Advice to Food Processing Suppliers: Adapt to stay innovative in the marketplace

Tom Egan, vice president, industry services, Packaging Machinery Manufacturers Institute, discusses key challenges and opportunities for suppliers.

By Diane Toops, News & Trends Editor

Many of these trends will be evident at Pack Expo Las Vegas 2011, slated for Sept. 26-28 at the Las Vegas Convention Center.

Food Processing: What is PMMI's outlook for growth in the packaging and processing industries heading into 2012?

Tom Egan: It's still pretty solid. PMMI does a regular series of economic indicators and quarterly outlooks. We just published our third-quarter outlook by market segment, and we anticipate most of them will still perform well in the second half of 2011 and into 2012. In fact, food, personal care and pharmaceutical/medical devices remain up. Research indicates beverage to be flat. The beverage segment is very large, and although some applications are encouraging -- performance drinks and RTD teas, for example – the overall segment doesn't have the growth we see in other categories. In sum, things generally look good. Could there be a wild card? Yes.

FP: Will this lead to more investment in new technologies in packaging?

TE: Yes. Along with seeing growth in certain market segments reflected in our third-quarter outlook, we have anecdotal comments from our members that they are seeing solid business growth. These two factors, combined with some positive statistics we're seeing from other industry resources, indicate that business is good and will lead to more investment.

One area we see this investment going into is the increased automation of manufacturing lines, in part due to the need to reduce costs over the long-term. In fact, there is interest in technologies across the board that can help drive down costs as soon as they are implemented. 

We've also seen a resurgence of business for co-manufacturers and contract packagers, who will need to invest in new technologies to keep up with demand. Increasingly, brands are turning to these companies for new product introductions, since they can handle them very quickly.

We've seen a resurgence of business for co-manufacturers and contract packagers, who will need to invest in new technologies to keep up with demand.

– Tom Egan

FP: With this projection of growth in the industry, how is PMMI working to keep the dialogue about innovation alive and well?

TE: The Pack Expo family of trade shows is one of the most powerful platforms to bring the whole industry together. Industry suppliers are working hard to deliver innovation that can contribute to the success of both small and large brands. Each year, Pack Expo is the forum to get that innovation to market.

We're launching a customer-centric approach at Pack Expo Las Vegas 2011 to make it easier for attendees to find the innovation they need. We're targeting three industries with that approach this year: confectionery, bakery/snack and pharmaceutical. Attendees in these sectors will find several features geared toward them, such as The Confectionery Pavilion and the Pharmaceutical Pavilion, as well as lounges like The Candy Bar, The Baking and Snack Break, and The RX Lounge that provide focused networking opportunities.

Even for attendees outside these sectors, there's still a tremendous opportunity to discover innovation at Pack Expo Las Vegas. One of the great things about the show is that it's easy to look outside of your own industry for inspiration and fine equipment that might apply to your business down the road and be a true game-changer.

Attendees will also have the opportunity to learn from their peers at the Conference, being held in conjunction with the show. We have speakers participating from major CPGs, including Coca-Cola, General Mills and Bush Brothers & Co. There's really no substitute for hearing directly from a peer about what's working and what isn't.

Outside of Pack Expo, PMMI conducts several focus groups each year, bringing together professionals from different market segments to dissect their operational issues. We share these findings with our members to illustrate the bigger picture of industry needs and how they can respond.

FP: What about food safety?

TE: The Food Safety Modernization Act, signed by Congress in January, is certainly going to have an impact on how food manufacturers operate in the years ahead.

The good news is that the pharmaceutical segment has already paved the way thanks to the standard operating procedures that are in place to validate manufacturing lines. We anticipate that many food industry professionals will look to the pharmaceutical sector for technologies and processes that may have crossover potential. For example, some of the validation software could be adapted to food lines to provide the same level of sophistication and checking throughout the supply chain.

FP: What trends are you seeing in food processing and how have they impacted equipment suppliers?

TE: We're seeing two major food manufacturing trends that are impacting equipment. The first is outsourcing. As I mentioned earlier, more CPGs are looking to market products that require production and packaging capabilities beyond what they currently have in-house and are turning to contract manufacturers and packagers for help.

The second trend is the implementation of equipment with quick changeover capabilities. Improvements in modified atmosphere packaging, or clean in place systems allow for a faster changeover from one product to another. One of our members, Alpax Products, has driven some really neat innovations in retort processing. The constant evolution of products and processes will prompt newer, faster technologies to manufacture goods more efficiently.

FP: Have end users changed their approach in addressing processing and packaging on the line?

TE: The line that divides the processing and packaging operations has increasingly blurred over the past few years. End-users are taking a more ‘big picture' approach to new product introductions. Rather than saying, ‘I need to flavor this product while it's still being cooked, put it into this container while it's hot, cool the container and put it into a six pack,' they are saying, ‘I want to introduce product X to the marketplace as a club pack and with these characteristics and ingredients.' The major difference is that the latter approach doesn't distinguish each step in the process. When you have to get new products out as fast as today's consumers are demanding them, there's no time to make those distinctions. End users have to bring their suppliers in –for both the processing and packaging steps –during the early stages of product development to not only ensure their idea is feasible, but to make sure it is manufactured as efficiently as possible

This integrated approach for consumer products prompted PMMI to integrate processing technologies into the Pack Expo shows. The Processing Zone, which was introduced in 2010, will be featured for the first time in Las Vegas this September. Recognizing that the processing and packaging teams are increasingly working together, we wanted a forum where manufacturers could find whole-line solutions.

During a past show, four PMMI members united in a single booth to clearly demonstrate that their technologies could work together seamlessly. Their approach was: When you need to package a product, we have a coding solution, a product handling solution, a filling solution, and a cartoning solution. So spend a few minutes talking to us about what you are trying to achieve, and we can present an integrated solution to make that happen.

FP: How does the total systems approach impact the purchasing process?

TE: As purchasing teams seek more complete solutions to their manufacturing challenges, they are adjusting their manner of working with their suppliers. They are bringing suppliers into the product development process earlier than ever before, as several of our members can attest to. In some cases, end-users are calling them in to discuss how making a small change can impact how a piece of equipment handles the product or how much the end-user can save in terms of material usage. Suddenly, that small change has led to major cost savings, higher speeds or increased output, all of which positively impacts the whole line.

Things are moving faster today; there's so much more data and information available to help CPGs enhance their operations. Many will recall when packaging and processing lines could be left unchanged for two weeks -- all you had to worry about was one SKU. Now, it's not uncommon to talk about a packaging line that is set up once, twice a day –even four or five times each day. Companies need to adapt; to do that, they need to work fast.

FP: What are the toughest challenges for your members?

TE: End-users always require more flexibility to accommodate faster changeover and more product or packaging types. Additionally, equipment needs to hit the ROI targets of end-users more quickly. End-users expect certain rates of return, and those hurdle rates in their business must be met to have a successful project. It's a challenge, not because we can't do it, but because what one customer needs is very different from another. The ultimate need is to make the line as individualized and specific as possible for one customer, and be able to make a change when the next customer comes in.

FP: What opportunities do you see for processing equipment manufacturers?

TE: Rapid changes in consumer demand and the end-user need for flexibility will also continue to impact the makers of processing equipment. What we see in the marketplace today could be drastically different in 18 months. Our members on the processing side are trying to adapt quickly.

This is one of the discussions we want to encourage at Pack Expo Las Vegas. A little knowledge can go a long way. The more open brand owners become to innovative solutions – from both inside and outside their market segment – the more likely they'll find the solutions that will help them adapt to the changing marketplace.