Milk carton

A Swedish economist with an obsession with milk packaging

Ruben Rausing (Raus, Helsingborg, June 17, 1895 – Lausanne, August 10, 1983)

Every year in late March or early April, the Times of London publishes a list of the 1,000 richest Britons. For the Rausings – Swedes who fled to Britain for tax reasons in the 1980s – it must always have been an embarrassing moment.

As owners of the packaging giant Tetra Pak, they managed wonderfully to remain obscure. Except for that one tricky moment a year. Gad and Hans Rausing were continuously in the British top three during the 1990s.

It was they who first displaced the Queen from first place in 1994.

Hans was in fifth place in 2009 with assets of 4 billion pounds or about 4.7 billion euros. The comments invariably say that Hans, like his brother, is 'secretive', 'reclusive' and 'not very visible'.

Ruben Rausing, the father of the two, fought a long and arduous battle until the age of seventy to get Tetra Pak off the ground, to put its milk packaging, the tetrahedron (tetrahedron bounded by four equilateral triangles) and the Tetra Brik, the milk carton, in to enter the world.

Or was it more than just packaging?

Ruben Rausing was born on June 17, 1895 as Ruben Anders Andersson in Raus, a hamlet of the fishing village of Raa, just south of Helsingborg. His father was a humble house painter who was successful enough to allow his three children to continue their studies.

After his secondary education in Helsingborg, Ruben enlisted in military service. It was there that comrades referred to him as 'rausingen', literally: the Rausenaar, the guy from Raus. He liked the nickname so much that he would later change his family name to Rausing.

With the support of family members, he was able to enroll in Stockholm Economics College in 1916, from which he graduated magna cum laude two years later.

He worked there for a few months for a bank and then went to work at the printing company SLT, the Sveriges Litografiska Tryckerier.
The First World War was coming to an end, the League of Nations was born, the new peace in Europe aroused high economic expectations. It was therefore not unusual for 24-year-old Ruben to receive a scholarship with his first-class degree to continue his studies at Columbia University in New York.

In 1920 he obtained his doctorate in economics.

In a few years he got a good idea of what was going on economically in the United States, of the commercial ideas that were gaining momentum. He saw the thriving self-service shops and supermarkets.

His employer SLT had also asked him to look out for new developments in packaging. The impressions he gained would be decisive for his life. American industrial production was a model for Europe, he was sure.

On his return in the summer of 1920 he was given a managerial position at SLT.

A year later he married the minister's daughter Elisabeth Varenius - she also plays a role later in this story - and went to live in Bromma, just outside Stockholm, where his eldest son Gad was born in 1922. In 1926 his second son Hans saw the light of day in Gothenburg.
For a moment it seemed as if Ruben would take over the leadership of SLT. But he was too modern and too fast-paced for the board of directors.

When the company built a new complex in Stockholm a few years later and he was unable to implement his American organizational ideas, he resigned.

He teamed up with the industrialist Erik Akerlund, who owned a small packaging company in Malmö. In December 1929, the year of the Wall-Street crash, it was renamed Akerlund & Rausing, A&R. Akerlund provided the capital, Ruben Rausing took care of the management.

However, the company did not get off the ground very well. Akerlund lost interest and Rausing bought him out. In the spring of 1933, Rausing finally had his own company in which he could give full rein to his new ideas.

But the world economy had collapsed and was experiencing one of the deepest crises of the twentieth century.

Nevertheless, a restructuring of distribution started to take place in Sweden. Migration from the city to the countryside increased significantly. More and more people were being removed from their primary sources of nutrition.

Rausing had seen in the United States, especially in a city like New York, how merchants no longer sold all kinds of consumables – flour, sugar, salt, milk – in bulk, but packaged them in small quantities. He knew that Europe would also go down that road.

He invariably asked those who traveled to the United States for one reason or another to bring packaged dairy products with them.

Rausing did not do badly, but the general economic climate was not good. By 1939, the company in Malmö had nevertheless become too small and he moved to Lund. He opened his new branch there just before the outbreak of the Second World War.

