Tetra Pak

"The creator, LO economist Rudolf Meidner, wanted to exclude smaller companies with fewer than one hundred employees, but the LO congress said no to this in 1976. It wasn't just Ingvar Kamprad and Ikea and the Rausing family with Tetra Pak who fled the country. Thousands of family-owned small and medium-sized businesses ended up on the sales list."

"The dairies did not buy the machines, but rented them for a relatively low cost. Tetra Pak made money instead by charging production royalties and by requiring customers to commit to only buying Tetra Pak’s specially treated paper. When the contracts were drawn up, Erik Torudd wanted a clause that would force customers to pay triple royalty if they used someone else’s paper. However, Holger considered it unnecessary, as Tetra Pak could always sell its paper as cheaply as any competitors. Torudd protested, fearing that paper mills would soon gain access to Dupont’s coating method and start producing equivalent paper on their own. He argued that it wasn’t certain that Tetra Pak would be able to withstand the competition and since the paper was the company’s major source of revenue, it would ultimately threaten the operation. But Holger had Ruben on his side. “Yes, yes, that’s enough for us to take back the machine if there’s any cheating,” Ruben commented. “Are you really willing to take back the machine if it means a whole city then has no milk distribution possibilities?” asked Erik Torudd, who did not believe Ruben was serious. “Of course,” Ruben replied. It turned out as Ruben had said. What Tetra Pak committed to in return for the stringent contract terms was a reliable service organization. It was a factor whose importance could not be underestimated. For a dairy, it would be a minor disaster if the machines came to a stop and the milk spoiled. Tetra Pak promised to quickly fix any faults or immediately supply replacement machines. This unique service would later become one of the company’s most important selling points, if not the most important. Once Tetra Pak had gotten the machines into the dairies, the retailers were the key group, as a retailer convinced that the tetra was much easier to handle would soon stop buying bulk milk for their stores. But Tetra Pak also had to try to overcome consumers’ resistance to buying, since enough protests from consumers could potentially push the dairies to revert to delivering only bulk milk or glass bottles."

"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."

"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."

"The year was 1953 and it had been seven years since Erik Wallenberg invented the tetrahedron. Only now was there a cream machine that worked. Ruben had waited long enough for the money to start flowing into the company. He was of the firm opinion that Tetra Pak could quickly sell 500 cream machines in Sweden alone. He based this view on the fact that there were about 600 dairies in the country and that at least 500 of them would easily agree to rent a machine from Tetra Pak. But in his great optimism, he forgot that most of Sweden’s dairies only produced cheese and butter. Their need for cream packaging was, to say the least, non-existent. And among those who produced cream, only a few were large enough to afford to rent a separate packaging machine. Ruben also ignored the fact that the paper was still unreliable and that little Tetra Pak did not have the capacity to produce 500 machines. A realistic assessment of the sales opportunities indicated that the likely market encompassed about 60 machines. But Ruben refused to listen to what the marketing people said. In the end, they agreed to manufacture 100 machines. But even that was too much, the salespeople said."

"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."

"After nearly 40 years as leader of the family conglomerate, initially in name only but later undisputed, Hans cut ties with the company in August 1995. In our interview with Hans, a few years after he had sold and left the company, he stated emphatically and with relief in his voice: “The essential thing was that I had either been CEO or chairman of the board for 37 years and that’s enough. I can assure you that’s enough!” In a later interview in DN in 2006, Hans expressed that the reasons for the sale were that he found Tetra Pak to have become a cumbersome large corporation that was increasingly unresponsive to new ideas. He no longer believed in the business future of Tetra Pak. Hans also commented on the Gad family’s takeover with: “It must have been a sudden sentimentality that took over. It was not rational.”"

"When the Gad family took over, the work within Tetra Pak was focused on tailoring a package for each customer. It is a trend that began in the 1970s, especially in the Japanese subsidiary. The Japanese market often demanded a range of special solutions and particularly high quality. When these demands began to arise in the 1970s, they were considered by many within the company as impossible to meet. But when they realized that it was possible and could also be used in competition in other markets, customer adaptation became somewhat of a term of honor within Tetra Pak. Therefore, the group has decentralized the development work as close to the customers as possible. This has led to new demands where it is largely the subsidiaries that control the development and not the central corporate management or owners."

"Through ingenious solutions, the family, primarily Hans, and its employees, especially Carl Borgström and the administrative head at the headquarters, Ingvar Wenehed, set up a network of companies whose purpose was to keep money outside of Sweden, beyond Swedish taxation, and beyond Swedish currency regulations. In Switzerland, the company Société Outremère (Socomer) was registered, created solely to absorb commission money for all the paper, plastic, paint, and aluminum that Tetra Pak purchased from suppliers. Normally, such purchases go through an agent who receives a commission of 2–5 percent of the invoiced amount. What the agent is paid for is that he formally takes on the credit risk until the goods are paid for by the buyer. If, for example, the buyer goes bankrupt before the payment date, it is the agent who takes the financial hit."

"One of the company’s largest expenses was paper purchases. Ruben decided that no invoice from the paper mills would be paid within the stipulated 30 days. Instead, the supplier credit would be extended as far as possible. But there were no negotiations with the paper mills, especially involving Billerud and Uddeholm, but entirely a unilateral decision on Ruben’s part. After he had decided how the financing would be managed, he drove the line to absurdum. Payment times would, entirely in accordance with Ruben’s tactics, sometimes amount to eleven months. Holger, who was a much more sensitive person than Ruben, found the situation uncomfortable and wanted Ruben to change his mind. Invoices should be paid on time, was Holger’s firm belief. But he gained no listening at all from Ruben. “It’s only natural that they contribute to the payment, since we’re increasing their market. They haven’t been very good at that themselves,” claimed Ruben. Ruben’s reasoning was correct to the extent that the conservative Swedish paper companies were terrible at creating new markets themselves. It was also entirely correct that Tetra Pak gave the paper mills a huge sales boost. But despite everything, it is customary to negotiate supplier credits. That’s what the paper mills believed, too. However, Ruben was not at all ashamed that Tetra Pak did not pay a single invoice on time. Instead, he only said the same thing to them as he said to Holger. “You are obliged to help with our financing since we are expanding your markets.” When the paper mills’ managers found no understanding from Ruben, they instead turned to Holger who suffered and was ashamed. “You must understand that I can’t do anything. Ruben has decided that this is how it should be, and I can’t influence him,” Holger was forced to say. The paper mills were caught in a catch-22. Even though they wanted to get their money, they knew they couldn’t push Tetra into bankruptcy. Then there would be no money at all, as the company had virtually no assets. Another important creditor was the construction company ABV, which voluntarily gave very long credits to Tetra Pak’s new factory facilities. The rapidly growing business required almost constant construction of new premises. Without ABV’s willingness to extend credit, it probably wouldn’t have been possible for Tetra Pak to expand as quickly as it did. But it wasn’t just loans and credits that financed the development of Brik. Since the aseptic package hit the market, fantastic sales successes were noted. Mainly, the system was sold in developing countries – exactly as planned. In a short period, the company brought in – for that time – enormous sums. But the expansion also cost."

"On September 5th that year, the first tetra machine was test-driven. Harry Järund had succeeded in his task. His wooden and bicycle chain model would eventually be set up as a monument in the foyer of the Tetra Pak main office. Ruben later explained in various contexts that it was he himself who had the model built, as he was dissatisfied with what the technicians had achieved. In his unpublished memoirs, written much later, Ruben wrote: “The little wooden model that I had made to demonstrate the idea as such is still set up at Tetra Pak.” In other words, Ruben felt like the true inventor of the tetra machine."

