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A marriage of value-added convenience Sugar Foods Contract Packaging and Café

El Marino feed off each other's strengths to enhance speed to market and provide ‘hidden value' in exporting dry-blended products.
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Two concepts fueling the growth of contract packagers today are pretty simple. Form the right partnerships. Provide measurable value. Sugar Foods Contract Packaging de Mexico is a co-packer that has been transforming itself over the past year to score on both of these accounts.

Consider these two recent examples:

• Sugar Foods Contract Packaging optimizes speed to market in packaging some coffee-related products as well as powdered non-dairy creamer and sugar for Café El Marino. These products are distributed under brands such as Café El Marino and under private-label brands to retailers and institutional customers in the United States and Mexico.

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The co-packer provides “hidden value” for Med-Systems by moving some of the packaging and repackaging steps that were previously done in the Pacific Northwest all under one roof at its Mazatlán, Sinaloa, Mexico, facility. The relocation eliminated three steps and reduced co-packing-related costs significantly.

A number of events have occurred over the past year at Sugar Foods Contract Packaging to make these two packaging initiatives possible. Foremost, the company is now under joint ownership of New York City-based Sugar Foods Corp. and Mazatlán-based Industrias Marino, Mexico's largest coffee producer. Sugar Food Contract Packaging has relocated from Sun Valley, CA, to Mazatlán and operates as an independent company.

 

Side-by-side operations

The move to Mazatlán has positioned Sugar Foods Contract Packaging for expansion in its core service areas of mixing and packaging dry-blended products, says James Ellis, vice president. Proximity and shared expertise are crucial to this growth.

Café El Marino and Sugar Foods Contract Packaging operate side-by-side in a bustling facility in Mazatlán, a seaport city on Mexico's western coast. On one side of the facility sits Café El Marino, operating 250,000 sq ft of coffee-production and packaging space. In addition to coffee, Café El Marino manufactures and packs powdered soft drinks, shake mixes, and chocolate; gelatin; soup bases; and other food items. The company exports its products through its Food Service and Retail Divisions to the United States, Canada, Latin America, Europe, and the Far East. Nearby, Café El Marino also operates a 100,000-sq-ft distribution center, which is minutes from the Port of Mazatlán.

At the other end of the facility, Sugar Foods Contract Packaging operates 50,000 sq ft of space for packaging dry-blended products, from coffee to beverage mixes to nutraceuticals to food supplements. The co-packer blends proprietary formulas. It also creates packages using artwork files provided by customers and offers packaging services from form/fill/seal, bag-in-box, portion-control, and single-serve package development, and gusseted pouches (1-g unit-of-use packets up to 2-lb pouches) to preparing shipments for export at the port facility. Sugar Foods Contract Packaging is also capable of doing assembly work, is certified organic and kosher, and has certification from the U.S. Food and Drug Administration.

Operating within the same facilities, Café El Marino and Sugar Foods Contract Packaging bring economies of scale to the whole operation. Ellis says, “Being a division of Sugar Foods Corp. within the Sugar Foods plant in the U.S. restricted the growth of our contract packaging operations due to space and capital investment. Teaming up with our long-term partner, Industrias Marino, was a natural fit for utilizing their production facilities, expertise, and quality-control procedures.”

In moving 1,000 miles southeast to Mazatlán, Ellis says 95% of Sugar Foods Contract Packaging's customers have followed it to the new location. In addition, the co-packer has gained three new customers and has recently received approval following audits by two major global consumer products companies. Ellis notes: “We didn't solicit that business. It came to us through visibility by way of the Contract Packaging Association.”

Adds Arturo Lizárraga Mercado, Café El Marino general director, “The spirit of this venture between Café El Marino and Sugar Foods is a true partnership. One of the advantages is that we can create products real fast for customers for presentation and show them an actual package. Sugar Foods helps us with the packaging of some of our coffee, and we help Sugar Foods with the distribution of their products.”

 

Speed to market

Café El Marino packages some of its own products but relies on Sugar Foods Contract Packaging to co-pack other products. These include coffee creamer marketed under the Café El Marino brand and food-service-size 2-lb foil bags of cappuccino. The process of creating cappuccino at Café El Marino and then packaging it next door at Sugar Foods Contract Packaging is a perfect example of how the two companies, working together, optimize speed to market, and Contract Packaging viewed the operation in action.

The green coffee used in producing cappuccino comes from southern Mexico and arrives at Café El Marino in 150-lb, food-grade burlap sacks. Once removed from the sacks, the beans are placed in a dry mill, cleaned, and forwarded to a “selecting station.” Operators at the selecting station separate the beans according to size, weight, and color.

Selected beans enter a chamber where they are roasted at 486˚F. “In order to make cappuccino, you first have to make instant coffee,” Mercado explains.

After roasting, the beans enter extraction and evaporation chambers for grinding and obtaining liquid coffee extract, and then for reducing water volume and raising the concentration of the solid coffee grounds. “In the end, you have dry solids of coffee,” Mercado says, adding that the extraction and testing processes requires 20 hours.

At this point, the dry coffee solids are ready for blending. Precise mounts of creamer, sugar, and other ingredients are blended with the solids to create different cappuccino flavors. Fresh batches of cappuccino are placed into totes for the very short trip over to the Sugar Foods Contract Packaging portion of the facility for packaging.

