ASIA REMAINS the region attracting intense focus and high expectations from the world’s leading packaging company Tetra Pak, says Christopher Kenneally, the company’s president for South Asia, East Asia and Oceania.
Tetra Pak will continue to build on its decades-long presence in Asia, said Kenneally.
“While our operations started much earlier, our first factory in the region was set up as far back as 1971 at Gotemba, Japan followed by the second one in Jurong, Singapore in 1981 and the third one in Chakan, India, in 2013. The group has always believed in the potential of the region and we have made continuous investments, whether in terms of the number of people or the number of offices and sites,” he said.
“Today we have a presence in around 30 countries in South Asia, East Asia and Oceania, which are serviced by more than 2,700 people across seven market companies and 21 sales offices. We currently have three converting plants for packaging material, with the fourth one expected in Vietnam in 2019, one factory for additional materials in Rayong and a Tetra Pak stainless equipment factory in Indonesia.” Since 2014, Tetra Pak has been growing its business revenues at a cumulative annual growth rate of around 4.5 per cent in Asia. This region will continue to be extremely promising in the foreseeable future, and there are clear reasons for it, he said.
“The per capita consumption of various food and beverage categories is quite low in this region as compared to the western world. For instance, the per capita consumption of liquid dairy, fruit-based beverages and dairy alternatives in South Asia, East Asia and Oceania is 32 litres per person per annum, while in Europe it is 87 litres and in the Americas it is 102 litres,” he said.
“From a distribution perspective too, there is significant headroom. Even if we park aside virgin markets like Myanmar, Cambodia, Sri Lanka and Bangladesh, there are massive white spaces in India, Vietnam, Thailand and many other markets where millions of consumers in remote areas don’t have access to safe, packaged food. Against this backdrop, if we layer on the increasing economic growth, growing urbanisation and a burgeoning middle class, the only way to go is up,” said Kenneally.
“We’ve always been conscious of this potential and have therefore consistently strengthened our presence in the region for the last few decades. Our commitment to this region continues, and with that intent we have recently made some big investments in the region: a new packaging material factory in Vietnam, a new packaging closures factory at Rayong and a brand-new customer innovation centre in Singapore.”
Kenneally declined to discuss details of the investment budget for business expansion in the region. He, however, said the company was quite confident of its growth prospects in the region, both in the short-and long-term.
“We strongly believe that there is a huge potential for us to grow the market itself, working closely with our customers, both existing and new, in order to: 1) build existing categories, increasing the overall consumption; 2) enter new categories such as shelf stable food; 3) drive distribution and penetration in existing and new channels/geographies; and 4) leverage innovation to address new consumers and consumption occasions.”
For the past three years, South Asia, East Asia and Oceania have been the biggest growth contributors to Tetra Pak’s global revenues – and that position is expected to remain for the coming year.
Whatever the investment future, the region will remain a priority focus with high expectations, he says.
“India and Vietnam have been the biggest contributors to our absolute volume growth in the last couple of years, growing on a healthy base. Other markets such as Philippines and New Zealand have seen a tremendous spurt in the last one year, although on a relatively smaller scale, New Zealand being driven more by exports. On the other hand, Japan and South Korea have had an interesting performance in the last year. Despite being mature markets with a low population and low category growth, we’ve seen positive growth [versus a conventionally stable market] on the back of new innovations that we have introduced over the past few years,” he said.
“Going forward, we have a positive outlook in almost all our markets. Besides some of the usual growth horses in South Asia and Asean [like India and Vietnam], there is huge untapped potential in markets like Myanmar, Cambodia, Sri Lanka and Bangladesh, which are at fairly early stages of evolution,” added Kenneally.
“As part of our efforts to support our customers and to leverage relevant insights to grow the market, we regularly invest in market intelligence and consumer research. Every year we conduct studies on mega-trends globally and in Asia to help shape our strategies and initiatives,” he said.
Kenneally said that the company’s latest research shows global mega-trends that will drive consumer behaviour over the next few years. Most relevant for Asia is that consumers today are looking for products that support easy and fuss-free living, as their lifestyles get increasingly busier. As well, they eagerly want to achieve a healthy balance in food and beverage consumption.
“Consumers are all looking for ways to simplify their lives. The time they are required to invest in products and meals will become as influential as nutrition or ingredient claims,” said Kenneally.
“And consumers’ multitasking lifestyles are driving a need for shortcut solutions that are fresh, nutritious and customisable. The world of snacking and on-the-go products is being fuelled by new products. A healthy lifestyle and well-being are on top of the minds of consumers, and brands are listening and acting on this. We can expect consumers to increasingly look for products that promote good health through what they eat and drink – doing good for both the inner self as well as the body. Consumers are more demanding and expect food and drink products to improve their quality of life and self-image, while still remaining tasty, desirable, attractive and interesting,” he said.
“We expect manufacturers and brand owners to evolve with the trends and offer packaging solutions to address future market needs. Noteworthy amongst these are packages that offer greater functionality, which are designed for on-the-go [eating], easy to carry and use, as well as those with improved opening and pouring abilities, and multi-serving,” said Kenneally. He added that future consumers, especially millennials, want packages that are designed for them. Different shapes, sizes, designs, and surface treatments will be key elements. They will be looking for the environmentally friendly options.
Carton packages have a strong profile today, he said. In the future, bio-based materials for both closures and the package itself will be in demand.
Consumers also seek information through the package, including about the producer of the product, facts about the product and promotions. Different technologies will enable this going forward, such as QR codes.
Kenneally said that digital disruption is affecting almost every stage of the supply chain from the consumer purchase journey, Industry 4.0 manufacturing and supply chain efficiency.
“Being the world’s leading food processing and packaging solutions company, we believe that we can play a strong role in supporting our customers by consistently bringing about innovations in product formulations through our product development centre: in packaging with advanced functionality, and in equipment bringing about efficiencies and reducing costs, as well as providing end-to-end solutions to our customers – from processing to packaging to after-sales services – so that they can focus on their operations,” said Kenneally.
“We want to ensure the highest levels of quality and food safety and to leverage digital technology to provide multiple benefits … including production control, quality control, and leveraging packaging as a marketing and communication tool [via dynamic QR codes],” he said.
“Last, but not the least, using our global network and our expertise, [we aim to] bring best practices from across the world and deliver value-added services such as marketing services to grow the market,” added Kenneally.
He said that entering the Industry 4.0 era is about working smarter. It is about fully integrated technology that allows the company to respond in real-time to meet changing demands and conditions in the customer’s factory.
“Going through the journey of digital transformation ourselves, we are seeing the benefits that this technology can bring to our business and that of our customers. For example, by embracing new technology in augmented reality, we are able to provide customers with on-site specialist support in a number of hours. This saves us needing to send out an engineer and, more importantly, drastically reduces downtime for the customer.
“This is only one example, but demonstrates the substantial impact Industry 4.0 is having. A key to our success so far has been joining forces with the right partner to help to scale opportunities.”