Åkerlund & Rausing

"From the start, the company was already high-tech, even though it may be hard to believe considering its products - simple paper packaging. However, it is misleading to focus on the company’s end products to consumers. In reality, it is the technology to fill the packages which was and remains the great innovation - the continuous filling. The continuous filling, which also worked with aseptic technology and development of a paper material for these purposes, is what keeps the Tetra group still leading in the global packaging systems for liquid foods. That is where they make their largest profits. It was the road, the process, to a finished product that was important, and it was not easy to let machines fold and fill paper packages that had to be tightly sealed despite rough handling. At the same time, the contents of the packaging had to be completely sterile. It should also be remembered that when the management decided to continue working with Wallenberg’s little tetrahedron, there was no one who knew how it would be done. There was also no packaging material. Tetra Pak had to solve many problems and use previously untested cutting-edge technology, while many who stayed within Åkerlund & Rausing laughed behind their backs. At the same time, Tetra Pak’s people developed an industrial system that was so easy to handle and maintain that it was one of the few Western systems that could be directly applied in developing countries."

"Åkerlund backed down when faced with a done deal. However, the issue was not resolved with this. Åkerlund definitely wanted to get rid of his bond commitments totaling 700,000 kronor. And Ruben wanted to get rid of Erik Åkerlund’s option to avoid future problems. Therefore, a series of negotiations began that were only resolved in 1937 when the bank director Richard Julin, who was responsible for Åkerlund & Rausing’s credits at Enskilda Banken, stepped in as a mediator. The settlement consisted of the bank approving Åkerlund & Rausing’s loans of 700,000 kronor to remain, against publishing mortgages in the company. At the same time, the bank took over loans from Åkerlund to the company totaling 500,000 kronor on the condition that Ruben, Holger Crafoord, and Börje Svenby provided guarantees for the money. In addition, Ruben had a personal debt to Erik Åkerlund of 400,000 kronor for his share of the shares. This debt was also resolved through loans in the bank. Shares in the company were given as security. Against a commission of 50,000 kronor, Enskilda Banken had saved Ruben’s business."

"When development had progressed this far, Ruben decided that the milk packaging business should be placed in a separate company. He was well-prepared: as early as 1946, he had applied for the registration of Aktiebolaget Alicante to have on hand in case the tetrahedron became something. Now was the time, and in 1950, on Erik Torudd’s suggestion, the small 10,000-krona company Alicante changed its name to Tetra Pak. It was also decided that the company should be registered in 57 different countries—big plans were being made within the walls of Åkerlund & Rausing’s headquarters. But for now, there was no actual business in Tetra Pak. The development work was still being conducted within the framework of Åkerlund & Rausing. The shares that Ruben had so far been the sole owner of, were transferred after a couple of years to Ruben’s three sons, Gad, Hans, and Sven. They each received 25 percent. The remaining 25 percent went to the partner Holger Crafoord. The sons also took over Ruben’s share in Åkerlund & Rausing. The Rausing share was controlled through AB Vapor."

"When the problem of constructing a machine that could manufacture tetrahedrons came up, Harry Järund, now the work study manager at Åkerlund & Rausing, believed he had the solution. On January 3, 1945, he made a sketch that showed how the machine could work. Through a system of chain-driven clamping jaws, tetrahedrons could be continuously produced from a paper tube. Ruben liked the idea and assigned a group of technicians under the direction of the exiled engineer Dieter Kunckel from Germany to further develop it, despite many within the company questioning Kunckel’s competence for the task. He was a highly qualified engineer but not a mechanical engineer. His expertise was in a completely different area: before his exile, he had designed submarines for the German navy. But Ruben, who was incredibly stubborn once he had made up his mind, did not want to listen to the criticism of Kunckel. Instead, a location was rented at old Väster in Lund. Here, Kunckel and his men would develop Harry Järund’s basic idea."

"In countries like Great Britain, the USA, and Germany, milk was already being sold in paper packages. But common to all was that they were too expensive because they required a lot of material and costly manufacturing processes. Since they also had to be filled one by one, the filling process itself was also costly. Thus, Åkerlund & Rausing had to either find a cheaper material or another way to manufacture and fill the cartons."