After the totes arrive at the co-packer's discharging station, the cappuccino is loaded into stainless-steel drums and then gravity-fed into a Bosch form/fill/seal machine. The “cappuccino room,” like many of the packaging machinery rooms in the co-packing plant, is isolated in order to maximize sanitation and control humidity. “There is no transfer of product odor or taste from one machine to another,” Ellis notes.

At the end of the production line, operators pack the filled 1.5-lb and 2-lb foil pouches of cappuccino into shipping cartons holding either six or 12 units. The shippers are transported either to Café El Marino's nearby distribution center in Mazatlán or are shipped directly to Sugar Foods Corp.'s distribution centers in Los Angeles, CA, and Atlanta, GA.

The close proximity of both coffee-production facilities and co-packaging operations enables a one-week turnaround from the time when the green coffee arrives at the plant to the time when packaged cappuccino is ready for shipment.

 

‘Hidden value'

Besides speed to market, the location of the co-packing facilities in Mazatlán also offers what Ellis describes as “hidden value” for customers. By that he means introducing new ideas that eliminate or improve production steps, or reduce costs that may not have been readily apparent.

For example, Sugar Foods Contract Packaging reduced Med-Systems'
co-packing costs substantially, Ellis says, by eliminating three “touches” in the packaging process for its SinuCleanse nasal wash system. Med-Systems, based in Madison, WI, manufactures the product and markets it through U.S. drugstores.

SinuCleanse comes in a paperboard carton that includes a “tea vessel,” 10 product pouches, and instructions. It is also available in 60-count refill packs. Previously, the product pouches were created and filled in California and packed 2,000 to a case. Those cases were then shipped to a fulfillment facility in Seattle, WA. There, the pouches would be removed from the master cartons and repacked, either 10 apiece into the kits or into the 60-count refill cartons.

Med-Systems moved the entire operation to Sugar Foods Contract Packaging's Mazatlán facility. This tactical step, Ellis explains, has eliminated the need to pack and unpack the 2,000-pouch master cartons before the kits are assembled. Another bonus is the elimination of freight costs for shipping master cartons to the Pacific Northwest. Ellis also says that Sugar Foods Contract Packaging was able to comply with FDA Good Manufacturing Practices requirements, a critical must-have for Med-Systems.

 

Looking ahead

Ideas such as the filling solution for Med-Systems have Sugar Foods Contract Packaging on a course toward future growth by sharing its production expertise, distribution capability, and labor with Café El Marino. One future objective at Sugar Foods Contract Packaging is to extend the hidden-value approach by providing speed to market for the toy industry, Ellis adds. Currently, the company fills pouches of powdered food for toy kits, and then ships the pouches to the Far East for insertion into the primary packaging along with the toys. The completed toy packages are then shipped to the United States for distribution.

This entire process requires 12 weeks—and while a toy enjoys an unlimited shelf life, the powdered food that is packaged along with it carries an expiration date. The long turnaround time in the packaging process reduces the pouched food's “good until” sales window once it reaches retail shelves, Ellis notes.

“What we'd like to do is get the toys shipped to the Port of Mazatlán, where we have negotiated a 60-day complementary warehousing program, then produce the food and put the food in the toy package. In other words, reverse the current system to provide speed to market and a fresher product,” he says.

Ideas that are currently in product and packaging development offer the hidden value to which Ellis refers.

 

The value of case printers in custom packaging

Custom packaging is another value-added service at Sugar Foods Contract Packaging. Meeting customer requirements for short package runs, quick ins and outs, and promotional items requires the flexibility that demands internal control of case printing.

Sugar Foods accomplished this by installing Iconotech Optimizer digital case printers to print everything economically on outer cartons, from graphics to ingredients statements. The print rate is a maximum of 60 cases/min.

The time and space savings that the case printers provide the co-packing plant is significant, says Mark Thomson, vice president of operations. The case printers streamline operations, making them less labor-intensive. Sugar Foods Contract Packaging uses the equipment to accommodate the always-changing case quantities of private-label customers.

The case printers use computer-generated artwork. This benefit eliminates the waiting time for printing plates or preprinted shipping materials required in traditional printing methods to fulfill a promotional or just-in-time short run, Thomson says.

From a carton standpoint, the case printers enable Sugar Foods to reduce lead time for developing an attractive shipper case from weeks to minutes. That change has eliminated the possibility of dated cases, and Sugar Foods Contract Packaging can give customers more attractive shipping cases, at no additional cost, that are both easier to read and quicker to identify.

2005 Toy of the Year nominee

Another specialty of Sugar Foods Contract Packaging is blending product formulations. Funrise Toy Corp. approached the co-packer with this challenge: Create new items “with action” for Funrise's Doctor Dreadful line of laboratory toys in which kids create their own food and beverage products.

Sugar Foods Contract Packaging created more than 20 new product formulations of desserts, gelatins, and sticky liquids, such as bubbling potions for the “Demented Drink Lab.” After creating the formulations, the co-packer filled the powdered mixes into pouches and shipped them to Hong Kong, where they were inserted into the toy packages.

With the new food and beverage formulations, Doctor Dreadful was a nominee in the Activity Toy category for the Toy Industry Association's 2005 Toy of the Year Awards.

 

The author, Jim George, is the Editor-in-Chief of Contract Packaging magazine.

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