"Thus, Tetra Pak was already making big money on the Kenyan market from the beginning. After just a few years, Kenya accounted for the largest number of tetra packs sold per capita of all the countries in which Tetra Pak had established itself. A number of years later, the tetra pack was immortalized on the Kenyan ten-shilling notes as a tribute to the school milk program and what it has meant for the country’s health development."

"Hans Rausing eventually developed into a very skilled business leader, but it took time. In later years, many of his former critics within Tetra Pak claimed that he became one of Sweden’s most skilled business leaders of all time. As a person, he is described as very solution-focused and at the same time uninterested in status, power, and power games. He had inherited Ruben’s clear and unsentimental view of people and his rock-hard stubbornness, which was proven among other things when he pushed through the Tetra Brik program. Hans was also endowed with an intuitively acclaimed ability to see what was worth investing in, and he quickly comprehended complex economic contexts."

"Nils Andersson and Gad enthusiastically took on the new project. But despite both of them constantly disparaging Americans and Frenchmen, who were already using the method successfully, their own results were poor. And both Gad and Andersson refused to consult anyone who already mastered the method. Quite soon, people began to wonder what was happening with the project. The reports gave clear signs that something was not right. And they never managed to show any paper where the plastic really stuck. “It’s damn strange that the paper department can’t make paper in the Eagan machine when everyone else apparently can,” Hans commented irritably on the missed development. “It’s not strange at all; they insist on doing everything themselves and refuse to learn from others’ experiences,” Erik Torudd replied. It was not until a year after the construction started that they figured out the temperature required for the plastic to really adhere. And that was due to an accident at work. A temperature regulator had malfunctioned, and the temperature of the extruder had begun to rise uncontrollably. Only then did the plastic adhere. The accident taught the Tetra Pak team something that the French and Americans had known for a long time. Only another year later would the method work well enough that it could be reliably used in production. But then, on the other hand, there were problems with Dupont, who was the rightful patent holder. “There is undoubtedly a patent infringement,” the company’s own patent engineer Tage Norberg also stated when the matter was discussed. However, Tetra Pak was saved by the fact that Erik Torudd had been shown the method already in 1951, and at that time there was no patent. Thus, Dupont had no legal ground against Tetra Pak. For the second time, Tetra Pak had cunningly appropriated a machine design."

"While Ruben showed great satisfaction in finally having removed Holger from the circle of owners, he was also relieved that he wanted to stay on the board. He knew Holger’s good name meant a lot for the opportunities to take up new loans at Tetra Pak. He therefore quickly wrote to Marcus Wallenberg to inform him about the stock takeover, but also to emphasize that Holger would remain on the board. “A limited cooperation will therefore continue, which I am pleased to see,” he wrote in the letter. With the purchase of Holger’s shares, only one step remained for Ruben before the plan for a family-run empire, with his sons as the sole owners, could be realized: he had to remove the remaining six small owners. Therefore, he soon made deals with Torsten Jeppsson and Erik Wallenberg. They sold their shares at nine times par. Harry Järund, Gunnar Brime, and Erik Torudd, however, resisted the Rausing buyout proposals. None of them wanted to sell at the price Ruben had proposed. Erik Torudd did not want to sell at all. Not at any price."

"Tetra Pak had long lived on being both the price leader and technologically superior, where they protected their technology through various patents. Even when the patents expired, it took a while before competitors had developed the knowledge to copy the Tetra systems, especially the aseptic packaging. With the help of various additional patents, Tetra Pak’s Aseptic Tetra Brik system protected its technology from being copied by others. However, these patent protections began to expire in the early 2000s. Strengthened by the EU ruling against Tetra Pak, the Swiss company SIG Combibloc had started a more aggressive strategy at the turn of the millennium to compete with Tetra Pak’s aseptic systems and packaging. There were also other competitors within aseptics who began to challenge Tetra Pak’s leading position."

"In 1977, he gave up – it was only in India that something resembling the Rausing plan had succeeded, but on a local level. Ruben decided to leave Rome and instead settle in Switzerland. However, the decision was easier to make than to implement in practice. The Swiss authorities considered him too old and would be a burden to the country if he were granted a residence permit. Ruben felt wronged by the Swiss opposition, as he believed they should understand how much money he had. After a tough fight, he managed to obtain his residence permit and moved to Lausanne where Tetra Pak’s and the family’s financial managers worked under the economist Lennart Ohlsson. Although Ruben still longed to return to Sweden, he found it easier to live in Lausanne than in Italy. In Lausanne, he could socialize with the Swedes stationed there and take an active part in managing the family fortune which had grown significantly after they started seriously selling the aseptic Briken. Money, both commissions from Cordotex and profits from the various Tetra companies, literally poured into the foundations."

"The statement was completely made up. In fact, Tetra Pak was utterly unsellable since it did not have a developed method to show. Holger couldn’t believe his ears when he heard what Ruben said. Ruben had made a big blunder. Marcus Wallenberg fully understood that as the company was, Ruben and Holger would never get a penny for it. The argument backfired on Ruben himself, as Marcus Wallenberg thought it was ridiculous and only showed that Ruben was desperate for more money for operations. And if there’s anything that triggers alarm bells for an experienced banker, it’s when someone reveals their desperation."

"Another major concern when the Gad family took over was the competition from new plastic packaging systems. Tetra Pak had, in its appeals of the EU ruling, attempted to get the right to broaden the market concept to also include systems and materials other than paper, but without success. Plastic packaging for beverages such as the PET bottle had increasingly started to take market shares from the beginning of the 1990s. An intensive central development effort was initiated to meet the competitors. Initially, the company chose to focus on the development of plastic packaging and aimed for plastic materials to account for ten percent of the revenue by the year 2000. The idea behind starting to use plastic was that Tetra Pak would be able to more precisely tailor packaging according to customer preferences. In the mid-1990s, Tetra Pak began acquiring companies with expertise and products in plastic packaging, such as Dynaplast, Hitech, and Novembal. In addition, several strategic partnerships began with the Graham Manufacturing Group. Within the group, the development of proprietary products and technological solutions in plastics also commenced, with factories in various parts of the world. The CEO of Tetra Pak since 1994, responsible for the strategy, was Gunnar Brock. Jörn Rausing was also heavily involved, having been responsible for acquisitions and mergers since 1991."

"But suddenly, in 1959, things seemed to turn around. The director of the Danish East Asiatic-Dumex, Beck-Sörensen, was willing to test a machine at the company’s dairy in Kuala Lumpur. Additionally, he wanted an option for another 15 machines. But that was not all: Beck-Sörensen, who had previously worked within the UN’s Food and Agriculture Organization (FAO), promised to launch a massive campaign within the organization if it turned out that Tetra Pak’s system worked."

"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."

"In connection with the restructuring, Tetra Pak was dragged into a scandal of gigantic proportions – the Parmalat affair. The Italian dairy conglomerate Parmalat was at the time one of Tetra Pak’s largest customers with dairy operations in 23 countries. Parmalat’s main owner, Calisto Tanzi, was revealed at the end of 2003 to have been involved in a massive financial embezzlement, with 90 billion kronor having disappeared from Parmalat’s accounting. The investigation into what had happened showed signs that Tetra Pak had been part of the scheme constructed by Calisto Tanzi and the CFO Tonna. Parmalat had made provisions to the main owner from the payments for machine rental and paper that were supposed to be paid to Tetra Pak. According to Italian media, these provisions were estimated to amount to approximately 638 million between 1996 and 2001. These funds were channeled to offshore accounts controlled by the Tanzi family. Although Tetra Pak was only a small part of the investigation, there were statements from CFO Tonna that Tetra Pak had bribed the Tanzi family in this way to get the agreement with Parmalat through. The affair was widely covered in national and international press, where Tetra Pak was also exposed. The accusations against Tetra Pak of having bribed the main owner Tanzi could not be substantiated, and the case was closed in 2005. Three years later, Calisto Tanzi received his sentence and was sentenced to ten years in prison."