Remarkably enough, the war offered unexpected opportunities. Many foodstuffs were rationed. Pre-packaging was ideal for rationing. Field supplies, first aid kits… Rausing was all set.

Only A&R had all kinds of elegant solutions ready, A&R had the machines for the right material and the right packaging. Milk, however, was a persistent problem. How could the loose milk and bottled milk be replaced? The examples from the United States did not suffice.

If only because the cartons and the necessary manufacturing machines made packaging much too expensive for Sweden.

The pyramid

During the war, Ruben was a member of various government committees and investigative committees. For example, in the years 1941-42 he was chairman of the National Council for Price Control. In the meantime, his business was not standing still, although crucial people were in military service.

The problem of alternative milk packaging remained dormant. According to company records, it was in February 1944 that Ruben, as so often in the research department, walked in and recalled the milk carton: 'Especially now that I've bought a bunch of cows.

And they are waiting to be milked,' he said laughing. Humor had to hide his determination. The photo of the founder of Tetra Pak with one of his prize cows on his farm in Simontorp near Lund is one of the nicest in the company's album.

Experiments had already been done with square and rectangular packaging shapes. At that time the company had a round paper box for marmalade in production. What if you replaced the lid with a compressed, sealed top?

That's what the very young lab assistant Erik Wallenberg must have thought. And what if you also compressed the round bottom in corners, so that you get a pyramid, with three sides and a bottom surface: a tetrahedron?

It was a bizarre idea. Rausing would later say, 'This is what you get when you employ people
who have no idea how a packaging is put together and what it should look like.' But he had enough imagination to take up the challenge, and on March 27, 1944, the company patented it. Erik Wallenberg was the inventor.

It was not until 1991 that he would receive the gold medal of the Swedish academy from King Carl Gustaf. At the time, he received six months' wages from his employer.

The machine

The new problem was only: how do you develop a machine that can package milk in such an unusual shape? It took engineers eight years to design a machine that could manufacture Gillette razor blades.

It took Swedish engineer Sundback eight years to develop a machine that could manufacture the zipper. Rausing's engineers couldn't have it any easier.

In August 1944 he patented a system in which a roll of paper ran from top to bottom, took on a triangular shape, was filled and then sealed. So you could package milk in a continuous process. But milk froths during filling.

How do you get the exact volume in each pack? The researchers couldn't figure it out. According to a much-told story, Ruben Rausing came up with the solution when he saw his wife stuffing sausages in the kitchen.

He himself stated: 'One day at lunch I discussed the problem with my wife.

Suddenly she said, "Why don't you run the milk continuously through the tube and seal the packages right through the milk?" I said it was a great idea, if it could be implemented. It would result in completely filled packages, without harmful oxygen.

But this seemed impossible because the hot clamps needed for sealing would give the milk a burnt taste. She just said, "Have you tried?" That was a typical logical answer from the remarkable woman.

I went back to my office after lunch, had a cylinder made in the lab, filled it with milk, and used some heat clamps to separate out some tetrahedra. We tasted the milk and couldn't detect the slightest burnt taste.'

In May 1946 a wooden model of a machine was ready, albeit with primitive cogwheels and bicycle chains; the prototype was ready in September. It soon became apparent that no suitable paper material was available.

The paper

The paper had to be stiff yet flexible. It had to have a constant thickness. It should not smell and have no taste. It had to be resistant to steam and moisture. It had to provide optimal protection against light. You had to be able to print the surface.

And it had to form a suitable base for attaching a plastic protective layer to the inside. This paper had yet to be invented. By 1947, Father Rausing entrusted his eldest son Gad, 26, with the project.

Because he experimented with dangerous substances such as acetone and benzene, he had a separate wooden building erected. It was named 'Siberia' because it had no heating and all lighting was attached to the outside for safety.

On one occasion, Gad had to be rushed to hospital with acute benzene poisoning.

