‘China & South America growth offset by decline in Europe’

Tetra Pak to expand in South America

By Jenny Eagle

- Last updated on GMT

Tetra Pak to expand in Brazil.
Tetra Pak to expand in Brazil.

Related tags Tetra pak Tetra brik aseptic Lund

Tetra Pak released its 2013 net sales today announcing a 3.5% growth and a 15% rise in capital equipment, which saw more than 580 filling machines installed globally, led by a demand in Greater China and Central and South America. 

Dennis Jönsson, president and CEO, Tetra Pak talks to FoodProductionDaily about why it was a tough business year, why it’s seen a 3% rise in packaging material volumes and what expansions we can expect to see this year.

'Tough year'

Speaking about the combination of strong competition and soft economies in many markets worldwide Jönsson admitted it created a tough business environment for Tetra Pak last year.

If we look at our performance at a regional level, we’re experiencing strong growth in regions with strong demand and economic growth – such as in Greater China and Central and South East Asia, but at the same time, we’ve seen significant decline in Europe​,” he said.

It was a tough year because on the competition side, plastics manufacturers made further improvements in the efficiency and performance of their packaging systems, with the introduction of a number of technologies to deliver product flexibility and differentiation, whilst reducing cost.

In addition, non-system suppliers (NSS) of carton packaging firmed their toe-hold in a few key geographies, most notably Europe and China, where NSS total capacity is estimated to reach 7.4bn and 11bn standard packs respectively by the year end. A number of these companies are now diversifying into new areas of our portfolio, looking beyond Tetra Brik to other package formats, with some initial success​.”

Jönsson said the firm saw a 15% rise in capital equipment because customers are investing now to take advantage of future growth, particularly in Greater China and Central and South East Asia.

The dairy market in China will continue to grow. According to the ‘China Food and Nutrition Development Outline for 2014-2020’, released in February by the China State Council, milk consumption will increase from 24kg to 36kg per capita by 2020​,” he added.

South America

South America is an important market for us and later this year we will announce a capacity expansion in Ponta Grossa, Brazil​.

We are continuously looking for opportunities, primarily on the processing side, to strengthen our ability to support our customers. Since the start of the year we have announced our acquisition of Miteco, strengthening our products for carbonated soft drinks​.”

The company’s packaging business reported net sales for the year of €9.6bn, with packaging material volumes rising 3% compared with 2012, as the company delivered more than 178bn packs to customers worldwide.

Around 27% of this volume came from Tetra Pak’s advanced product portfolio; with a range of shapes, formats and openings for improved functionality. This compares with a 21% share in 2012, and reflects year-on-year growth in Tetra Prisma Aseptic portion packs and Tetra Brik Aseptic Edge 1 litre, up 35% and 75% respectively.

Talking about Tetra Alcross RO Lite, Tetra Therm Aseptic Flex 1, Tetra Therm Aseptic Drink 1 and Tetra Albatch 1Jönsson said: “The scaled-down versions of some of our most popular products offer robust and reliable processing technology at a lower investment cost. This is popular among a lot of mid-size customers and customers in emerging markets and new fledgling businesses where the initial investment cost is a significant proportion of the overall operating cost.

Rising costs

He added one of the challenges customers face today is rising costs and competitive pressure and it is one the reasons why it is introducing different packaging designs that require minimal investment in the filling machine technology. Examples include Tetra Brik Aseptic Crystal, Tetra Brik Aseptic Edge, and Tetra Gemina Leaf.

Sales within processing reached €1.5bn in 2013, up 16% year-on-year including filtration systems for milk, cheese and whey applications and September’s acquisition of DSS Silkeborg, a membrane filtration technology company based in Denmark. 

The acquisition of DSS Silkeborg and the earlier 2012 acquisition of Filtration Engineering, gave Tetra Pak in-house expertise in reverse osmosis, nano-filtration, ultra-filtration and micro-filtration​,” said Jönsson.

The next phase is incorporating and developing these technologies into the next generation of dairy processing products​.”

Excluding acquisitions, processing growth was 13%, reflecting an increase in technical sales and service, which climbed 15% year-on-year, and gains in equipment sales to the beverage and prepared food categories, up 19% and 15% respectively.

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