"“It was unfortunate that I mentioned Lomma to Hans Rausing because he panicked and now he is running around here or calling and tormenting me several times a day. It’s almost like I can feel my old ulcer,” complained Hilding Borstam who didn’t quite understand Hans’ hysterical reaction. In the confused situation that prevailed, Hans came to the conclusion that the company had to launch a massive advertising campaign specifically targeting the households in Lomma. It was the only way to avoid a stinging defeat, he argued. He nagged intensely at Holger and Erik Torudd. The two of them, with the right of age and experience, had much more ice in their stomach, however, and managed to slow him down. At Erik Torudd’s initiative, they instead began to work the market “from the back.” By filling the newspapers with positive letters to the editor and persuading the journalists to do interviews with the city veterinarian of Lund about the hygienic advantages of tetrapacks, they would win the households over to their side. The tactic was that it would be better to knock out bulk cream with clean weapons rather than trying to manipulate consumers through an advertising campaign, which would likely be seen through. If the tactic of getting the press on their side succeeded, it would all look much more elegant and could be used in later marketing. A few weeks later, it became clear: the tetrapack was on its way to eliminating bulk sales. Tetra Pak had managed to turn the opinion and the company management could breathe easily. This time."

"Jia F., Wu Z., Gosling J. (2019) Tetra Pak: Sustainable Initiatives in China. In: Lenssen G., Smith N. (eds) Managing Sustainable Business. Springer, Dordrecht 2019."

"After the meeting in Rome, a solution to the financing problem was finally found: the small subsidiary Purac, which developed water purification technology. The company had great potential, but had not been managed properly. Gad, who had been appointed CEO, thought it was something he could handle with his left hand, but soon had to realize that it was not that simple. However, he was not the man to solve the problems, but since the company had great development potential, Tetra Pak still managed to sell it for a reasonable price, about 15 million kronor, to American Hercules Powder. That was money that was really needed to be able to continue driving the Tetraproject forward. Ruben and Gad were totally against the sale. Gad because he had planned to keep the company as his own little territory - a way to get revenge for the previous defeats within Tetra Pak. Ruben’s opposition was due to the fact that Purac’s water purification technology, a method that had been discovered by chance when there was a need to purify the water for Östanåbruket, could become a global product if the company was managed correctly. Ruben was against all sales of ideas that could develop into something big. But the sale was pushed through by Hans, Ingvar Wenehed, and Erik Torudd."

"China is just an example of how Tetra Pak, since the founding of the company, has had a very expansive global growth strategy to enter new markets. This strategy became problematic in the 2000s as there were not many more countries to enter while competition had increased significantly. It has become even more important to retain existing customers. A packaging machine has a lifespan of about 13 years before it needs to be replaced. At each such occasion, Tetra Pak is tested by customers and competitors. In 2006, the group had about 9,000 packaging machines with various customers, which in turn generated the largest revenues linked to paper sales. Every lost customer and deployed packaging machine was and is a significantly tangible loss for the company."

"For an outsider, it must seem unlikely that a small tetrahedron of paper could form the basis for such an enormous fortune. It is unlikely, but it has still happened. When repeatedly asked about the size of the Rausing dynasty’s fortune, Gad Rausing said a few years before he passed away: “I have also asked myself that many times. When one talks about money, it is not pennies and cents that are discussed but rather what opportunities for operation that, for example, Tetra Pak has provided.” When Hans Rausing was asked the same question, he answered that he knew exactly to the last penny how large the fortune was and that it was a significant amount, but he saw no reason to disclose it."

"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."

"Bertil Hagman hastily went to London to discuss the matter with Hans and Gad. After the meeting, they agreed that Tetra Pak would make a bid. Through Jacob Palmstierna, who was about to join Tetra Pak’s board, a signal was sent to Investor’s CEO, Claes Dahlbäck, that Tetra was interested in Alfa Laval. But for Tetra Pak, the contact with Investor was not sufficient, there was another major owner in Alfa Laval, namely the financier Fredrik Lundberg. Tetra Pak was not only interested in buying a part but desired complete control over the company."

"In the developing world, it was often impossible to manage the transport of fresh milk from dairies to consumers. They couldn’t afford refrigerated trucks, nor the expensive metal tin cans. On all of Torudd’s travels in the third world, he was therefore constantly asked when there would be a tetra for aseptic milk. “Soon,” he had answered. In a considerable number of cases, he then received the information that it was currently not relevant to purchase the tetra system. “But if you come back with an aseptic package… Well, then things would naturally be in a completely different situation,” he was often told. Now the moment had arrived. And the aseptic packaging not only opened up many poor countries for Tetra Pak, but also a large and relatively well-developed country like the Soviet Union. The Soviet planned economy system resulted in large quantities of fresh food, including milk, being destroyed during the hopelessly long transports. This was because the planners had concentrated the industries in certain locations, while the market could be the entire country. Products were often transported from one end of the vast country to the other. But now, Tetra Pak with its aseptic tetrahedron could solve the problems that the communist regime had created."

"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."

"In the work with this book, we have not found any signs that Tetra Pak previously used bribes. Rather, the group, as in the case with the launch in India and the Gandhi family, has actively chosen the path of not paying bribes. An exception was, however, during Ruben’s frustration over Lund Dairy’s resistance to adopting the first half-liter tetra pack for milk in 1954. In his desperation, Ruben suggested that they should bribe the managing director Hilding Borstam to adopt the system, but both Hans Rausing and Erik Torudd dissuaded Ruben and made him reconsider."

"The history behind Greatview clearly shows the risks associated with knowledge transfer in a country like China. The founders of the company were Jeff Bi and Hong Gang. Both had been employees and managers at Tetra Pak’s various companies in China. In 2003, they purchased the company Tralin Pak. The business idea was to exploit the expiry of Tetra Pak’s patents for aseptic packaging and sell a low-cost alternative that completely copied Tetra Pak’s technology. Already in 2004, Jeff Bi and Hong Gang accused Tetra Pak of abusing its dominant position. Inspired by the EU’s verdict, where Tetra Pak was convicted for having “locked in” its customers to only buy their paper material, Tralin Pak pushed the issue that dairies should be free to choose their paper supplier. Initially, Tralin offered prices 25 to 30 percent lower, which later changed to five to ten percent lower than Tetra Pak. Tetra Pak has pursued cost efficiencies and could likely meet the price competition. However, the group was handicapped by the 2016 verdict, which complicated Tetra Pak’s ability to meet price competition in China. Today, the Chinese Greatview is also present in the European market."

"Immediately, new Indian press campaigns began to discredit both Tetra Pak and Verghese Kurien. The tetrahedron was said to be outdated and Tetra Pak was accused of trying to dump old obsolete machines in India. It quickly became apparent that the arguments were unsustainable considering that one of the key early arguments against Tetra Pak had been that the tetrahedron was far too expensive. Now, they were requesting a packaging system that used nearly 50 percent more material and required a laminate that was considerably more expensive than the tetrahedron’s. Moreover, the new laminate was more expensive than the Indian market could bear."

