near Beijing and here in Helsingborg. In China we must have production capacity for the aseptic packaging material; at the moment everything’s manufactured in Helsingborg. We’ve already built warehouses and manufacturing areas and bought printing presses. We’ll be starting production there towards the end of the summer.”

They manufacture all their film in Helsingborg, including transparent film, and this will continue to be the case. Printing and conversion, however, take place in China. When nord emballage visits the factory in Helsingborg, they have just started excavations for the expansion of the production facilities. The surface area will be increased to ten thousand square metres, and the capacity for white film will be trebled.

“We should have everything in place sometime in the late spring or early summer of 2015,” confirms Peter L Nilsson.

Nord emballage is a well renowned Swedish magazine specialising in the packaging industry. This article was published in issue #3 2014. Translation by Semantix.