The fabulously wealthy Rausing family made headlines last week with the death of Eva Rausing. A look at the company that fueled the family’s riches.
FORTUNE — The tragic fate of some of its fabulously wealthy heirs has pushed giant, but little known, multinational corporation Tetra Pak into the limelight. While its drink boxes are on store shelves the world over, one of the world’s largest packaging companies barely registers in the United States.
Since founding the company 61 years ago, members of the Rausing family have been known for their business acumen and good works — and recently for its dark side. On the surface, third-generation family members Hans Kristian and his American-born wife Eva used their family company wealth as generous philanthropists, hobnobbing with English royalty.
But the veil on their drug-blighted lives was swept aside when Eva was found dead last week inside the couple’s luxury London townhouse. Hans Kristian has been arrested and is under medical care. Tetra Pak, which sold $12.5 billion in products last year, swiftly posted a statement on its website that the England-based Rausing relatives no longer participate in running the company.
Efforts to sever the family link did little to quell interest in the Rausings, who are the heirs to an estimated $10 billion fortune stemming from their grandfather Ruben’s invention of a milk carton. The Switzerland-based company, now part of Tetra Laval, was run for decades by Ruben’s sons, the elder Hans Kristian and Gad, and still includes Rausing family members in key positions.
Although company sales rose 5% last year, Tetra Pak carefully guards its patents and acknowledges robust competition, which “has increased in recent years, both from PET bottle manufacturers” and other suppliers, according to Dennis Jonsson, chief executive of Tetra Pak.
The company’s sales growth came from developing markets, and it has a “high reliance on growth in Asia,” Jonsson said in the company’s annual report for 2011. China’s rising middle-class is expected to boost demand for high-quality packaged goods, according to packaging industry studies.
Tetra Pak’s main business is no longer containers but rather selling the machinery to package juice, milk, soup, and other liquids, and it faces competitors that are developing machines that can package smaller volumes of liquids as well as China-based rivals that are moving into markets abroad, including Europe.
As part of its low-key profile, Tetra Pak has rapidly distanced itself from scandal. In 2004, it quickly swatted away accusations that it was embroiled in a financial controversy with Italian food processing giant Parmalat, whose chief executive was accused of funneling Tetra Pak and other money for his own outside use.
Tetra Pak was founded in 1951 after Ruben developed an interest in food packaging while studying at Columbia University in New York. After he graduated in 1920, Ruben returned to Sweden and experimented with alternatives to glass bottles, which could transport perishables like milk more easily. He came up with a paper-based carton shaped like a tetrahedron — or four triangular faces — that could store liquids without refrigeration. Hence the name, Tetra Pak.
Instead of glass bottles, which could break and were heavy, the sturdy airtight carton — often called a brick — could be stacked, shipped, and stored, which was a boon to the milk industry. Other packaging grew from that, but the Rausing family sold off those holdings and kept Tetra Pak.
Then, in 1981, the company moved its headquarters to Switzerland, to escape Sweden’s high taxes. Ruben Rausing ran the company until his retirement, expanding it to a packaging behemoth that sold its containers in 170 countries.
The company, based in Lausanne, has been buffeted, particularly in environmentally conscious countries, with complaints that its containers add to waste because they cannot be recycled. The company maintains that glass and plastic make a bigger carbon footprint because they require more energy to transport than the lighter-weight carton.
Even so, some American consumers complain that beverage packaging is heavy and bulky, and say that “glass would be better,” according to the June 2012 Food and Packaging Trends by Packaged Facts, an industry research company. While Tetra Pak sells a substantial amount of cartons, which are used by large companies like Minute Maid and Swanson in the United States, they are recycled at a low rate. Many localities do not collect the cartons for recycling because they have layers of aluminum and polyethylene (plastic) as well as paper.
To allay concerns, Tetra Pak has committed to double its global recycling by 2020, to 40% of its 100 billion used beverage cartons. It also has joined a WWF initiative, along with companies like Coca-Cola KO and Nike NKE , to cut 100 million metric tons of carbon dioxide emissions in an effort to address climate change.
Adding another environmental credential, the company also began using wood certified by the Forest Stewardship Council (which tracks wood fibers to ascertain they come from sustainable forests) in cartons it makes in Europe, and recycles the containers.
After Gad died, his three children — Jorn, Kristen and Finn — who are seldom in the news, began to serve on the board of Tetra Laval, the holding company that controls Tetra Pak. Hans Rausing, who is listed as Sweden’s third richest man, moved to England and funded a university program to save endangered languages.
While benefitting from the grandfather’s success, the elder Hans and his three children, who also live in England, no longer have a say in running Tetra Pak, which has grown into a 23,000-person company.