"Their conversation became crucial for a very important decision, to move Tetra Pak abroad. The family had long been worried about Sweden’s heavy taxation on profits, capital, and inheritance. Hans had calculated that if he died, the children would be forced to pay an inheritance tax of a total of 350 percent, as the tax would be paid with already taxed funds. If they wanted to keep the company within the family dynasty, staying in Sweden was not an option, he assessed."

"At the same time, Ruben realized that the group would have problems acquiring the necessary capital to finance further development. In his quest for money, he got the idea to let the Wallenberg family buy into Tetra Pak. The same year the company was named Tetra Pak, he thus offered the Wallenberg family to buy half of the shares for one million kronor. Jakob and Marcus Wallenberg thought that Alfa Laval could be a natural collaborative partner and had its CEO, Harry Faulkner, and the board take a closer look at the matter. But when they were done reviewing Tetra Pak, Faulkner informed Ruben that they considered the deal too risky and therefore declined the purchase."

"Rausing, Gad: The Way of an Invention from the Laboratory Bench to the World Market. The case of Tetra Pak, from The Creative Process, edited by Lars Gustafsson, Susan Howard, and Lars Niklasson, Stockholm 1993."

"The new one-liter packaging gave Tetra Pak entirely new and unforeseen leakage problems. The difficulty in making them watertight was largely due to the shape of the packaging, a problem that could seem simple at first glance, but in reality, involved advanced structural mechanics. As the tetrahedron looked the way it did, the stress on the lower seam increased nearly exponentially with the larger amount of liquid. Thus, the milk leaked out through this path. Harry Järund managed to find a simple solution; he simply reinforced the seam with a thin polyethylene strip that was affixed over it. Although many have later tried to solve the problem in a more elegant way, it is still Järund’s strip that is used within Tetra Pak."

"When the company’s real success product, the aseptic Briken, finally worked, the first Tetra employees had all been replaced. But by then, the marketers had already laid the foundation for Tetra Pak as a well-established brand. They had also been involved in building a service organization that customers knew they could rely on. Even though the tetrahedron as a shape was a relatively consumer-unfriendly packaging that took many years to become fully functional, the company had managed to acquire a quality image through its skilled marketing and service staff."

"To return to Hans Rausing and his involvement in the packaging company Ecolean. In an interview with DN in 2006, he expressed why he thought the company was important: “Nothing new has happened in this industry for 50 years. Tetra Pak broke the conventions when the disposable paper package took over from glass bottles. Today, Ecolean is the spearhead in the next revolt against convention.” In the same interview, he mentioned that, despite being over 80 years old, he was out in stores at least every fortnight to keep up with trends of new packages."

"Formally, it was not the family that bought the shares but AB Vapor which was the official owner of Tetra Pak. However, Vapor was in turn owned by the Rausing brothers. The money to redeem the outstanding shares was obtained by Vapor in the same way as Socomer in Switzerland. The company functioned not only as an owner company but also took commissions from Swedish Tetra Pak suppliers. Thus, the purchases were made possible by money that the Rausing family had earned from Tetra Pak, but which had been concealed from the minority shareholders they wanted to kick out of the company."

"There is also an ongoing long-term effort to make the systems circular through collection and reuse of packaging. Tetra Pak can now separate paper, plastic, and aluminum and reuse the raw materials, but the major challenge is the infrastructure and processes for collecting and transporting the material back to production."

"If anyone doubted who held the real power in the company, all doubts were dispelled at the board meeting the following month. Although the CEO, Hans, was present, it was Holger who presented the balance sheet and budget. It was a symbolic act whose value should not be underestimated. The business world is filled with symbols intended to mark the status of various individuals in an organization. It can involve the size of the office, whether or not there is a sofa group in the office, leather upholstery in the company car, and so on. But one of the most critical signals is who in the board reports on the financial figures. If someone other than the CEO, who is directly responsible for financial management, does it, it is a way to indicate that the CEO is really just a figurehead. This was now the case within Tetra Pak."

"The setup allowed for the financing of further development and expansion of the companies, while at the same time, the Rausing family could start building their private fortune. Once the money had entered the foundations, they could not, on Ruben’s explicit orders, be used for investments in Tetra Pak. Ruben’s plan from the fifties was beginning to be realized."

"Since Tetra Pak in recent years was making as much money as it did, they could afford quite wild experimenting before concluding a project. The costs were often allowed to rise to between 50 and 100 million kronor before the brakes were applied. In this way, Tetra Pak continued to be an innovation and entrepreneurship company long after the packaging system was fully functional. When Gad and Hans moved from Lund, in connection with the company’s relocation from Sweden, it was a hard blow for the technicians, who had gotten used to having a direct channel to the owners."

"Less than half a year after Gad’s family purchased the entire group, a restructuring was carried out. The group management was abolished, and the company was divided into three industrial groups, Tetra Pak, Alfa Laval, and Alfa Laval Agri. Within Tetra Pak, the packaging machines and paper remained, while Alfa Laval took care of the engineering operations from “old” Alfa Laval. Agri, finally, handled everything needed to keep and milk cows plus storage equipment for the milk. The division into three independent companies was made to avoid the tensions created by the merger between Tetra Pak and Alfa Laval. It was certainly not easy to merge a family-owned business with a company that had been previously listed on the stock market. It wasn’t long before the former Alfa Laval employees began to call Tetra Pak’s people “tetrapacket”."

"The machines and the method itself are simple and very easy to maintain, which is why the system also does not require a high level of education from the dairy staff. At the same time, both producers and consumers benefit from the tetrahedral packaged milk. The success that Tetra Pak achieved in Kenya was therefore to be repeated in many other developing countries."

"After returning to Sweden, Erik Torudd continued to advocate for the use of the S-50 and to apply HP Smith’s method to it. Now, it seemed that the winds were changing within the company. The board of Tetra Pak now included Ruben, Gad, Hans, Holger Crafoord, Erik Torudd, and the company’s skilled lawyer, Carl Borgström. When the dark-suited gentlemen gathered for a board meeting on the morning of February 4, 1952, they decided to build a copy of HP Smith’s machine. Erik Torudd and Harry Järund, who was co-opted onto the board, fought hard against the decision. Both thought it was better to either buy a finished machine or drawings. Otherwise, they risked several years being lost to development. Moreover, they thought it was immoral to copy someone else’s work. But they spoke to deaf ears. Tetra would copy the HP Smith machine. Responsible for the project were the technical genius Nils Andersson and Gad. The decision was bold, but entirely legal. Carr Sherman had voluntarily shown them a design that was not yet patented."

"When Hilding Borstam realized that Tetra Pak was also negotiating with the Stockholm Milk Central, he contacted its CEO, Gösta Winberg, and arranged a meeting. At the meeting, they decided to pursue a joint negotiation line against Tetra Pak, which demanded a paper price of 32 kronor per 1,000 half-liter packages. Gösta Winberg was positively inclined towards Tetra Pak, but he could not accept such a price. Shortly after World War II, Winberg had been in the USA and seen the American paper packaging and became enthusiastic. However, since he had never clarified the size of Milk Central to the American packaging manufacturers, they largely ignored him. He didn’t even receive replies to his quote requests. So when Tetra Pak appeared on the scene, he realized that the opportunity he had been waiting for had finally come. He was willing to pay 25 kronor – no more. Hilding Borstam agreed with him. For nearly half a year, the companies negotiated without taking any decisive step. In May, Ruben got tired and wanted to travel to Stockholm himself to handle the negotiations. He was convinced that he could push through a price of 29 kronor. But the day before departure, he started to get nervous, although he did not admit it."