"Engineer Harry Järund was hired at Åkerlund & Rausing in 1942. Ruben had spotted the talented young man during his work in the industrial commission. At that time, Harry Järund had converted the carpentry department at Jonsereds Fabriker to instead produce 7.5-centimeter shells. The production shift was so successful that Jonsered could, after a short time, sell the cheapest shells to the defense. Ruben, who was always on the lookout for competent men, was quick to notice the achievement. In the summer of 1942, he asked Harry Järund to come to Stockholm for lunch. After the lunch, Järund was employed at Åkerlund & Rausing."

"For Ruben and his company, the hygiene campaigns of the thirties offered a golden opportunity. As the population became more aware of hygiene, it also became easier for companies to sell pre-packaged goods. This meant that Åkerlund & Rausing’s market—the consumer goods industry—increasingly demanded packaging for their products."

"Meanwhile, Hans had to deal with his father, who was the working chairman of the board for both Tetra Pak and Åkerlund & Rausing. He had great respect for both him and Holger, but most of all for his very determined father. Hans did nothing without first getting his father’s approval. In fact, both he and Gad were much more dominated by Ruben than any outsider could guess. Neither of them made any decisions without first consulting Ruben’s opinion."

"Yet, the positives outweighed the negatives: they finally found out that it would probably be possible to package sterile milk in tetra packs. But more problems remained. It is not only air that is an important enemy of milk, but also light. If milk is exposed to light for an extended period, it acquires a harmless, but unpleasant off-flavor known as sunlight flavor. Aseptic milk, as Tetra Pak chose to call the new sterile product, which lasted between three and six months without refrigeration, would inevitably be exposed to light. And the tetrahedron in plastic-coated paper could not resist the light. Even if they managed to sterilize the paper, the light would make the milk virtually undrinkable. Compared to sterilization, however, light was a manageable problem. By using a technology developed within Åkerlund & Rausing, they could overcome these difficulties. The method, primarily developed for chocolate bar wrappers, involved attaching aluminum foil to the inside of the paper. This effectively blocked out the light. Now there were both sterilization and paper, but no complete system existed. It was not so simple that the usual tetrahedron machines could be used. To maintain the sterility of the milk, it was required to have a completely closed sterile system. And the paper had to be sterilized inside the filling machine itself. If it were sterilized before being introduced, there was always the risk that it could become bacterially infected along the way. Then the milk would be ruined within just a week. While the company tried to develop the right machine, Torudd worked hard to get someone to rent the first untested machines – machines that did not yet exist in reality. Everyone was indeed very interested in a cheap disposable packaging for aseptic milk, but they first wanted to see a finished machine before they committed to anything."

"He was driven by three urges: to realize ideas, make money, and build a dynasty. The drive to make money and realize ideas led him to the founding of both Åkerlund & Rausing and Tetra Pak."

"People who accomplished great deeds by building Åkerlund & Rausing and Tetra Pak at a time when these visions seemed like science fiction to others. Ruben also attracted inventive and imaginative people, as they knew that if they succeeded in getting his ear, they would also have the chance to test their ideas in practice."

"Åkerlund & Rausing initiated a rationalization of goods distribution that eventually led straight into homes. The company’s many different packages laid the foundation for the introduction of modern supermarkets in Sweden. What modern packaging has saved in both money and labor for transporters, stores, and customers today is hardly possible to calculate."

"Ruben thus decided to give the two young men the option to buy into the company. They would be allowed to do so as soon as he had gotten rid of the troublesome Erik Åkerlund. Now was the time. Holger was appointed deputy CEO and deputy chairman of the board and got to buy 20 percent and Börje Svenby ten percent of the shares in the company. Six years later, when Svenby switched to PLM in Malmö, Holger and Ruben divided his shares. Eventually, Holger owned 25 percent in Åkerlund & Rausing."

"Many became ill from the fumes. Common for them was that they worked in the small, shabby wooden shed called Siberia, which was isolated from Åkerlund & Rausing’s other buildings. There, they tried to develop a method to coat the paper with S-50 plastic. Under Gad’s leadership, they experimented with the so-called solvent method, which involves melting the plastic in a solvent called benzene. Then the paper is “lacquered” with the ready solution. But the vapors from the benzene were toxic and even Gad had to be hospitalized. The various substances were also explosive, which is why Siberia was separated from the rest of the houses. The risk of explosion also explains the name Siberia. No heat source could be near, and the technicians worked in constant cold."

