After getting off to a bumpy start many years ago, local plastic packaging company Eka Global is now aiming to become the largest producer of longevity packaging in Asia within five years.
The ambitious goal follows a period of rapid growth for the company, especially after its move to take over the Asian business unit of Print Pack, a US-based rigid packaging manufacturer.
Print Pack, which suffered a sharp drop in sales during the US-China trade war between 2017 and 2018, decided to deal with the problem by selling its asset in Asia. Eka Global viewed the purchase as a way to generate more revenue.
The asset acquisition is expected to help Eka Global achieve its revenue target of 5 billion baht by 2024, to be generated by three production plants with added capacity of 350 million packaging products.
The facilities -- two in China and one in Thailand -- have a combined capacity of 2.5 billion packaging products a year.
The company's rosy outlook is a far cry from the difficulties Eka Global had to overcome while seeking out opportunities amid crises, said chief executive Chaiwat Nantiruj.
FINANCIAL TROUBLES
Cash flow was a major problem for Eka Pak when it was established as a startup in 2003. It was the country's first rigid barrier packaging firm.
Mr Chaiwat said there was no business model to follow in terms of raising funds, so he had to depend mostly on his family's support.
"At that time, barrier packaging was unknown in the market. Businesses were familiar with cans for packaging food, but this material had its weak points, including a 10% higher price than other forms of plastic packaging," he said.
Barrier packaging refers to a technique used to make packaging materials that can offer strong protection against dust and germs.
Before establishing the company, Mr Chaiwat and his team spent three years conducting a research study on barrier properties in a laboratory and packaging products in the Thai market.
Despite the intensive studies, the company encountered a loss of more than 100 million baht, a financial obstacle which almost caused the company to shutter.
His family told him to exit the business as it planned to cut its financial assistance. The family wanted Mr Chaiwat to work in its other business -- manufacturing cassava processing machines.
However, he persevered with his dream of a barrier packaging business.
"We treated the crisis as a business challenge," said Mr Chaiwat.
"We continued to work hard in the laboratory to find techniques that could prolong the shelf life of products without any change in the appearance, colour, taste or quality of the product, as well as helping to save on transport costs."
The company also invested in high-speed precision thermoforming, along with high-quality laboratory and testing equipment to ensure reliable data analysis to support its business decisions.
FRUITFUL OUTCOME
After years of product testing, the company came up with several innovations to serve customers' needs, which eventually caused its business to turn around.
Eka Global's packaging materials allow customers to keep food products for up to two years at room temperature, thanks to the insertion of noble gas in containers to preserve the contents. The products can also be stored in refrigerators and are microwaveable.
Cans have a long shelf life for food, but they cannot be microwaved. Steel prices are also higher than those for petroleum-based plastics.
During 2007 and 2008, Eka Global began to enjoy strong sales, followed by double-digit growth every year.
The success caused Mr Chaiwat to consider business expansion in order to become the largest rigid barrier packaging manufacturer in Southeast Asia.
GOOD FORTUNE
After acquiring Print Pack, which runs a rigid plastic packaging factory in China, Eka Global, like many businesses, felt the impact of the Covid-19 pandemic that broke out in 2020.
Yet there was one major difference -- measures imposed to contain the highly transmissible virus drove up sales of packaging products.
"People were told to work from home, so ready-to-eat food was in strong demand, which also increased the demand for packaging materials," he said.
The company saw its revenue double to 800 million baht in 2020, up from 400 million in 2019.
This year, Mr Chaiwat expects to record 1.5 billion baht in revenue and forecasts it to reach 5 billion baht in 2024.
Roughly 2% of annual earnings will be allocated to additional R&D projects, he said.
OPPORTUNITIES AHEAD
Eka Global will continue to launch new products and seek more business partners to expand in the packaging industry, said Mr Chaiwat.
To adapt to environmental trends, such as the green economy, the company plans to launch packaging materials produced from biodegradable plastic and post-consumer resin (PCR). PCR is a form of recycled plastic.
The prices of these packaging materials are 15-30% higher than petroleum-based plastic, but their prices may drop if demand for them increases, allowing manufacturers to benefit from economy of scale, he said.
In the middle of this year, Eka Global will resume its plan to team up with small and medium-sized food and beverage companies to prolong the quality of their goods after a delay due to the Covid-19 impact, said Mr Chaiwat.
He said many bakery items and traditional desserts sold in Thailand and India have a short shelf life, lasting only 1-2 days. Preservatives could be used, but doing so would not be desirable, said Mr Chaiwat.
The company plans to conduct a research study on packaging materials that can ensure a two-week shelf life for food that cannot be kept in refrigerators, he said.
Eka Global also plans to team up with small-scale durian growers to improve packaging materials, which would ensure a longer shelf life for the fruit and better control its strong smell.
