On-the-go drinks and personalized products: Tetra Pak eyes up new growth areas

By Jim Cornall contact

- Last updated on GMT

One of the Tetra Pak innovations for 2015 was the world’s highest-capacity ice cream extrusion line, producing up to 43,200 ice cream sticks an hour, or 12 every second.
One of the Tetra Pak innovations for 2015 was the world’s highest-capacity ice cream extrusion line, producing up to 43,200 ice cream sticks an hour, or 12 every second.

Related tags: Tetra pak, Dairy, Milk, Revenue

Tetra Pak’s revenues reached €11.9 bn ($13.5bn) in 2015, a rise of 7.5% on the previous year.

Tetra Pak president and CEO Dennis Jönsson said that in spite of slowdowns in the company’s top two markets – China and Brazil – and significant hits to sales arising from the political and economic events in other countries, there was growth in both processing and packaging in 2015.

Jönsson credited the strength of Tetra Pak’s strategy as one of the reasons for the rise in revenues.

Packaging solutions

Chris Huntley, SVP communications at TetraPak told DairyReporter, “As the dairy industry becomes more competitive, customers are innovating more quickly than ever, and this is reflected in their deployment of our new packaging products.

Tetra Pak says that it has been able to meet shifting demand by introducing new shapes, new materials and enhanced functionality.

Almost 40% of packages delivered during 2015 were from the company’s range of advanced formats, an increase of 27% since 2010.​

“Our vitality index, which measures the share of sales coming from new packaging products launched during the past five years, has risen from 2% to 17% since 2010, reflecting customers’ strong demand for new shapes, closures and materials, particularly for new growth areas, such as on-the-go drinks, milk products with personalized benefits, and products that address health and environmental concerns,” ​Huntley said.

Revenues from packaging solutions totalled €10.1bn ($11.5bn) in 2015, a rise of 6.4% compared with the previous year, with particularly strong growth in technical service. Sales of packaging materials were slightly higher, with 184bn packs sold in 2015, compared with 180bn in 2014.

Processing solutions

The processing solutions division saw revenues reach €1.7bn ($1.9bn) in 2015, which Tetra Pak said is the highest in the company’s history. All five of its geographical divisions grew, with double-digit growth in its Greater China and Greater Middle East & Africa regions.

It noted that processing technical sales and service revenue was strong, with a 17% increase, at prevailing rates, compared with the previous year.

The company said that performance in this area of the business also benefitted from the acquisition of Polish company Obram S.A., a provider of cheese technology solutions and equipment in its home market, Russia, Belarus and other parts of Eastern Europe.

Services revenue upward trend

Services revenues, which combine packaging and processing solutions, reached €1.2bn ($1.4bn) in 2015, with growth in new categories. These include production line upgrades, consumables such as lubricants and adhesives that are used in production, and expert services, which are directed at improving operational performance.

The company says that this growth is expected to continue as the company expands its offerings. Services now account for more than 10% of total revenues for Tetra Pak.​

Innovation in 2015

Huntley said that dairy customers are seeking innovation in equipment to help them reduce operational costs and improve productivity.

“In 2015, we launched a number of new filling machines as well as processing equipment. Among these were the Tetra Pak TR/G7, a low cost, easy-to-operate high performance filling machine for chilled distribution that cuts electricity consumption by a third, and the world’s highest-capacity ice cream extrusion line, producing up to 43,200 ice cream sticks an hour, or 12 every second.”

Tetra Pak added that it launched other innovations in 2015, including the Tetra Rex Bio-based package, which is the world’s first fully renewable package; the Tetra Pak E3 filling-machine platform, which uses electron beams to sterilize packaging materials; and the OneStep processing technology for liquid dairy production from powder​, which was previously only available for production from raw milk.

Future growth

Looking forward to 2016 and beyond, Jönsson said, “This year marks the half-way point in our 2020 Strategy. Since we started that strategy five years ago, we have become leaner and more productive, with a stronger and broader product portfolio and a sharper focus on customer value, giving us a good platform from which to build.

“In the future, we believe that we can continue growing our business by driving efficiency, staying focussed on product and service innovation, and putting customers at the centre of everything we do.” ​​

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