In desperation, Gad left for the United States with a few technicians to break out of the impasse. In four months they ran down ninety companies in search of a solution. In vain. By 1951, a Chicago firm was found to have developed a workable formula using polythene.

No sooner had they stocked up than the Korean War broke out. The American company was only allowed to work for the war industry.

A begging trip to Washington ended in disaster. "Sir," said the high-ranking official, "what's more important, that we win that war or that you put that package on the market?"

Under pressure from the market, where the cry for packaged milk grew louder and louder, the Rausings gave a press presentation on May 18, 1951, demonstrating the filling system. They knew that the packages leaked hopelessly because of the faulty paper.

So they kept the technology of the lockdown hidden. For the sake of safety, they collected two hundred packages with a successful closure for the press conference. During the demonstration, they let two men slide out the perfect packages behind a screen.

There are no photos of this event, says Lars Leander in his company history. Simply because one of the two manipulators behind the screen was the in-house photographer! Leakage of the 'triangles' would remain a problem for many years to come.

So much so that Ruben Rausing, not devoid of any humor, gave one of his speeches afterwards under the title 'My leaking life'.

It took another year and a half before they dared to deliver a small packaging machine to the local dairy. In the company album today this results in a touching photo: a cart pulled by two farm horses and a few men on top who keep the machine upright.

With this scoop, tetrahedron packets of 100 centilitres for cream packaging could be produced. At the end of November 1953, the packages made their entrance in Stockholm.

Finally, by 1954, the Du Pont de Nemours company launched a polythene-coated paper. Because the Swedes had already made progress with their own coating, they did not have to pay any patent fees.

In the spring of the same year, the half-litre packaging could be realized. It had taken a full ten years to realize the crazy idea of an assistant.
Worldwide

The silent hope that the demand for a one-litre packaging would not materialize was vain. The consumers were just one liter and so it had to come. March 1957 was the day. But actually the special pyramid shape was not really suitable for such a large quantity.

Leaking started all over again. So much so that a newspaper in Gothenburg, the country's second city, launched a campaign against the cardboard packaging. Pollsters surveyed 60,000 people. Only two percent were pro.

One proponent said, "I'm in favor of Tetra Pak because they gave my son a job." The young company, founded in 1950 as a small subsidiary of A&R, survived it all.

The country had developed into 'the Swedish model' within Europe and all foreign guests wanted to visit the special company in Lund.

Ruben Rausing's genius was that from day one of Tetra Pak, he believed that the company should operate globally.

Just like ketchup king Heinz, who believed that the whole world was waiting for ketchup, or the shoe manufacturer Bata, who thought that billions of people around the world were still walking barefoot.

So it happened that at the beginning of 1951 the board decided to immediately register the trademark Tetra Pak in 57 countries. A real American idea was also to only lease the machines and not sell them.

A 1957 board meeting decided to make someone responsible for overseas markets such as: "Brazil, Argentina, the rest of South and Central America, India, Australia, New Zealand and other countries." Kenya became the first market outside Europe in 1957.

A bold vision for a company that still struggled with leaking packaging in its own country. Today, the group operates in more than 125 countries and operates more than 8,000 packaging machines. The number of packages sold annually exceeds 80 billion units.

Sustainable milk

In addition to the development of the special packaging, the special machines, the unique cardboard, the global thinking and the leasing system, Ruben Rausing also pondered ways of extending the shelf life of milk without reducing the quality.

Pasteurization was done at 75 degrees, made the milk germ-free, but hardly extended the storage time. Sterilization was done at high temperature but killed the product.

The milk in Tetra Pak's pyramid, the Tetra Classic, did not come into contact with the ambient air, nor with any other part of the machine. Forming and closing the boxes was done from the outside.

The finished product contained no air because the closure happened at the bottom, below the surface of the liquid.

Suppose you could come up with something that would make the milk last much longer without refrigeration. An aseptic, bacteria-free filling process would offer huge advantages for storage and distribution. Experiments in this direction had already been undertaken in 1953-1954 under the impulse of Ruben.