"His increasingly intense wishful thinking also made him want to start building three new laminators according to the same model. However, it wasn’t three new laminators that were needed but more S-50. The problem was that the American military’s need for S-50 plastic meant that it was running out in the market. The Korean War had made S-50 be regarded as a strategic commodity – everything produced went directly to the military. Erik Torudd had to desperately call all the companies that had received samples of S-50 and ask them to send it to Tetra Pak. But the small amount he gathered would not last past August 1953. After that, they would be without viable coating material. Torudd managed to get an audience with the United States Army Quartermaster General to submit a request that Enjay and Tetra Pak be allowed to buy 1,000 tons of S-50 from Standard Oil. The petition was submitted unsuccessfully."

"Ruben was not only dominant towards his sons but also towards his grandchildren. It was only after his death that they were free to study or work with whatever they wanted. Until then, even that was within Ruben’s control – hardly surprising considering the importance he placed on the idea of a dynasty. To create a dynasty, heirs must meet certain criteria to be able to contribute to the family business. Thus, the room for individual wills is greatly limited, which both children and grandchildren got to experience. In an innovative company like Tetra Pak, heirs are required to either possess specialized expertise or, like Hans and Gad, be trained in the business over a long time. However, the most important thing of all was that the following generations engaged in the role of owners. Among Hans and Gad’s children, there has been a great variation in the willingness to take on an owner role within the group."

"⁠The longer he reflected, the more convinced he became that he and Tetra Pak had a solution that could mean a great deal for public health in developing countries. Ruben looked much further than most and didn’t just focus on the problem of temporarily feeding hungry mouths. For him, it was a question of the developing countries’ possibility of development comparable to that of the rich Western countries. He was completely clear about the importance of proteins and certain amino acids for brain development, from the fetal stage up to six to eight years of age. Ruben argued that the developing world’s lack of protein-rich foods meant that children did not get the chance to develop their full intellectual capacity. This affected the people’s ability to think, plan, and act for their own best interests. From his point of view, the developing countries would inevitably fall behind as long as they couldn’t meet their citizens’ protein needs. The vision he saw before him made him “feel a calling like I perhaps never felt before in my life,” as he himself wrote at a later time. He was sure that he and Tetra Pak, which could package sterile milk in aseptic packaging, would be able to make an important contribution. At just over seventy years old, Ruben tackled one of the world’s most complicated problems.⁠"

"But even though Verghese Kurien succeeded in getting useful products, there was still an important component missing in the plan: Tetra Pak’s machines for the aseptic packaging of milk. Without them, he would never manage to transport the milk the long distance from the rural dairies to the urban consumers. Together with Tetra Pak, Kurien planned for the order of 44 machines that would be delivered in three batches during 1970 and 1971. The necessary laminated paper would be supplied from Sweden until the turn of the year 1971/72. Afterwards, a joint venture would be formed between Tetra Pak, the government-run Indian Dairy Corporation (IDC), and the private Indian packaging company Kant & Co. The newly formed company would start local production of the laminated paper. Alfa Laval would also be involved by providing dairy equipment. The entire deal would cost just over 70 million kronor – money that India could not afford to spend. To solve the tricky financing issue, Tetra Pak brought the matter up with Sida. Thanks to Gunnar Sträng personally backing the project, Sida promised to lend the necessary funds."

"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."

"The summer went by without any action taken. No one engaged to try to sway public opinion. No one tried to get Eskilstuna-Kuriren to adopt a more impartial line. And eventually, Sven Wedén’s campaign became an increasingly greater threat to Tetra Pak. He managed to drive Mjölkcentralen’s Sven Lundberg to agree to conduct a market survey on the situation among consumers. Ruben, on his part, tried to get Prime Minister Tage Erlander to ban the bulk sale of milk. The Prime Minister was well aware that bulk milk was one of the main sources of contamination behind the paratyphoid epidemics that were spreading across the country. Poor hygiene meant that store and dairy personnel often contaminated the milk, and the disease then spread to consumers. But banning bulk milk was the absolute last thing Erlander wanted. To legislate that milk could only be sold in packaging would mean an indirect price increase for consumers, since they would have to bear the cost of the packaging. And in Sweden, household milk was, and is, sacred. Contributing to an increase in the price of milk during an election year would be committing political suicide. However, Ruben lacked an understanding of the nuances of realpolitik and became quite irritated over Tage Erlander’s stubborn refusal to agree to a ban. And Erlander, in turn, became irritated over Ruben’s constant proposals."

"But even though Verghese Kurien succeeded in getting useful products, there was still an important component missing in the plan: Tetra Pak’s machines for the aseptic packaging of milk. Without them, he would never manage to transport the milk the long distance from the rural dairies to the urban consumers. Together with Tetra Pak, Kurien planned for the order of 44 machines that would be delivered in three batches during 1970 and 1971. The necessary laminated paper would be supplied from Sweden until the turn of the year 1971/72. Afterwards, a joint venture would be formed between Tetra Pak, the government-run Indian Dairy Corporation (IDC), and the private Indian packaging company Kant & Co. The newly formed company would start local production of the laminated paper. Alfa Laval would also be involved by providing dairy equipment. The entire deal would cost just over 70 million kronor – money that India could not afford to spend. To solve the tricky financing issue, Tetra Pak brought the matter up with Sida. Thanks to Gunnar Sträng personally backing the project, Sida promised to lend the necessary funds."

"“It’s damn like talking to a fish,” Torudd thought. Although Torudd did not know it, the harsh words took effect. Hans realized that this time it was serious. He contacted Ruben and Holger. In the evening, the three gathered for a dramatic meeting. They agreed that Gad was not up to the role as head of paper production. Ruben, with his dynastic ambitions, was shaken by how serious the situation was. That one of his sons, born with such good prospects, would fail so spectacularly was something he could never have imagined. But there was only one possible decision if they wanted to save Tetra Pak – even Ruben realized this: Gad could no longer be involved with production. Formally, he remained on the board and retained the title of vice CEO."

"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."

"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."

"The later investment in Tetra Pak, however, became by far the biggest success. Not just economically but also mentally. Today, Tetra packs are so commonly seen that we take them for granted in our everyday life. It would also be difficult to imagine a modern society without Tetra Pak’s packaging. In Sweden, they are also intimately associated with the concept of the welfare state and the modern construction of society."

"This issue can be highlighted with the help of a legal case in China. In 2016, Tetra Pak was fined 890 million kronor for exploiting its dominant position. The new competition legislation was introduced in 2007 in China and Tetra Pak was one of the first companies to be convicted under the new law. The complainant was a Chinese competitor, Tralin Pak, which later changed its name to Greatview Aseptic Packaging."

"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."

"what was decisive was that it was so cheap compared to what the competitors could offer. Thanks to Erik Wallenberg’s ingenious tetrahedral shape, the material usage was only half as much as for competing packaging. And this meant that even poor countries could afford the Tetra system. Tetra Pak’s method of packaging milk is indeed one of the very few Western industrial systems that have been able to be directly adopted by developing countries without major problems."

