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SIG Combibloc discusses Brazilian ‘business opportunities’ with PepsiCo

By Ben Bouckley , 13-Apr-2012

SIG Combibloc says that milk-mix drinks are a rapid growth category in Brazil, and has revealed that it is discussing new “business opportunities” with PepsiCo having just supplied the beverage giant with a new filling line in the country.

SIG said it had installed the CFA 712 aseptic filling line at PepsiCo’s Palmares site in the Brazilian state of Alagoas, with the machine chosen for its high performance and low product wastage rates.

But a SIG Combibloc spokeswoman declined to comment further on talks now underway aimed at cementing a closer partnership with PepsiCo, citing “confidentiality reasons”.

SIG cited Canadean figures showing that 460m litres of milk-mix drinks were produced in Brazil in 2011 (+12% on 2010), and SIG said it predicted growth of 10.5% per annum.

Since February 2012, PepsiCo’s Toddynho branded milk-mix drinks – pictured, launched in 1982 and aimed at growing children – have been sold in combiblocSmall 200ml cartons with a drinking straw.

Departure from Tetra Pak…

A SIG Combibloc spokeswoman told DairyReporter.com that until now PepsiCo had used Tetra Pak cartons to fill the product, but had chosen SIG filling technology for the 200ml cartons.

She said: “The filling line was installed to expand PepsiCo’s capacity since the flavoured milk market is booming in Brazil. The main drivers are higher average consumption and an increasing number of households which can afford consuming the milk-mix drinks due to higher average incomes.”

The chocolate variety of Toddynho “created a revolution in the Brazilian market” on its launch, SIG said, “kick-starting the entry to a new product segment, ready-to-drink UHT milk mix drinks”.

Chocolate milk mix drinks were especially popular in Brazil, with chocolate-flavoured products making up 90% of sales in the milk-mix drinks segment, while 80% of sales were in small carton packs, SIG said.

Quizzed as to what kind of penetration SIG was seeing for milk-mix in other markets than Brazil for milk-mix drinks, the spokeswoman said:“The market for aseptically filled liquid dairy products will see substantial growth in the coming years, first and foremost in China.

“Assuming there are no major unforeseen events, Asia will exceed Europe’s market for aseptically filled liquid dairy products in 2012."

Total average annual growth for liquid dairy products in China was estimated at around 10 % (2010-2014), followed by countries like Vietnam and Indonesia, SIG said.

Asked to explain the specific benefits of the CFA 712 machine vis-à-vis market rivals, the SIG spokeswoman said that the machine had “unique format, volume, decor and product flexibility”.

Rapid volume changes

One should not assess the performance of the equipment by speed alone, she added, explaining that the correlation between speed and actual output was the overall measure of the cost-effectiveness of a system.

Rapid volume changes allowed a wealth possibilities for positioning products tailored to specific target groups, she added, with a single filling machine able to fill up to seven different volumes.

“For all combibloc and combifit formats with the same base dimensions, switching between different fill volumes takes just a few minutes,” she said.

The spokeswoman cited the example of a top-selling milk mix drink for children – with a special formulation and a volume matched to the age group – that could be supplemented with a variant for teenagers, and might require a carton pack to hold more product.

“Or think perhaps of special seasonal products or functional premium drinks that are normally consumed in smaller quantities than conventional juice classics or milk,” she said.

PepsiCo Brazil was founded in 1953 and employs around 9,000 staff. Apart from Toddy/Toddynho (milk mix drinks) Propel and Gatorade (sports drinks), Trop Coco and Kero Coco (coconut water), Frutzzz, H2OH!, Pepsi-Cola (carbonates) and Lipton (RTD tea) via its JV with Unilever.

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