He carried out extensive hygiene tests with milk from his own cows on the farm in Simontorp. The technique could be realized with the help of a Swiss industrial group.

A heating of 140 to 150 degrees for two to four seconds followed by a drastic cooling proved to be the solution.

In 1961, Tetra Pak introduced the Ultra High Temperature (UHT) system to the press. UHT products, packaged aseptically and distributed outside the cold chain, quickly became regarded as 'the greatest invention since Pasteur'. This time, too, Rausing hadn't invented anything himself.

He had only been looking for it very much, had looked carefully and, above all, had the courage to be the first to apply it on a large scale.

Building blocks

The renowned Tetra Brik, today the most famous product of the multinational, came under pressure from the competition. At the beginning of 1959, Tetra Pak produced no fewer than one billion packages in thirty countries around the world. But one liter of milk was too much weight for the pyramid shape.

It made the packaging difficult to handle. Privateers appeared here and there who offered rectangular shapes. Zupack in Germany, Pure Pak from the United States, the Norwegians with Elopak.

All brands that still exist today. In a race against time, the Swedes made their Brik, their building block. The ingenious thing about it: a format developed on the basis of the standardized European loading pallet of 80 by 120 centimetres.

Tetra Pak presented its 'Brik' on March 12, 1963 in Motala, central Sweden. After falling behind, Rausing was again a length ahead of the competition.

In 1965, Ruben and his two sons sold all the companies belonging to A&R - including factories from water purifiers to ATMs - to Svenska Tändsticks AB, later Swedish Match, and put all their cards on Tetra Pak.

They had no choice, Tetra Pak required too large an investment. They had been deeply in debt uninterruptedly.

Finance manager Boris Carlsson later told the story of how "the numbers got redder every year." At the end of 1958, after a year of hard work, the loss had risen to three million Swedish kronor, an insane amount. Carlsson: 'That day Hans Rausing walked in.

He said: “This doesn't look bad. Next year the volumes will increase and then we will be on top, you will see that.” The reaction of the real entrepreneur.' Countless projects dragged on endlessly. Suppliers sometimes did not see their money for years.

Ruben Rausing was sometimes even forced to take out loans from his customers – the dairies.
The succes

In 1965, the future looked bright. The founder had now turned 70. From 1968 he withdrew abroad. His sons, who had been given positions of responsibility at a very young age, took over.

Gad, the eldest, born in 1922, studied chemistry and was put in charge of the laboratory at the age of 22. He became fascinated with archeology as a hobby. He also met his future wife during an excavation.

He obtained his doctorate as an archaeologist in 1967 and later in life spent many millions on excavations, especially at Birka, a trading center of the Vikings from the tenth century. For Tetra Pak he focused on conquering the Chinese market and achieved spectacular results.

Hans studied Russian and was managing director from 1954 to 1985. He would explore the Russian market, among other things. After 1985, both brothers left the company to professional managers and moved to Great Britain.

In 1995, Hans sold his shares to Gad for nine billion dollars, who then moved to Switzerland. According to good sources after an extortion affair. Gad died there on January 27, 2000.

Ruben Rausing lived another 15 years after his departure abroad. He died on August 10, 1983 in Lausanne.
How can it be explained that Ruben Rausing, from that small southern Swedish fishing village of Raus, is the great
industrial innovator of Sweden, Sweden's pride in a stamp: Tetra Pak biographers have often wondered. Lars Leander, in his company history, attributes this in part to the example of his parents: hard-working, deeply religious people.

Ruben Rausing himself once said: 'Everything is predetermined.

Your genes shape your destiny.' How can this genetic predestination be reconciled with the free will and the dynamic entrepreneurship that would characterize his entire life, says Leander.

Rausing: 'Each individual's talents are governed by their genetic nature, but that nature also includes the ability – or inability – to seize chance opportunities.' Or: "You must have the instinct and the courage necessary to choose the right direction in business." His direction was the packaging industry and the distribution sector.

In his own words, he wanted to 'create something new that was useful at the same time'.