"On Tuesday, January 22, 1991, eight people from Tetra Pak gathered at the Grand Hotel in Stockholm: Bertil Hagman with his wife, Jörgen Haglind, director of communications, Bengt Eckerwall, head of research in Lausanne, Lennart Ohlsson, head of finance in Lausanne, the secretaries Rosemarie Werner and Kristina Kessel, and the trusted chauffeur Bengt Jensen. All the rooms were reserved under their names and not the company’s. Three of the rooms were converted into offices. The blackout was total; hotel staff were forbidden to clean at regular times and to prevent leaks, all transportation to and from the hotel was handled by Bengt Jensen. The Tetra people even had their own telephone and fax lines installed to minimize the risk of eavesdropping."

"At Tetra Pak, they had not yet taken the public opinion seriously. The only reaction was essentially that Ruben walked around annoyed that consumers did not understand the grandeur of his packaging system. But now that Wedén started driving his campaign, the situation changed – developments could become really dangerous if things went badly. If Wedén’s campaign spread across the country, it would be very difficult to convince more dairies to adopt the tetra system. And then the success with the local dairies and the Dairy Centre would be worthless."

"The reason Hans wanted to sell simply came from a harsh assessment that the best thing for the future of the Tetra Group was for someone other than the Rausing dynasty to take over the ownership role. At the same time, he considered his age and had long been worried about his health. Both Hans and Gad had a trait – inherited from Ruben – to exaggerate the risks of disease. Even mundane illnesses became for them a reminder of death, which meant that diseases could not be discussed in their presence at all. Employees within Tetra Pak who fell sick and stayed home might very well find themselves reassigned to less important positions when they returned. This was because Gad and Hans considered them too frail to hold important positions. The risk was that they could die. The same applied to themselves; when either of them fell ill, he would hand over important powers, so that everything would be secured if he died. But as soon as it turned out that the illness was not serious, they immediately took back their position."

"Holger explained to Ruben that he would gladly keep his shares in Tetra Pak if he gained control over the company’s cost development, was freed from his guarantor liability, and was not forced to invest more money. This would be written down in a new agreement between the families. In a letter, he also suggested that the period for redeeming the shares should be temporarily extended to December 16 that same year unless a new collaboration agreement was reached beforehand. However, Ruben preferred not to see a new agreement and therefore ignored the letter. He had made up his mind: there would not be a new agreement that limited his freedom of action. The only thing he was interested in was delaying the development until the Rausing family had received the money from the sale. Then Holger would be thrown out of Tetra Pak."

"On October 21, 1978, the first formal order for 16 aseptic packaging machines was written. After more than 20 years of work and at the ages of 83 and 68 respectively, the two fighters Ruben and Erik Torudd finally began to approach their goal. Between October and January, the machines were ordered for the lamination factory. Finally, at the end of 1979, Torudd could visit the upcoming lamination factory in Itola near the city of Baroda. There, an educational center for aseptic machines, an aseptic dairy, and a service center would also be built. The ownership issue was settled in January when it was agreed that Tetra Pak would invest three million rupees or equivalent to 20 percent of the joint venture’s share capital. The remaining 80 percent would be owned by IDC. The company was named Indian Dairy Packaging Co Ltd (INDCL) and would have a total share capital of 15 million rupees."

"Even Douglas Draffan was caught up in the purges. He was forced away from his life’s work and moved back to the United Kingdom. Instead, a Kenyan took over as CEO of the cooperative. Erik Torudd became worried since he was uncertain whether the new, poorly educated CEO would manage the job and therefore moved Tetra Pak’s service manager in Japan, Torbjörn Nilsson, to Kenya. His only task was to oversee the cooperative’s facilities to ensure that paper and spare parts were ordered on time. The system with Nilsson as the “supervisor” worked excellently."

"The owning family, with Kirsten, Finn, and Jörn, governed the conglomerate primarily by serving on the board of the parent company Tetra Laval Group. The board functioned as the board for all three companies in the group: Tetra Pak, DeLaval, and Sidel. The CEO of Tetra Pak, Dennis Jönsson, described the family’s governance as involving board meetings every quarter and additional contact via phone or email once a month."

"Ruben’s patriarchal disposition meant that it was not until the mid-seventies that his son Hans could take over as the real power holder in Tetra Pak and start running the company almost entirely independently. But Ruben still dominated him to some extent – no major decisions were made without consulting Ruben. Until his death, it was Ruben who ultimately decided what applied. His last action within Tetra Pak was to approve the financial statements – this happened the day before he died."

"Ruben had drawn the entirely correct conclusion that the really big markets for Tetra Pak were outside Europe. But the time was not ripe and he therefore underestimated the difficulties of selling the system, not least difficulties in the form of contacts with authorities. Everything to do with food production was, and is, surrounded by walls. There was not a government in the world that did not primarily protect its own food industry and its own farmers. Therefore, the salespeople often faced various more or less ingeniously constructed trade barriers. They were forced into long and hard negotiations with the authorities to get laws and regulations changed and to obtain the necessary permits. It was a complicated job that took time."

"However, the question remains whether Ruben Rausing’s motto that: “A proper packaging saves more than it costs” should also form the basis for Tetra Pak and the current generation of Rausing in a more sustainable circular economy. It is worth pointing out that especially the aseptic packages with long durability, without the need for the products to be refrigerated, have fundamentally been a sustainable packaging system compared to many other packaging alternatives. The major climate benefits have been the minimization of packaging materials and the reduction of waste of food raw materials. At the same time, the aseptic products can have a shelf life of up to a year without needing to be refrigerated, which in turn leads to major energy savings in the distribution chain. Tetra Pak’s packaging solution also emits less carbon dioxide than the alternatives of plastic and glass packaging. However, it cannot be claimed that this will suffice for the sustainable packaging solutions of the future."

"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."

"The new organization would start when Tetra Pak moved into its own premises. This was planned to happen in a few years. For Ruben, it was time to realize his dynasty plans. Even if it meant that two completely inexperienced sons would get top positions in the company. Gad was 30 and had a degree in chemistry and archaeology. Little brother Hans, who would become CEO, was 26 and had studied economics, business administration, and languages at university. Although forming the dynasty was primary for Ruben, there was one thing he was terrified of: that Erik Torudd would see the organizational plan as a provocation and decide to leave the company as the inexperienced Hans became his superior."

"The new organization would start when Tetra Pak moved into its own premises. This was planned to happen in a few years. For Ruben, it was time to realize his dynasty plans. Even if it meant that two completely inexperienced sons would get top positions in the company. Gad was 30 and had a degree in chemistry and archaeology. Little brother Hans, who would become CEO, was 26 and had studied economics, business administration, and languages at university. Although forming the dynasty was primary for Ruben, there was one thing he was terrified of: that Erik Torudd would see the organizational plan as a provocation and decide to leave the company as the inexperienced Hans became his superior."

"The two dairies that Tetra Pak tried to convince to package milk in tetra, Mjölkcentralen and Lundaorten, demanded that the company lower the price, otherwise they were not prepared to sign any contract. The price was so low that the entire profit margin disappeared. Negotiations soon reached a deadlock, which could be devastating for Tetra Pak. The company’s weak finances meant that it was necessary to get the milk machines on the market. When Hilding Borstam began to argue that the tetra packaging would result in decreased revenues for the dairy, Ruben became irritated. He did not present his most important argument, that the dairies could save significant amounts just by utilizing the trucks’ space to 87 percent with tetra packaging instead of just 42 percent with glass bottles. It seemed so obvious to him that he believed Borstam would understand it himself. Therefore, no one informed Hilding Borstam that the lost revenue on glass bottles would be replaced by extensive rationalizations that would ultimately give the dairies a much larger surplus. Instead, Ruben gave him a pompous lecture about the sweep of history."

