How can you be as profitable as possible? How can you get your cost-per-case lower without sacrificing the quality or taste profile of your beverage? In this article, we’re going to talk about how you can reduce your cost-per-case by a whopping 25% by blow molding your own PET bottles.
The beverage industry has changed over the past decade. In as recently as 2008, most bottlers were purchasing empty bottles from a supplier and having them shipped in. These days, many of those same bottlers are now blow molding their own PET bottles.
I had the opportunity to interview InterTech’s Holly Fisher about this increasing trend.
Holly has worked in business development at InterTech for almost a decade. InterTech is one of the most trusted integration experts in the industry. Over the past 30 years, InterTech has helped hundreds of plants implement direct-to-fill projects (inline blow molding).
She will explain how blow molding your own PET bottles can reduce your cost-per-case by 25%. This typically leads to an average annual savings of nearly $2 million per line.
Diana Adams: Hi Holly. I’m excited to talk to you today. This is a fascinating topic. Reducing a bottler’s cost-per-case by 25% seems like a big number. I’m sure there are a lot of details and specifics that go into this cost savings.
Holly Fisher: You’re right. It’s not as simple as buying a blow molder and turning it on. The true savings and ROI happens when over 25 components are integrated into a well-designed system.
The problem is, many bottlers depend on their OEMs to engineer their production lines. That almost always results in higher costs.
That’s one reason we’ve been able to achieve such amazing results for our clients. We aren’t loyal to any equipment manufacturer. Instead, we are loyal to our customers. We keep their best interest at the forefront of every decision, which brings a lot of value in terms of cost savings.
Diana Adams: Before we get into the specifics of this process, let’s talk about that cost savings. I understand it’s a trickle-down effect that touches almost every aspect of the manufacturing process. Can you talk about that a bit?
Holly Fisher: Sure. By blow molding PET bottles in-house instead of buying empty bottles from a supplier, manufacturers save money across the board which affects production costs, availability, flexibility, freight, shipping and more. It also allows the bottler to have more control over their supply chain.
By bringing the process in-house, bottlers are able to produce thinner (lighter weight) bottles since the bottles won’t have to be made to withstand the stress caused during supplier shipping.
Since over 70% of the bottle cost is tied to the raw materials used to create the bottle, this is a substantial savings. That’s not to mention the typical ratio from bottles to preforms for a 52-foot trailer is 10 to 1.
Preforms also take a lot less space to store, which is another advantage. By blow molding your own PET bottles, you will also be protected from supplier availability and price increases.
Diana Adams: I’m sure there are probably other advantages to bringing the blow molding process in-house that stretch beyond just the cost savings.
Holly Fisher: Yes, there are. When bottlers bring this process in-house, suddenly they have all kinds of flexibility they never had before. For example, they can look into creating unique sizes and shapes for their bottles. Maybe they want to align the bottle with their branding. All kinds of creative marketing options appear. It’s great for creating differentiation.
Diana Adams: If a bottler decides they want to look into blow molding their own bottles, what is the process? Since InterTech has done this hundreds of times, I’m sure you’ve got it down to a science.
Holly Fisher: We sure do. We help with the end-to-end process. Our intensive research on the front end determines the feasibility of in-house blow molding for your facility.
The Financial Feasibility Analysis we produce provides the detailed data you need to make the best decision.
We forecast a long-term operational cost and establish budgets for plants that haven’t previously self-manufactured their own PET bottles. Beverage manufacturers can request a Feasibility Analysis on our website.
Diana Adams: I’ve heard of those comprehensive reports that you compile. InterTech is known for those, right? [Laughs]
Holly Fisher: Yes, we are. We like to stay humble, but yes, we are known for our incredibly detailed reports that find hidden costs and cost-saving opportunities for our clients. We look at how every piece of equipment works together with the others.
By the time our analysis is finished, our client knows what the result will be if they move forward. There’s no guessing. The expectations are clearly defined. It’s all in the data.
Diana Adams: What if it’s not feasible for a plant to blow their own bottles? Does that ever happen? What if the plant is too small?
Holly Fisher: Blow molding isn’t the mystery it was a decade ago. Back then, yes, it would only be feasible for large companies. The technology has improved a lot. The ability to run a blow molder and operate it has become much more manageable. Now even smaller beverage manufacturers can benefit from this cost savings.
Most of the time, when the bottlers see the numbers, they realize it’s a no-brainer to bring this process in-house. It’s rare when we see a situation where it doesn’t make sense.
Diana Adams: Can you tell me about how the different PET bottle sizes affect the decision to bring the blow molding in-house?
