On a global basis, the company’s dairy category has been growing and continues to grow in developing markets, fuelled by population growth, rising prosperity and urbanisation.
Rising competition within the liquid food packaging sector
Carol Yang, corporate director, public relations, Tetra Pak, told FoodProductionDaily, a further softening of global GDP and rising competition within the liquid food packaging sector made 2014 a challenging year.
However, Capital Equipment sales grew to €2bn (revenues grew 6.4% year-on-year) and Technical Sales reached €1bn (increasing up to 11%) for the first time in the company’s history.
“Our packaging Capital Equipment sales grew in parallel with sales of advanced packaging formats. Customers invested in higher specification equipment partly to take advantage of package formats from our portfolio, such as Tetra Gemina Aseptic,” she said.
“Compared to traditional packages such as the base format of Tetra Brik Aseptic, these packages have a unique look and feel, allowing products to stand out on the shelf. They also have an improved environmental profile and benefit from better functionality such as closures that are simpler to open, better to pour from, easier to drink from and to close.
“In processing Capital Equipment, factors that have influenced growth include global demand for milk powder and cheese processing equipment, in anticipation of the lifting of European Union milk quotas in 2015 and the growing opportunity to export to emerging markets – something we covered in our recent Dairy Index report.
“Technical Sales had another strong year, with increased revenues of 10.9% compared with 2013. Almost 30% of Technical Sales now come from service contracts, as more and more customers recognise the value of proactive maintenance, stable performance and predictable costs.”
Significant external challenges
On the downside, Yang said its Packaging Solutions business faced significant external challenges this year (despite reporting net sales of €9.4bn, 0.9% higher than in 2013); competition intensified, core categories declined, and political unrest stifled demand in several important growth countries.
“In terms of competition, the year saw a further squeeze on market share in some of our long-established categories, most notably ambient white milk, where we lost share principally to non-system suppliers (NSS) of carton packaging material, i.e., companies who sell base format packaging materials to be used on our machines,” she added.
“We also saw increased competition from outside of the carton sector, for example the plastics industry.”
Talking about jobs cuts, she added Tetra Pak announced the closure of its packaging material production facilities in Moerdijk, the Netherlands and Lund, Sweden, as part of on-going efforts to improve production efficiency in the face of falling demand for beverage cartons across Europe.
“The closure of plants is never an easy choice. We fully recognise the impact on our highly skilled workforce and are committed to do what we can to give affected colleagues every possible support in what is always a difficult period,” she said.
Tetra Rex Bio-based
The company launched a range of processing and packaging products in 2014 including its Tetra Rex Bio-based, the world’s first carton package made from plant-based materials, combining paperboard with plastics derived from sugar cane.
“Packages have to be simpler to open, better to pour from, easier to drink from and to close, and this is exactly why we have invested in developing new shapes of packages and new closures,” said Yang.
She added the Tetra Brik Aseptic Slim has one of the largest ranges of sizes and openings and closures and it has recently introduced HeliCap, a one-step resealable screwcap.
Tetra Brik Aseptic Edge adds a slanted edge to the Tetra Brik Aseptic, to stand out on the shelf and make it easier to handle. The closure on the package makes use of its Direct Injection Moulding Concept (DIMC) technology.
“Tetra Prisma Aseptic continues to set the pace because there’s nothing else like it for aseptic packages. It’s an eight-sided design that looks good, pours well and lends itself to modern design. In particular, the Tetra Prisma Aseptic portion pack with DreamCap offers consumers a visually appealing and portable package, for on-the-go beverage consumption,” she said.
Yang added Tetra Pak is now rolling out its Tetra Rex Bio-based carton out to more customers in Europe, and it is talking to customers in other parts of the world.
She said the challenges will remain the same in 2015: a sluggish global economy and rising competition.