"They also did not want to list any of their other companies on the stock market, since Tetra Pak’s poor finances had also dragged down their value. Thus, they would not be able to raise enough money from an IPO of them either. Eventually, they concluded that the only thing they could do was to sell Åkerlund & Rausing and thereby save Tetra Pak, at least for a while. For Ruben, deciding to sell Åkerlund & Rausing was relatively easy. On one hand, he was most interested in working on new projects, on the other hand, Holger had closed the company’s cashbox for Tetra Pak. Ruben simply could not withdraw more money from Åkerlund & Rausing to finance the further development of Tetra Pak. Another major contributing reason for deciding to sell Åkerlund & Rausing was that they had noticed that the company’s revenue curve had begun to flatten out. The company had been first in the market with disposable paper packaging and had thrived in the rapidly growing market. But now there were several competitors, and the market was largely cornered. Holger and Ruben had no choice. Enskilda Banken was pressing them through CEO Marc Wallenberg, Marcus Wallenberg’s eldest son. He refused to lend more money to Ruben’s and Holger’s company. Instead, he demanded that they find money elsewhere."

"to ensure against a potential bankruptcy in Åkerlund & Rausing dragging all assets with it, the companions chose to use Åhlén & Åkerlund Offset Printing in Stockholm as the parent company. This profitable little company that printed playing cards, advertisements, and covers for weekly magazines had Erik Åkerlund temporarily managed to exempt during the sale of the rest of the publishing house. In the negotiations, he had managed to get Bonniers to accept that they would take over the small company only after twelve years."

"Shortly after the subsidiary directors’ meeting, which ended in a general slashing of Brik, Hans called Åke Gustafson, who was now working on entirely different projects, and asked him to come back and help Tetra Pak. Although he would never have admitted it openly, Hans was desperate; the losses for Brik and the development costs for Rex and Rigello began to devour the capital that had been borrowed and the money that had been freed up with the sale of Åkerlund & Rausing. And the money that could have been used – the commission money that went into the foundations – the company was not allowed to touch by Ruben. If the situation was as bad as the subsidiary directors described, there were only two possibilities to solve the situation. One was to borrow more money to resolve the liquidity crisis that had arisen, but that would, on the other hand, be only artificial respiration. The other possibility was to once and for all get Brik in order so as to avoid this large black hole that just sucked capital."

"When 1955 was over, Tetra Pak’s balance sheet total – the sum of debts and equity – amounted to 6,038,382 kronor, of which 6,027,611 kronor were debts. The turnover was at 6,336,633. In the heavily manicured annual report, an operating profit of 48,579 kronor was recorded. In reality, it was about a loss of one million kronor. But the loss was dribbled away by allocating certain expenses to Åkerlund & Rausing’s annual report. The costs for machine development were borne by Östanå, a paper mill that Ruben and Holger had bought during the Second World War. It was only in the closed rooms of Tetra Pak and Åkerlund & Rausing that the real figures could be discussed. This way, they avoided having anxious creditors running in the corridors. And anxious they would have become if they realized the company’s escalating costs."

"From 1934, the company began to make a profit. One of the major advances was when the company managed to get several bakeries to switch to packing their bread using the so-called Pertinex method, which was developed by Åkerlund & Rausing. The method, which involved wrapping the breads in waxed paper at the bakeries, made them more durable and thus easier to transport to the stores. The company also got the textile industry to switch to delivering their garments in decorated cardboard boxes. Another important advance was when the newly hired salesman, Erik Torudd, succeeded in 1935 in getting the cutlery company Gustav Eriksson’s Nysilverfabrik in Eskilstuna to switch to packaging their goods in specially made packages. The deal with Gustav Eriksson’s became a major breakthrough in the entire city: eventually, almost all Eskilstuna companies switched to packaging their goods with the help of Åkerlund & Rausing."

"“Erik. At 100 machines, we’re just breaking even, but in order to be able to repay the 20-30 million kronor that we owe Åkerlund & Rausing, it requires us to make 4-5 million a year. In other words, between 400 and 500 machines must go out this year. You have to travel everywhere yourself and stay so long in each country that you, for example, sell 100 machines in Brazil. And the whole of India is open. They should take hundreds of machines. You’ll have to give up everything here at home and instead be on the non-European markets for 9-10 months per year,” he demanded."