Holly Fisher: That’s actually the first step of the process. We look at the number of bottle sizes and the volumes for each one. Some companies have as many as 10-15 different bottle sizes. We take all of that into consideration.
Blow molders come in all different sizes. If you have a lot of volume, having a piece of equipment that can run a lot of volume at once makes sense. If you have your volume spread out between many different bottle sizes, it might make more sense to have a different type of blow molder. It’s all about adapting the equipment to the needs of our client.
Diana Adams: This seems like a silly question? If a company decides they want to start making their own PET bottles, where do they put the blow molding line?
Holly Fisher: That’s actually a good question. Every situation is different. Most companies already have a plant. In those cases, we can easily fit an in-house blow molding line into their existing plant. Many times this is in the warehouse area that is being used for empty bottle storage or in the existing depalletizer area.
Every client and plant is different, so there isn’t a one-size-fits-all answer to this question. Basically though, regardless of the physical space, we can find a way to make it work.
Diana Adams: That sounds expensive.
Holly Fisher: The average savings we see on most projects generates a payback in less than 2.5 years. Bottlers can get that cost-per-case down and realize a profitable ROI model with volumes as low as 5-7 MM bottles annually.
This is what we do, and we-ve done it for a long time. We specialize in assisting leading food and beverage companies with the transition into self-manufacturing PET bottles within their plants.
For multiple lines or locations, we can help establish a 3-5 year plan to prioritize high return projects that can define your investment strategy. We have helped multi-plant clients develop long-term plans to capitalize on the savings of initial projects in order to support future projects whose returns are lower.
Diana Adams: What makes InterTech different from the competitors?
Holly Fisher: There are two things that distinctly set us apart from anyone else in this industry.
First, we don’t have allegiance to any equipment supplier. Our clients never have to worry that we are spinning information to sway them in a certain direction. Our loyalty is always to our client. Their best interest is our best interest. That brings a level of partnership that is unmatched anywhere else in this industry.
Secondly, we have an extremely intelligent engineering team that values honesty and integrity in business. You’ve spent time with them so you know what I mean. We are fortunate to work with people who have been in this industry a long time. We have an incredible breadth of expertise here.
There are no surprise costs. There are no back charges. We do the job for the price we quoted.
We include all of the auxiliary equipment required for successful implementation. You’ll have everything needed to ensure your system runs efficiently as planned from day one. Each component of the line is properly sized and integrated into an efficient, customized system designed specifically for you.
Diana Adams: Is it better for beverage companies to get InterTech involved early in the process, or is it better for you to come into an existing facility?
The earlier we are brought in on the process, the more money we can save our clients (before they start purchasing equipment). In other words, our clients can avoid costly changes by contacting us on the front end.
With that being said, we also bring a lot of value into existing facilities. We can go in and be successful making things work with what’s already there. That’s where our expertise really shines. It’s in developing a well-oiled machine with the equipment that’s already in place.
I like this analogy – It’s one thing to make cookies from scratch that taste good, but it’s a completely different thing to make cookies that taste good when someone else has already added a bunch of ingredients to the cookie batter.
Diana Adams: Thank you, Holly. If I was a bottler, I’d definitely consider manufacturing my own bottles. How should someone contact you?
Holly Fisher: We would welcome an opportunity to assist any beverage company in determining where in-house blow molding can be best deployed for both short and long-term value. Our contact information is below, or of course visit our InterTech website. Thank you for this interview!
For over 35 years, InterTech has helped hundreds of food and beverage plants implement a variety of manufacturing projects. Whether it be a single line or multi-plant roll out, we have helped reduce their operating costs by $2-10 million per year.
Let us model your operations and show you the feasibility of your project ideas. The earlier we get involved, the more money we can help you save.
For multi-plant clients, we have helped develop long-term plans to capitalize on the savings of initial projects in order to support future projects whose returns are lower.
We also develop Requests for Information (RFIs) or Requests for Proposals (RFPs) for major equipment so our clients can be assured they are getting the correct equipment at the best value. By assembling all of the information we receive into a Total Cost of Ownership, we can forecast operational costs for the long-term and establish budgets for plants that have not previously been self-manufacturing their bottles.
Our clients include Cargill, AAK, Constellation, Ghirardelli, and both Coca Cola and Pepsi Cola (and their respective bottlers) and many others. We invite you to view a more complete list of our esteemed past and current clients.
Working with InterTech’s experienced engineering staff will help you make informed decisions and avoid costly changes.
120 Interstate North Parkway SE
Atlanta, GA 30339
You can reach Holly Fisher directly at 404-314-2400