Published in Jan-Feb 2019
Tahir Hafeez, VP Supply Chain Operations (Greater Middle East & Africa), Tetra Pak, about his company’s role in improving the packaged milk supply chain in Pakistan.
SYED WAJEEH-UL-HASSAN NAQVI: What made Tetra Pak enter the Pakistan market?
TAHIR HAFEEZ: Tetra Pak launched in Pakistan in 1983 as a joint venture between Tetra Pak International and the Packages Group. As Tetra Pak started to expand, we targeted countries where the availability and consumption of milk were high and what brought us to Pakistan was the presence of a huge and untapped potential for packaged milk. Today, within the food packaging industry in Pakistan, we are the market leaders. Ecolean also has a strong presence and there is one local player, the Popular Group of Industries. We only deal in liquid food packaging in Pakistan; major clients include Engro, Haleeb, Nestlé, Pakola, Shakarganj and Shezan.
SWHN: What differentiates Tetra Pak from their competitors?
TH: We are a complete system supplier, from processing to packaging and delivery, we provide an end-to-end solution; we call it the ‘cow-to-consumer’ system. System costs are a big issue in this industry so there is an advantage in being an end-to-end solutions provider. Our customers prefer Tetra Pak over other packaging alternatives which, although may be cheaper, have higher conversion costs in terms of the manufacturing and production expenses incurred when converting the raw material into the final product. Our customers also do not have to deal with wastage or spoilage due to low-quality or outdated packaging material. So, all in all, we are competitive when it comes to overall pricing expenses. Furthermore, no other company offers the sizes, shapes and functionality that we do. It is about value and innovation and not only about what the product costs. Most importantly, we have a local presence and we provide 24/7 service to our customers. Added to which we have a wealth of knowledge available from our international team and should anything go wrong, we can draw upon resources from our facilities throughout the world.
The new food safety regulations introduced by the government require that tea whiteners specify on the packaging that their consumption is for tea alone. Companies are complying with this but it will take time for consumers to understand the difference.
SWHN: What are the opportunities and challenges of the milk packaging industry in Pakistan and how do they help or hinder the growth of your brand?
TH: Pakistan produces about 36 billion litres of milk every year and only five to seven percent of that production is packaged, therefore, approximately 90% is unpackaged. Milk production is concentrated in rural Punjab and rural Sindh, despite the fact that consumption is higher in cities; furthermore, there is a dearth of supply in the northern regions. Considering these factors, in a country where temperatures are high and a cold supply chain is not available, we are able to provide the optimum solution in terms of delivering milk from the producer to the consumer. In terms of challenges, consumer focus on quality is much higher compared to before and we have to meet those expectations. Furthermore, the duties on raw materials continue to increase while those on finished products are decreasing and this has made local production less viable compared to 10 years ago. People who have invested in setting up an industry in Pakistan now have to pay higher duties on the purchase of raw material and this is unfair and is harming the industry.
SWHN: What was the impact on Tetra Pak of the Supreme Court’s decision to ban certain packaged milk brands?
TH: There was a negative impact on the industry because the initial reports that were submitted to the Supreme Court by the three testing organisations did not corroborate each other. In spite of this, those reports were circulated in the media and misrepresented the industry. If you read the reports, UHT milk has been declared safe for consumption. Yes, some pasteurised milk brands were called into question, but we do not deal with pasteurised milk brands. The Punjab Food Authority (PFA) tests milk brands twice a year and as per the results published on their website, UHT brands are on the list of approved brands that are deemed safe for consumption according to food safety standards. In light of this, it is clear that the initial reports were unsubstantiated, but the media hype had an extremely negative impact on the industry. Government food safety bodies lack information about packaged milk. Tea whiteners are used all over the world; the difference between them and packaged milk is that in tea whiteners the animal fat is replaced with vegetable fat to add texture and make the tea creamier and more affordable. However, tea whiteners should not be marketed as regular milk. The new food safety regulations introduced by the government require that tea whiteners specify on the packaging that their consumption is for tea alone. Companies are complying with this but it will take time for consumers to understand the difference. However, scrutiny is good for the industry because brands will be more careful in future. For our part, we are trying to engage with the media to spread awareness about the safety of packaged milk.
The environmental footprint of Tetra Pak is far better compared to the global packaging industry. Packaging material such as bottles take up a lot of space. Our packaging is shipped in rolls that are compact and allow for more volume in a small space. Our packaging to product weight ratio is very efficient. Our factories are given carbon footprint targets in terms of energy and product efficiency.
SWHN: There is growing concern about the environmental hazards posed by discarded food packaging. What is Tetra Pak doing in this regard?
TH: The environmental footprint of Tetra Pak is far better compared to the global packaging industry. Packaging material such as bottles take up a lot of space. Our packaging is shipped in rolls that are compact and allow for more volume in a small space. Our packaging to product weight ratio is very efficient. Our factories are given carbon footprint targets in terms of energy and product efficiency. Our company stands for sustainability and renewability. The material we use is FSC (Forest Stewardship Council) certified, which means that the number of trees used to make paper for our products are sourced from managed forests and that the same number of trees which are cut down will be planted to ensure there is no decline in their number. We have also set up a recycling initiative in partnership with a local recycler. The environment is one of the top priorities of the company.
SWHN: How important was the Japan Institute of Plant Maintenance Award to Tetra Pak Pakistan?
TH: Japan has been at the forefront of efforts aimed at improving the overall efficiency of industries and JIPM uses an award system to recognise factories around the world that achieve excellence. In Pakistan, we started working on their model in 1999 and this year, we were presented with their Advanced Special Total Productive Maintenance Award, which is their second biggest award. Achieving world-class manufacturing standards in our plant is an extremely significant development for us and for Pakistan. It is very important to Tetra Pak that we adhere to our values both within and outside the company. Our motto includes the words Rehbar-e-Taraqi-o-Kamal because it was always our intention to build a factory that was unparalleled in our field of operations. Our success is evident from the fact that of all the Tetra Pak plants in the world, Pakistan is number one when it comes to controlling wastage and in terms of efficiency and reliability.
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