This has been a landmark year for StePac, the Modified Atmosphere Packaging (MAP) business acquired by UK-based multinational Johnson Matthey Plc for £18 million in May. The purchase, from previous owner DS Smith, was an important step in the development of Johnson Matthey’s Atmosphere Control Technologies business. A shared philosophy, as well as greater financial resources, should bring renewed strength to StePac and give the Israeli-based firm a wider scope to develop products that will make a difference to fresh produce customers in 60 countries
StePac was founded In Israel, in 1992, and employs around 90 people. It is one of the world’s leading providers of MAP and works closely with growers and distributors of fresh produce to develop, manufacture and supply application-specific products.
The business operates post-harvest and polymer laboratories in Israel and Brazil and is represented in 23 countries. It is best known for its Xtend brand of packaging solutions and has well-established relationships in the UK markets, both within the supply chain and with fruit and veg buyers and technologists at several key retail chains.
For Johnson Matthey, which will celebrate its 200th anniversary in 2017, developing atmosphere control technologies for shelf life extension in the fresh produce supply chain is a comparatively new business area. It sees an attractive market for the development of advanced packaging solutions that can prolong product life and reduce food waste.
The acquisition of StePac complements Johnson Matthey’s expertise in functional materials, bringing post-harvest expertise and IP in the area of polymer based MAP products.
The new division of Johnson Matthey can therefore boast a strong platform of complementary technical skills and market access to enable it to accelerate the selection, development and commercialisation of new technologies. It expects its Atmosphere Control Technologies business to deliver sales of around £20 million in 2015/16 and, after taking account of integration costs, the business should make a small operating profit in the year.
Dhananjay Tapasvi, director of Atmosphere Controlled Technologies at Johnson Matthey, says: “Johnson Matthey is a 200-year-old brand in the UK, with 13,000 employees around the world, that is applying expertise in chemistry, advanced materials and sustainable technologies to do something interesting…and improve quality of life.
“Those 200 years of experience have taught us to be dependable and to focus on our clients.”
Johnson Matthey, he adds, is a leader in most of the markets in which it operates globally – for instance, it is a world leader in the development and manufacture of catalysts and technologies to control harmful pollutant emissions from a variety of sources. Roughly a third of all vehicle engines in the US contain a Johnson Matthey emission control catalyst. The group’s products have been employed in a wide cross-section of industries, including agriculture, where a large range of fertiliser products have been evolved using catalysts and technology it has developed.
Now it has added a new string of fresh produce preservation products, in the form of MAP, to its portfolio.
“StePac has brought an understanding and application of polymer science, as well as knowledge of the post-harvest behaviour of fruit and vegetables. As importantly, we have very similar approaches to business and share a belief in the importance of integrity. Like us, they are a leader in their field and a respected partner for their customers. We think that together, we can grow faster, further improve the technologies we have through advanced materials and take StePac to the next level.”
The deal was, of course, no surprise to StePac, but Asaf Shachnai, who is now general manager of Johnson Matthey Plc’s Atmosphere Control Technologies
division, having spent many years with StePac, admits: “If you had told me a few years ago that a company from the automotive industry would be working together with StePac, I would have found it hard to believe you.” However, he adds: “…we found during discussions that theirs is an industry that feels the same way we do.”
Broadening the boundaries
It is the network of relationships across the fresh produce supply chain that will inform future technology and product development, Johnson Matthey said in statement at the time of the acquisition.
Dr Gary Ward, who has been R&D and technologies manager at StePac since 2004, agrees, and adds that the nearly new relationship marks an opportunity to “broaden the boundaries of StePac’s MAP solutions”.
He adds: “StePac realised at a very early stage that the sustained success of MAP is dependent on a holistic approach, working closely with customers to ensure they handle the product consistently, in order to achieve optimum performance [from the packaging].
“We have accrued a great deal of know-how and expertise of post-harvest technology across a wide range of produce items, so we have become a good source of advice for our customers too. Being global also enables us to interact between the various countries and create a pull effect for our products. That point of difference is a real benefit to our customers.
“MAP has obvious benefits over Controlled Atmosphere and there is considerable room in which to develop our business further by leveraging the synergies of the technologies and knowledge within Johnson Matthey. We are already working directly with supermarkets in Argentina, Brazil and Japan to generate huge added value for them through extended shelf life, and our technology is being employed extensively in the blueberry industry now – particularly in Chile, Peru and Poland, where they are sorting, grading and packing directly into punnets for the UK market.
“The bottleneck for success in the grape category has been botrytis, but already we are working with the team at Johnson Matthey to use bio-science and complementary technologies to complement our polymers and find the solution. And in flowers, we are now seeing customers using our packaging in Colombia and Ecuador to buffer their stock prior to airfreight to the US and Europe.
“Importers in general are probably not using bulk MAP as well as they could be for managing and buffering stock,” he adds. “Produce is often treated like hot potatoes when it arrives at a depot, but if you are using MAP, it provides you more flexibility to manage and supply produce upon demand and reduce wastage.”
There are many examples of the ways in which Xtend has already made a positive difference to the supply chain, Ward says. “The use of Xtend for shipment of bell peppers, cucumbers, aubergine and squash from Mexico across the USA and Canada had such a vast impact on the quality of the vegetables reaching the supermarket shelves, that the supermarkets began dictating that the packaging be used by all of its suppliers.
“The use of Xtend for prolonged storage and shipment of pomegranates has also resulted in dramatic improvements in the appearance and quality of this super fruit. Xtend helped develop new export markets that didn’t exist beforehand. For instance, the export of Galia and Cantaloupe melons from Brazil and Central America to Europe was only made possible by groundbreaking work with the exporters that demonstrated to them what they could achieve by good post-harvest handling coupled with well-designed MAP.”
Asked to pinpoint one particular opportunity for MAP to replace other forms of packaging in other categories, Ward picks out blueberries. “Blueberries respond well to MAP and Xtend bulk packaging is arguably better than any other product on the market for preserving the freshness of blueberries, due to the optimal modified atmosphere and modified humidity conditions that it provides,” he explains.
“In some instances the packaging is replacing CA, which only offers protection up until the berries are unloaded from the container, after which quality deteriorates rapidly, making the handling a race against time. The beauty of Xtend is that it provides the importers with greater flexibility after receiving the berries. For example, there are instances where importers are using the packaging for preserving freshness of loosely packed blueberries for up to two weeks after arrival before packing in punnets. This provides them with more flexibility in stock management.
“Everything we are doing is aiming to reduce the supply chain’s labour and packaging usage by providing more efficient and aesthetically pleasing MAP solutions. We have complementary world-class R&D facilities in the UK and Israel now and we will develop the products that take MAP forward.”
International collaboration has long been close to Johnson Matthey’s heart, says Tapasvi. “We are used to working with key players in different marketplaces to push the boundaries of innovation. We have acquired a fantastic team [at StePac] and we are very proud to have bought them into this organisation.
“I hope we can do something really magical here.”
See StePac’s mission statement here.