EXPO PACK Mexico 2018 (Expo Santa Fe Mexico, Mexico City, June 5-8) revealed a more complex, more mature market in Mexico and Latin America than existed when the event started 32 years ago. It's different now than it was even five years ago.
What used to be considered a good show for the high-volume, low-cost, or entry-level machinery that developing markets require now supports a heathy demand for a plurality of machinery sophistication, including the fastest and most innovative.
In Mexico in particular, the beverage industry continues to set the pace among categories in new investment, with new breweries making beer the largest subsector. The biggest brewery in the world is coming soon to Mexico. Heineken, AB InBev, and Constellations Brands alone project 15 million hectoliters in new capacity in 2018. Such installations arenβt going to be using entry level machinery.
And in the broader Latin America market, consider the growth of snack food. According to new research by PMMI Business Intelligence, developing countries in Latin America and Asia Pacific will continue to grow at the fastest rate, globally, with larger Europe and North America remaining comparatively flat. This growth requires automation, and the region already has at least 25 years of installed base to grow upon.
None of this is to say the entry level market isnβt still a vibrant portion of this regional packaging machinery scene. Bosch Packaging Machinery, for instance, a producer of some of the most sophisticated machinery around the globe, used EXPO PACK Mexico 2018 to help rollout the entry-level Pack 102, a hygienic, stainless steel horizontal flow wrapper at a price point thatβs well-suited for developing markets.
But on the other side of the coin, Serac had its FC filler/capper machine on site at the show. The machine aims for extreme precision in its fill, and while many machines aim at a three-sigma precision limit, this machine attains one-sigma. Now, this level of precision might not be necessary if the overfill were an inexpensive liquid, like water. But for expensive products, like motor oil, perfume, milk, or anything else that has a lot of processing tied up in it prior to reaching the filler/capper, thatβs a different story.
βWe pride ourselves on this precision, and a lot of times return on investment can be less than a year just by product give away savings,β says Alan Bonanno, Marketing Manager, Serac Group. βAnd that doesnβt just apply to the North American or European market, that applies here, too. If we can save an end user one, or two, grams per bottle, and theyβre doing 300 containers a minute, that adds up wherever you are.β
Meanwhile, PolyPack brought to the show a top-of-the-line shrink bundling machine, capable of speeds of 60 bundles/min for this application, that they would otherwise market to Coca-Cola Co. or other massive players the world over. But this machine has already been sold, to the tune of around $300,000, into the Mexican market for a milk application. Whatβs more, the machine is being added to an existing Tetra Pak line, no small piece of innovation for no small price in its own right.
βSo if I were to tell most people βI'm going sell a $300,000 dollar bundler in Mexico,β theyβd likely say, βNo, you're going to sell a $30,000 dollar bundler,ββ says Emmanuel Cerf, VP of Sales and Marketing. βBut this is a machine that is state of-the-art, and weβre selling it here because the region is growing and they need the capacity, they need the speed, and they can't really do it manually or semi-automatic at those speeds.β
And this wasnβt a freak occurrence. PolyPack has had a number of large installations in Mexico or Latin America. One of $600,000 for two machines just last year, and another Unilever bundler that does 200 bundles/min. As far as Cerf knows, this is the highest speed, most efficient bundler in the world for an aerosol line.
βWe have to look at Mexico as a developed market,β Cerf says. βItβs not a new market, it has been established. Weβve been here for 20 years now, and weβre now seeing some really nice facilities. Theyβre right up with Europe and North America.β
Elswhere, Nalbach Engineering Co. used the occasion to demonstrate a higher price point multilane auger filling system that uses direct drive servo systems on its hoppers instead of clutch brake controls. These are just a few examples, but the list of exhibiting OEMs targeting sophisticated end users was exhaustive.
More maturing trends
Cost is no longer the lone market force in Latin America, as the invisible hand of consumer demand drags brands and manufacturers into new sustainable, ecological, and package design territory.
In a region known for churning out produce in all seasons, the organic, less is more, clean label trend is really hitting its stride in Latin American markets.
βIn my experience, and Iβve been coming here for all 25 years, Mexico has not been particularly fast in adopting recycling, less is more, reusable packaging trends, probably similar to how the U.S. has been slow compared to Europe,β says Dennis Quinn, Sales Coordinator, Foremost Fuji. βTheyβre just like us. These sorts of green initiatives werenβt important until there was a benefit for someone. Now, thereβs a cost savings to source reduction, and thereβs a necessity of meeting a customer demand for green packaging where there wasnβt one before. Just like us in the U.S., there has to be a reason, other than it simply being the right thing to do, to address these trends. There has to be an economic reason, and reduction of materials was an obvious one. Plus, brands are now being pushed by the Latin American consumer to have a better package for the product. If we can produce a better package, the product will sell better, so itβs more cost effective to use better packaging. Until recently, packaging was all cost-related, but now thereβs a market demand to do better.β
Cerf agrees, saying that this year was the year of the so-called βEco Project.β Outwardly, the βEcoβ refers to ecology, but realistically, it refers to economy, too.
βWe have many more projects going on right now in Mexico and Latin America that they call βEco Projects,ββ says Emmanuel Cerf, VP sales and marketing, PolyPack. βThey want to save both the environment, and save money doing it. By reducing consumables, they can accomplish both.β
Chance to leap ahead?
One sentiment shared among several materials suppliers and convertersβthey chose not to be namedβwas a sense of opportunity in the Latin American market.
While more fully developed markets have a lot of capital tied up in equipment and a fully functional, not easily replaced installed base, emerging markets in Latin America donβt share that limitation. As emerging market companies spring up, they have fewer shackles that could prevent them from using cutting-edge machines running cutting-edge materials. Current European and North American installations might be good enough not to replace, but may not be able to run the latest and greatest in films or materials.