dairies

"During the 1980s and up to the purchase by Gad, Tetra Pak had acquired a market-leading position, especially for aseptic packaging systems. However, this dominant position began to be questioned by competitors as well as within the EU. In 1983, the Norwegian competitor Elopak, with its Pure-Pak packaging, accused Tetra Pak of abusing its dominant position. During the legal process that followed, the EU also began questioning the highly successful and ingenious business model that Tetra Pak had used from the start. The model was based on selling or leasing the packaging machines and primarily making money by selling packaging materials to dairies. Tetra Pak also attached a service agreement to the packaging machines, committing to solve any operational problems at short notice, as well as handle maintenance, deliver spare parts, and train the staff. However, the service agreement was valid only if the dairy used Tetra Pak’s paper materials. The terms of the agreement could vary somewhat from country to country. What Elopak objected to was not Tetra Pak’s business model but their practice of “dumping” the price of paper materials for pasteurized packaging."

"Ruben was also forced to realize the realities: that there were still no funds available for new projects. Many problems remained to be solved before the tetra was established in the market. The first was to convince the dairies of the excellence of the tetra system and the second was to win over the retailers to Tetra Pak’s side. And in the last step, to defeat consumer resistance. The first step was actually the easiest. The Tetra method was called by many “a dairy director’s dream”. The reasons were many. Unlike the noisy handling of glass, it was quiet and gave the dairies, for the first time in their history, a closed system, which drastically reduced waste and loss. The method was also easy to teach to the dairy workers, who at this time were notably poorly educated. Finally, the tetra system saved space, both in the dairies’ storage facilities and in their delivery vehicles."