BOCA RATON, Fla. -- As many of the world's traditional wet markets give way to Western-style supermarkets, packaging suppliers must provide solutions engineered to meet the needs of evolving distribution systems, says J. Gary Kaenzig Jr.
That's why the business he runs, Grace Packaging, based here, is charging hard in the developing economies of the Pacific Rim, Latin America and Eastern Europe.
Best known worldwide for its Cryovac packaging systems for perishable foods, the company is pursuing a two-year, $300 million capital expansion program aimed at doubling global sales by the year 2000.
"There really is just an unbelievable appetite for change over there, for new products," says Kaenzig, vice president of planning and business development for the company, a division of American specialty chemicals giant W.R. Grace & Co., New York.
Cryovac claims global leadership in flexible packaging systems for perishable foods and consumer and industrial products. Its 1994 worldwide sales were more than $1.4 billion, and it has sales offices in more than 100 countries.
But as Kaenzig explains, Cryovac's most technically advanced films, laminates and bags, developed for the leading-edge markets of North America, Western Europe, Australia and Japan, may not be appropriate solutions in countries with emerging economies, which lack refrigeration or product handling expertise.
"The challenge we've had there is that there is no refrigeration system, no distributions of either refrigerated products or really much else that is reliable."
In some countries, Kaenzig says, Cryovac has stepped back decades to revive packaging types based on earlier technology.
"We are actually in some cases going back and pulling off the shelf products that we had made here in the U.S. 20 years ago, either because they need retortable [shelf-stable] characteristics or something else that the market here has pretty much gone by," he says.
But consumer knowledge in emerging markets differs markedly from the experience of more developed countries. Satellite TV and cellular communications are frequently reaching the end user long before a system for distributing perishable foods is in place.
Kaenzig observed, "What we are finding is that as those markets evolve or emerge, the process up the curve is much faster. They get very quickly to the products we have, as long as there is that refrigeration chain in place."
In high-opportunity countries like India and Indonesia, which between them have close to 300 million middle-class consumers, Cryovac is teaching and collaborating with local food producers to "prime the pump" of market development.
Says Kaenzig: "There is still a lot of opportunity for growth in the leading-edge markets. But we really think that it won't take five years from now for the Asia/Pacific market to be as large as Europe is today. There is that much potential."
The company is presently building a huge new plant in Malaysia. "One of the reasons is because we see the market growing rapidly there and we want to be able to supply very close by," he says.
Kaenzig admits it is tempting to try to jump in quickly. "But some of our most successful programs have taken a number of years for the market to almost come to us. We are trying to use that same degree of patience in other markets as well, the ones that are emerging."
In China, the company is beginning to package a popular variety of pork sausage that is shelf-stable, using packaging materials that it makes in its plant in Volgograd, Russia (a two-year-old joint venture).
Kaenzig says the company is also meeting demand in new markets for packaging liquids. This may be an early thrust in India, for example, where tough, flexible pouches may be used to distribute pure water.
Cryovac's business has been booming in Brazil -- a country that a year ago was going through all kinds of financial upheaval. Now that food companies are willing to invest there again, Cryovac is weighing some "considerable capital investments" there as well, he says.
Another point of entry into Latin America is Cryovac's Mexico City facility, which converts basic materials like tubing into bags or other products for local customers. Business growth there has been "well in excess of low double digits," he says.
When it comes to identifying opportunity in new and emerging markets, he says, there is no underestimating the importance of working with local people.
"When we sit here in the U.S., we kind of have a tendency to look at things through our own eyes," he says.
"We want to have someone in Thailand or Indonesia or Malaysia who would sense, 'Hey, here is an opportunity for Cryovac packaging.' If we sent somebody over from France, they may not even see it."