Chinese dairy demand drives Tetra Pak expansion

The group announced yesterday that it has completed the third phase of an ongoing investment strategy in the country, which since 2004 has seen annual production capacity for its packaging rise from 8bn units. The group will further extend this focus next year with the inauguration of a new €60m packaging plant in Hohhot, Inner Mongolia, increasing total annual output capacity by a further 8bn packages. Upon completion of the construction, the group said it would, through its four production plants in the country, be able to serve processors throughout Southern, Eastern, Nothern and North Eastern China. Besides investing to meet rising dairy demand in the country, group managing director Hudson Lee said that processors and packagers have the responsibility to ensure that the growth remained sustainable by encouraging innovation. The group said therefore, that it was working with both the Chinese government and national industry associations to push growth through the country's entire dairy value chain. This had led to collaboration on programmes including the Sino-Swedish Dairy Training Centre, China Dairy Star Executive Development Programme and the Green Leaves Project, the company said. In boosting productivity and output in the country's dairy production, Tetra Pak claims that the advancements made to its Beijing converting plant will allow the group to further exploit demand amongst processors for its packaging. Tetra Pak's claims come as milk and dairy producers in China face calls for greater innovation in how they operate. Demand for dairy products in China has more than doubled in the past five years, according to Rabobank. Though domestic milk production is growing rapidly to reflect this change, China is only able to produce 24 million tonnes a year (liquid milk equivalents), the group added. While production of raw milk has been growing at a faster rate than demand recently, consumption is still expected to increase to 30kg in 2015 from the current average of 20kg per capita. The market is also becoming more sophisticated with consumers moving from milk powder to UHT milk and Chinese consumers becoming more brand conscious to ensure quality and food safety, according to the bank.