"At the beginning of August, when Holger gradually took over major parts of the executive power, Ruben began to realize that his dynasty building was seriously cracking at the seams. If Hans disappeared from the CEO position, it also meant that it was the end of Ruben’s real power in Tetra Pak. It was a situation that he could never, not even in his wildest dreams, have imagined. What would remain was the influence in the board, which could be quite important, but would mean that he could no longer interfere in the operational activities. Since Ruben wanted to approve all decisions, big and small, such a development was a pure nightmare for him."

"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."

"Already in 1948, they showed the machine to the packaging manufacturer Dobeckmun in hopes that the company would undertake to manufacture and sell the paper on a license. Tetra Pak also tried to interest other packaging companies, including Marathon, Shellmar, and Milprint. At the same time, they began to investigate which American company could sell both machines and paper for Tetra Pak. The company they ultimately chose was the world’s largest packaging industry, Continental Can. Unlike its fiercest competitor, American Can, it had no paper milk packaging. However, Continental Can did make tin cans for canned milk for the dairy industry. Thus, the company already had established contacts with the dairies, which was exactly what Tetra Pak was striving for. Erik Torudd was sent off to establish contact with the leadership of Continental Can."

"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."

"The sales successes soon forced even the large farmers’ dairies to cooperate with Kenya Cooperative Creameries. What particularly influenced them was that Douglas Draffan, with the support of Tetra Pak, had managed to convince the colonial administration of the positive effects on public health that would be achieved if mandatory school milk was introduced. When it was decided that the school milk could only be served in tetra packs, it effectively meant that dairies without the tetra method were excluded from competing for the orders. In other words, the large farmers no longer had a choice. If they wanted to be on the market, they simply had to open the door for cooperation with the previously so despised cooperative dairy."

"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."

"Before he left for the USA on the negotiation tour, he sat down and carefully analyzed how it should be set up. His deliberations led to Tetra Pak’s entire USA strategy being changed. Instead of acquiring someone who could sell the machines under license, they would instead try to sell them to the dairies themselves. Additionally, they would acquire a number of companies that would manufacture the paper under license. Due to the stringent American antitrust laws, having just one paper supplier for the dairies was not enough, Holger assessed."

"“Yes, yes. That’s probably the price one has to pay for having and having had a competent CEO,” Ruben said resignedly after the negotiations. However, Ruben recovered relatively quickly from his depression. After just a few months, he began to realize that he didn’t have the money it would cost to buy Holger out of the companies. He thought it was just as well that the agreement looked the way it did. If everything developed as he planned, Tetra Pak would soon start to yield substantial profits and then he would be able to earn enough money to buy Holger’s share. In his very special world of thought, he began to see the agreement as an ideal settlement. He was sure that Holger would voluntarily divest the shares after five years. This would finally allow Hans and Gad to take over the conglomerate completely."

"The classic theory of how companies internationalize is based on the companies first establishing a stable domestic market. Once that is done and operations at home are consolidated, they start working on the export markets. It is a process that often takes several years. In the case of Tetra Pak, it was exactly the opposite. While they were working on the Swedish market, they tried to spread their products all over the world."

"Tetra Pak became a success in Kenya. For Kenya Cooperative Creameries, the introduction of the Tetra method meant that milk sales increased by seventeen percent – that much had the milk been diluted previously. By effectively preventing the possibilities of cheating, the cooperative earned well beyond the cost increase brought by the packaging change thanks to the increased sales."

"“If I think about what they have meant to us - Erik Wallenberg, through his Tetra invention, Gunnar Brime through 27 years of activity in ÅR, Torsten Jeppsson through his devoted, tremendously hard work over many years, Harry Järund through his inventing activities, Stig Sunner through his scientific advising, Erik Torudd for his commitment to Tetra Pak from the very first minute, Göte Engfors through his 20-year, significantly underpaid directorship in our various companies, and Carl Borgström’s exceptionally important advising for our operations - then the price you mention, as far as I can judge, is really not reasonable,” he continued. But Holger never had the chance to carry out his plan to help the remaining small shareholders."

"Without showing it, Hans was shaken by the subsidiary managers’ message. Eventually, he realized that the company could not solve the problems on its own. What was needed was Brik’s chief designer, Åke Gustafson – the man who left Tetra Pak in 1964 after being forced to exaggerate the machines’ excellence and hasten their delivery times. Since his departure, efforts had been made to make the machines and materials work reliably – attempts that were largely fruitless."

"The basic idea came to him from one of Tetra Pak’s demonstrators who had suggested in retail that housewives should fold in the corners of the tetrahedron so that it would not take up so much space in the refrigerator. Starting from there, Gustafson figured that if you took a paper cylinder and folded in the edges at the bottom and the top, you would end up with a cylinder that could be used for continuous filling. It also wouldn’t use much more material than the tetrahedron did. Thus, it was possible to stay within the packaging markup, which by then had increased so much that a slightly more expensive packaging could be made."

"The development of Brik became much more expensive than anticipated. Tetra Pak was a company governed by economists; the engineers had little to say in the management. This led to the management having unrealistic expectations about how quickly machines could be developed and distributed to the dairies. Economists often greatly underestimated the technical problems. In the early days of Tetra Pak, the technical problems had remained at a manageable level, which meant that even the business school-trained economists could provide valuable ideas and contributions to the development. But with Brik, it was different. The company had embarked on a project that was extremely advanced. For instance, it was not only about producing a machine that could precisely fold a rectangular carton according to the folding instructions on the paper – something that was difficult in itself – but also about how to prevent the plastic from cracking at the folds. There were many other major problems as well."

"For the arrangement to hold against the Swedish authorities, it was of utmost importance that someone in the family lived abroad and stood as the owner of the companies. The company Tetra Pak could not have any ownership ties to companies such as Socomer and Cordotex. The owner of the companies could also not have any formal ties to Sweden, but had to be registered abroad. Otherwise, the construction would likely have failed for legal reasons."

"In an interview conducted with Ruben Rausing in his later years, he stated that it would be impossible to create a global industrial company such as Tetra Pak in today’s corporate environment. Then one might need to remind about his wife Elisabeth’s words when Ruben himself doubted the tetrahedron’s potential as a packaging solution: “Have you tried?”"

"Now Holger could start cleaning up the organization for real. The first action was to put Hans and Gad in their place. “Tetra Pak is bankrupt. It is now under administration. And decisions about expenditures can from now on only be made by me,” he informed them in brusque terms. He was right. The company was ready for bankruptcy if any of the creditors demanded their money back. In fact, since 1956, the company had been obligated to prepare a balance sheet for checking, but they had ignored it so that no outsider would see how badly off it was. “If Hans had not been a son in the house, he would not have stayed another ten minutes,” Holger told Erik Torudd."

"The situation was grim and it seemed that the only thing that could save Tetra Pak was to borrow more capital. It was Ruben who in March 1971 was tasked with going to Stockholm and talking to his friends in the Wallenberg family to try to get new credits from Enskilda Banken. But once in Stockholm, he was immediately disappointed. His old friend Marcus did not even receive him. He believed that as chairman of the board, he should not interfere in the daily management of the bank. Ruben had to settle for “just” meeting the bank’s CEO, Marcus’s oldest son, Marc. Ruben took it as a personal insult that he did not get to meet the head of the finance family. It was as if they treated him like just any zero and not the great industrialist Ruben Rausing. He was no less offended that Marc refused to lend him the ten million kronor that the company needed."

