A straw in the wind from packaging company UFlex set to benefit FMCGs

It is gearing up to make the six billion paper straws per annum needed by FMCG companies

Packaging company UFlex is setting up a plant with technology from the Netherlands to manufacture six billion paper straws annually to cater to the entire demand of the FMCG industry which uses them for its aseptic packs (tetrapacks) for juice, milk, coffee etc.    

If all goes well, the paper straws will start rolling off the assembly line in September thanks to equipment supplied by Dutch company Tembo Paper. The investment tag in the first phase will be over Rs 100 crore.  

This is good news for FMCG companies such as Parle Agro, Amul and Dabur who are short of imported paper straws due to huge demand globally to replace plastic with paper straws.

In India too, the government has banned the use of plastic straws from July 1. Despite the need for six billion straws annually, no Indian manufacturer makes them. Ashwani Kumar Sharma, president and CEO of the aseptic liquid packaging business at UFlex, said the company had anticipated the demand some years ago.

“We decided to go for the best technology available which is with  Tembo Paper which will supply the machines and the technology support. The first phase of the plant should get rolling by September when we will start with 100 million paper straws a month,” said Sharma.

Each machine can manufacture 50 million paper straws annually.

Sharma says demand peaks between February and June when juices, milk, and chaas sales are at their peak. In this period, the industry needs 3.5 to 4 million straws.

“We are confident of reaching that level of production by that time with more machines coming in and building production capacity to cater to the entire industry,” said Sharma.

Sip by sip

• Despite the need for six billion straws annually, no Indian manufacturer makes them
• In the UFlex project, the investment in the first phase will be over Rs 100 crore and the straws could start rolling out as early as September
• It is good news for FMCG companies such as Parle Agro, Amul and Dabur, who are short of imported paper straws due to huge demand globally for replacing plastic with paper straws
• Demand peaks between February and June when juices, milk, and chaas sales are at peak and the industry needs 3.5 to 4-mn straws
• UFlex will import paper from Europe, Japan, South Korea, and Indonesia initially but plans to manufacture the paper indigenously later

The two key ingredients in making paper straws are specialised paper which accounts for the bulk of the cost and high quality food grade adhesives. UFlex will import paper from Europe, Japan, Korea, and Indonesia initially but plans to manufacture the paper indigenously later or source it from Indian paper mills.

Talks are already on with paper mill companies on how to provide them with the necessary expertise to manufacture the special paper.

“We should finalise agreements with some mills by December. Our plan is that in February-June next year, we should get 40 per cent of our requirement from Indian paper mills. But that would depend on the quality of the paper they make as it is crucial for it to be food grade,” said Sharma.

Paper straws cost five times more than plastic but the gap is expected to reduce once they are manufactured in India and even more when they are made with locally made paper.      

In the second phase, UFlex will expand the capacity and leverage the export market. After all, the bulk of paper straws is made in China, Europe and Indonesia and some say that Chinese straws are not rigorously tested for quality.

UFlex has some other advantages. While Tetrapack is the king of aseptic liquid packaging, the former already has a 30 per cent share of the market and provides aseptic packaging to most FMCG companies.

UFlex could clearly leverage this strength to offer integrated straws (paper straws attached to the aseptic pack) to its customers.