"what Åkerlund & Rausing needed were new packaging systems, which could usually be found abroad. Therefore, Ruben’s strategy was to employ newly graduated economists who had received travel scholarships. When they went on their scholarship trips, they were tasked with keeping an eye out for new packaging,"

"One of Erik Torudd’s tasks during his trips abroad was to keep an eye out for new materials and packaging systems that Åkerlund & Rausing could introduce in Sweden. During a trip to the USA in the spring of 1951, he decided to visit the world’s largest slaughterhouse, Swifts in Chicago. He was curious about how they packaged meat, an area Åkerlund & Rausing had not yet ventured into, but which could yield significant revenues if the right method was found."

"The pattern within Åkerlund & Rausing was clear: young talented men were hired and sent at someone else’s expense to the USA to follow the developments in the grocery and packaging industries. The results of the “espionage” were to be sent home to Ruben immediately. Afterward, if Ruben decided it was something to invest in, the assignment was passed on to Nils Andersson, who was tasked with constructing a suitable machine. The salesmen were well aware of this: that the company’s product range was predominantly based on American inventions. Ruben, on the other hand, liked to talk about them as Åkerlund & Rausing’s own achievements."

"The difficulties were never known outside a very narrow circle, but an outsider who was concerned about the conglomerate’s condition was Marcus Wallenberg. In his eyes, Tetra Pak began to constitute a source of worry, as the company was consuming an increasingly large part of Åkerlund & Rausing’s resources. The overall picture made him wonder about Enskilda Bank’s lending to the Rausing/Crafoord corporate group. Marcus Wallenberg was extremely well-informed about the group’s condition, partly through Göte Engfors who sat on the Åkerlund & Rausing board, and partly because over the years he had become friends with Ruben."

"To maintain real control over a company, simply owning it is not enough. One must also have executive power in their hands – without it, the influence is limited to what is decided in the boardroom and at shareholders’ meetings. If the Rausing family did not have someone in the CEO position, they would no longer have total control over the operations. Especially since Holger had a controlling stake in the company and could thus block decision-making. But Ruben had no choice: if Holger did not take over the actual management of Tetra Pak, it was not only the dynasty building that would crumble, but the entire life’s work: Åkerlund & Rausing, Östanå, and Tetra Pak."

"They found the solution in 1962 in the United Kingdom. Through their contacts, Ruben and Holger managed to get the British insurance company Royal Insurance to lend 15 million kronor for twenty years. But to secure the loan, they were forced to ask their plastic supplier ICI to provide a guarantee. Against the guarantee, ICI received exclusive rights to polyethylene deliveries to Tetra Pak. Of the 15 million, formally, eleven went to Åkerlund & Rausing and four to Tetra Pak. In reality, most of the money went directly or indirectly to Tetra Pak."

"They found the solution in 1962 in the United Kingdom. Through their contacts, Ruben and Holger managed to get the British insurance company Royal Insurance to lend 15 million kronor for twenty years. But to secure the loan, they were forced to ask their plastic supplier ICI to provide a guarantee. Against the guarantee, ICI received exclusive rights to polyethylene deliveries to Tetra Pak. Of the 15 million, formally, eleven went to Åkerlund & Rausing and four to Tetra Pak. In reality, most of the money went directly or indirectly to Tetra Pak."

"Boye Benzon, one of the designers at Åkerlund & Rausing, invented a handle that was clamped onto the long side of the tetra where the seal was located. As a result, the tetra could function like a regular jug, only made of paper. Harry Järund believed that the handle was so good that it did not require any further development work. However, when he presented the idea to Ruben, he received no response at all. Ruben could not see anything good about the handle. But a month later, after he had finished contemplating, he wanted the handle to be patented as soon as possible. The strange thing was that in front of Erik Torudd, who was to draft the patent application, he claimed that he himself was the inventor. Torudd, who knew the true circumstances, advised Ruben against it and stated that he wanted nothing to do with the matter."

"Björkengren, Carl-Axel: Åkerlund & Rausing: 60 years of development and innovation, Lund 1992."