Why did you pick India as your first pitstop?
The first thing a company’s board asks you is how you will help the multinational firm grow in future. I, thus, wanted my first trip to be to India. The country has immense potential. As a company, we make food safe and that perfectly fits with India. We want to supply food to the remotest parts of this country where accessibility is a challenge. The profile of the new Indian consumer wants convenience which is aligned with our vision. We find Bengaluru’s startup ecosystem a great opportunity and want to build a connection. I want to understand the Indian consumer mindset and the unique retail model here to introduce new product categories. I believe that a company can effectively grow their business model in India by 4-5%. We are identifying 3-4 geographies globally where we want to put our resources and India is definitely one of them.
What was Tetra Pak’s sales growth in 2018?
We have a ten-year plan that we built from 2010-2020. We had set out to grow by between 4-5% net sales every year. Last year, we saw a small reduction. We grew by 2.4% globally. However, in India we have grown by over 10% last year. Our total turnover is about 12 billion euros. 2.4% is an achievement compared to many global companies that seem to be struggling these days. But we look to grow further.
Where does India rank for Tetrapak?
India is one of the 15th largest markets for us. The top three are China, Brazil and Russia in terms of total turnover. However, we need to rank India in terms of potential. It then ranks in the first five.
How do you look to grow in India?
Our research shows that we have 100 billion litres of liquid goods consumed in India. Less than 50% is packaged. We sell 35 billion litres of loose or street milk. That is the kind of headroom for growth in India.
The milk deficit in North-east part of India makes it a significant market for us. North Kashmir with severe winters is difficult for lose milk to reach. Army is also one of our biggest customers’ customer. Bihar and Odisha have limited milk supply. These are potential markets. Overall, the per capita consumption of milk is low and we want to drive it to a healthy level. Apart from these pockets, metros also showcase a high need for convenience. Other categories like juices and nectars are premium categories and have high penetration levels in Tier 1 cities and metros. Coastal areas are important markets too as the fishermen want packaged milk to prepare tea in the high seas. Roughly, 16 billion litres of loose juice is consumed on the streets of India. It is another packaging opportunity.
How different or challenging is India vs other emerging markets?
It is not less or more but uniquely challenging. The retail structure of India – 10% modern trade and 90% of mom-and-pop store trade – will not dramatically move in the next ten years. India is a continent with different consumption habits and different regional legislations. We need to be able to adapt to grow. We have been here for 35 years and we are still not achieving our target.
Give an insight into the current packaging trends.
Each market has a different consumption pattern that translates into the way products are packaged. US, Europe, India and China are uniquely different. US has on-the-go mindset where portability is important. So, they want small-size packaging. Europe puts focus on family size. India’s consumption has increased in the last four years and 70% of its packaging comprise portion packs of 200 ml and below.
What was the reason behind Tetra Pak’s decision to pick India as one of the first few countries to introduce digital packaging launched recently?
Digital packaging was launched first in China followed by India, Russia and Central America. With 70% mobile phone penetration, India emerged as the right country. A unique QR scan code will gradually feature on all our packs to gain information about the product and supply-chain for retailers and end-consumers. The QR code will help in promoting brand activities. In return, we will have gain the largest database of consumers in the world which will help our customers grow. We will give them database on trends and consumer habits. We have launched two pilots in India three months ago. Karnataka Milk Federation (KMF) in Bengaluru is one customer. The other is based in North India.
With many beverage startup companies using glass bottles and now Maharashtra state making it mandatory for companies using tetra pak and multi-layer packaging to devise a recycling mechanism for used packets, do you fear facing restrictions or getting banned like plastic?
About 75% of our packaging uses renewable materials. So, we have low carbon footprint. We have a strong proposition and can explain to the different governments on why we can be a very positive agent of change.
In India, we recycle close to 40% of our carton packages, a number high compared to other countries. Globally, we recycle about 20-25%. Europe stands at 50%. But we need to do more. It is not just a Tetra Pak job but an industry task. We are working with customers and main stakeholders to focus on recycling.
We support the government but want them to listen to us and work with us to drive this initiative. Developed markets have the infrastructure with waste segregation and collection in place. We request the government to strongly drive this initiative as this is in their hands. We cannot underestimate that we are doing enough for the environment. The biggest disruption agent we see in the future is sustainability. We invest 400 million euros in R&D every year. We have decided that most of that money would go into developing friendly-packaging than what it is today. We want to push the low-carbon circular economy.