Monday, June 13, 2011

A New Revolutionary Cheaper TetraPak Container; Balance of Power Shifts to Emerging Markets

The change in the balance of world economic power is directly reflected in sales of Swedish Tetra Pak. Ten years ago, 55% of sales from packaging manufacturer came from Europe. In 2010 the European share on revenue was 40%. As the potential for growth in consumption is concentrated in developing countries, it is likely that the importance of the "old continent" for the company to fall further in coming years.

Today, the two main individual markets for Tetra Pak are Brazil and China. The two countries are responsible, each for a share of 13% of company revenues, which totaled nearly $7B last year. So says the executive vice president of Tetra Pak, Nils Björkman: the intelligence efforts of the company aiming to expand the consumption of cartons are concentrated in emerging nations.

In 2010, Tetra Pak sold 11 billion packages in Brazil. With only the expansion "normal" economy, the market is growing between 5% and 6% - a direct reflection of the increase in family income, which now consume more products like milk, yoghurt and ready juices. To "boost" to expand further, increasing the current consumption by 20% (or at least 2 billion units), the company is not betting its chips on lower prices for packs of 1 liter - the most consumed locally - by the least 30%.

The triumph is to use the model without the folded edges of the 200 ml pack in 1l boxes. According to Paul Nigro, vice president of Tetra Pak South America, a better account of packaging entails a reduction in the final price of milk and juice ready - thus, the poorer classes (known as "D" locally), poorly represented in these categories, would contribute more revenue for Tetra Pak.

Worldwide. Björkman notes, however, that the development of cheaper packaging is a necessity not exclusive to Brazil. Experience with the model without folded edges, which will reach the Brazilian market later this year, should be taken to other nations in the coming years.

"Major markets around the world, including India, have a contingent of consumers very sensitive to the price factor," he says.

As the price of foods also escalates almost without control in developed nations, expect to see the new packaging here too.

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