"It turned out quite quickly that Åke Gustafson was right. The problems were solved and the “torpedo” Palm had managed to get the technicians in order at the factories. Once it was working, Tetra had an aseptic packaging that was both easy to pack at the dairies and consumer-friendly. At the same time, the packaging was inexpensive compared to what the competitors could offer. The main competitor, Pure Pak, did not have an aseptic packaging and was thus excluded from many markets. The system gave Tetra Pak nearly twenty years of lead."

"As soon as Åke Gustafson had wound up his current assignments, he rented a plane at Tetra Pak’s expense and set out to visit the company’s various production facilities. He was met with a miserable sight. During the first company visits, Gustafson thought it was merely a coincidence, but eventually, it became clear to him that there was a pattern within the group; significant demoralization had occurred within the organization, there was great confusion and uncertainty about what the group’s policy really was, and the technical departments were functioning poorly. He also found a long line of managers who had been promoted beyond their level of competence."

"The difficulties of the next generation of salespeople should not be underestimated, but there is no denying that the table was largely set for them with the introduction of the aseptic Tetra Brik system. This is something that few of them have reflected on, but the fact remains that when Brik finally worked, Tetra Pak for the first time had a packaging that was actually consumer-friendly. The combination of consumer-friendly packaging with limited material usage and a prepared market meant that sales could explode. When the company later presented its aseptic Brik, Tetra had long been established in the countries that demanded an aseptic system. As tetrahedral machines gradually needed to be replaced, it was natural to choose Brik. It has also been precisely the aseptic Brik that has generated the big money for Tetra Pak."

"How could Tetra Pak then become such a success and generate so fabulously much money for the owner family? Those who were there from the beginning and worked so hard but never got to see the company’s financial breakthrough constantly return to this question, while today’s Tetra Pak employees view the company’s profits as a given."

"Instead of selling their own plastic packaging to compete with the PET bottle, a different strategy within plastics was chosen. Tetra Pak switched to selling machines and equipment to produce plastic bottles, as well as selling machines to fill PET bottles. The strategy was implemented through acquisitions, where in 2001 a bid of 15 billion kronor was placed on the world-leading company in manufacturing machines for PET bottles – French Sidel. However, the acquisition was delayed by the EU competition authority and was not approved until 2003. In 2004, the group continued to purchase Italian Simonazzi, a leader in filling machines, which was merged with Sidel."

"The purchase of Alfa Laval was a stroke of luck, even though Tetra Pak and its owners thought that the price tag was ultimately too high. But once they took over the company, it turned out that it contained so many hidden tax benefits, properties, and other assets that the entire deal could be written off in less than two years. Additionally, Tetra Pak was able to use Alfa Laval’s global network, which meant that the company suddenly managed to close deals that otherwise probably would have been impossible."

"On February 16, Van Meter’s response came—cold as ice. When Ruben read it, he reacted in the same way as he usually did when contradicted. “He understands nothing. Someone should hit him hard on the head.” Ruben’s unfortunate letter had led to the break of relations between Tetra Pak and Continental Can, and the negotiations ended."

"But by virtue of its large material purchases, Tetra Pak could request to buy directly from suppliers and avoid the costly intermediary that agents represented. But not only that, Tetra Pak requested that the suppliers continue to charge the same final amounts as before. However, the commission that was previously paid out to agents would now be paid to Socomer instead. In this way, large revenues were obtained that could formally never be linked to Tetra Pak and that never passed through Sweden but went directly to Socomer."

"What went so easily in developing countries was much harder to implement in richer nations. There, people could afford to pay a high price for their milk packages. Therefore, it was harder to use the price as an argument. In these countries, Tetra Pak instead focused on the fact that the machines were very easy to operate. In the fifties, dairy staff were poorly educated and dairies had a very high staff turnover. Therefore, Tetra Pak’s salespeople argued that it was quick to teach how the Tetra machines worked. However, sales were still sluggish, often because of the resistance to purchase among housewives, who were skeptical of the strange shape of the Tetra pack."

"To return to Tetra Pak and the challenges the group faces, the first major challenge is the Chinese low-cost competition. Gad Rausing described already in the 1960s, when the management realized the opportunities with the aseptic packaging system, that they “were holding a tiger by the tail and that it was important to keep holding it by the tail”. The situation that has now arisen is that the Gad family and Tetra Pak have had to push their own aseptic “tiger,” as well as dealing with the Chinese “tiger economy” on their heels."

"Other dairies became skeptical when they saw how poor paper deliveries disrupted production and deliveries at the dairies that had bought the system. And when the French market began to be cultivated, the authorities were coldly disposed, as they had seen what happened when the Dutch dairies received poor paper and the milk lay in pools under the tetra machines. They questioned whether any import licenses for Tetra Pak products should be issued at all. Erik Torudd and his salespeople were truly working against the wind."

"After a long period of analyzing the market and Tetra Pak’s opportunities, the incredible happened. The tough and icy finance prince began to soften. He started talking about the bank perhaps helping to launch Tetra Pak into the market by utilizing its contacts worldwide. Finally, he was also prepared to consider an overdraft facility for Tetra Pak. But no deferment of amortization was discussed. The credit was to be repaid in four years."

"However, not all problems were solved yet. In a filling system for aseptic milk, there are many potential sources of contamination: the sterilizer, the pump, the homogenizer, couplings, the filling machine, the packaging material, etc. It was crucial to eliminate the risks of contamination, otherwise, one risked putting oneself in a very embarrassing situation; which company would want to be known for causing a series of epidemics? At Tetra Pak, it was realized that they could not handle the problems on their own. Instead, they chose to continue the collaboration with Alpura, where the expertise was available. There was often friction between the Swedes and the Swiss, as the Tetra Pak men were not used to the scientific method used at Alpura. At Tetra Pak, the trial and error method had been the norm, while Alpura operated completely differently. The Alpura officials proceeded strictly scientifically and had the highest standards for hygiene and testing."

"Agerman, Per & Pineus, Per: Tetra Pak’s dubious deals. Affärsvärlden January 20, 2004."

"At the same time, Alfa Laval’s operations were refined to heat transfer, fluid separation, and flow management within the areas of energy, marine, food, and water. Thereafter, Alfa Laval was sold to Björn Savén’s private equity firm IndustriKapital. However, Tetra Pak retained a minority stake in the company."

"The day after, the front pages of the newspapers were dominated by the biggest corporate purchase in Swedish history – carried out by a single family. Through the purchase of Alfa Laval, Tetra Pak gained control over the entire production chain from milking to packaging. On January 1, 1993, the two companies merged and a new major corporation, Tetra Laval, was created."

"Overall, the problem-solving of the first generation – technically, market-wise, and legally – had given subsequent employees a 20-30 year lead. Many of Tetra Pak’s later generations of employees have lived under the illusion that the company’s products have always sold themselves. This was certainly not the case in the 1940s, 50s, and 60s."

"Tetra Pak’s success in Kenya was mainly due to two things. The first was that the packaging was secure. No one could open it and then reseal it. This made fraud impossible. This was not the case with competitors’ paper packaging, as they were coated with wax instead of paper. If one opens such packaging, it is easy to reseal by heating the wax."

"The size of the tax claims previously confirmed estimates in the media that several of the founders of major companies had become billionaires. They were still light years behind clans such as the H&M Persson family, Tetra Pak’s Rausing, or Ikea’s Kamprad, but they had within a relatively short time earned more than any highly paid executive in the business sector."