New Year’s resolution: Tetra Pak wants to capture Middle Eastern markets

Company equipping itself with the latest technology; looking to utilise idle capacity.

LAHORE:

Tetra Pak Pakistan, a company that has for decades provided packaging solutions to Pakistan’s food industry – primarily to dairy products – has equipped its only unit in Lahore with the latest machinery to start capturing neighbouring Middle Eastern markets as well this year.

The company will also stop importing packs, which it currently does to supply a multinational food giant for its milk packaging needs, and will start manufacturing the same packs in Lahore this year.

Tetra Pak currently has 90% of the market share in dairy packaging solutions, and about 50% of the market in the soft drinks segment. The company’s Lahore unit currently manufactures eight billion packs annually, with enough spare capacity to make 16 billion packs. The total annual revenue of the company is about Rs25 billion, out of which it generates Rs2 billion through the export of products to some Middle Eastern countries.

“We are planning to enhance exports up to Rs6 billion this year, by exporting packs to emerging markets in Middle Eastern countries,” Tetra Pak Marketing Manager Assad Abbas told The Express Tribune in an interview.

Tetra Pak Pakistan has its eyes set on capturing Iran’s growing needs by providing 1.5 billion packs to the country’s industries every year. Along with Iran, the company will also export packaging solutions to the UAE, Yemen, Egypt, Jordan, Syria and other adjacent countries.

Meanwhile, Pakistan is still an important market for the company. “As the 3rd-largest country worldwide in terms milk production, Pakistan is still an emerging market. We are here to capture it, as annual growth recorded in Pakistan in this segment is 10-12% annually,” Abbas said.

The company has ambitious plans. Abbas said that “We are prepared to provide packaging solutions to each category of the local market and the export hubs.” However, despite its aspirations, Tetra Pak Pakistan continues to face tough competition in the soft drinks category. Many other local companies operating in the same business are successfully providing cheap packing solutions to the emerging soft drink industry. Tetra Pak considers such companies as their competition in the carbonated soft drinks and juices etc category, but maintains that their packing solutions are the best in the country, especially in the absence of cold storage chains.

“No solution is cheaper if you have to store the product for a longer time period,” Abbas explained. While admitting that clients are not dependent on Tetra Pak due to the variety of choices they have, he said that products survive for longer in Tetra Pak packing rather than the cheap alternatives available due to the superior technology used by the company.

The energy crisis is restricting the pace of growth of Tetra Pak Pakistan, but Abbas says the real hurdle is the absence of a well-established cold storage network in the country. The company provides the facility to clients in Lahore, Karachi and Islamabad, but others must step forth and set up similar deposit stations to tap the true potential of the industry. Pakistan produces 36 billion litres of milk annually, out of which six billion goes to waste because there is no means to store it properly. “We cannot provide this facility all over Pakistan. Investments are needed in this sector if Pakistan wants to be a global player in milk production,” Abbas said.

Tetra Pak Pakistan often introduces the latest packing solutions in the country, by analysing and following global trends. The company’s Research and Development department evaluates trends for the last three to four years, half of which are then adopted locally. The company also spends 5-7% of their total budget towards creating consumer awareness; the results of which, it says, lasts for around three years.

“We are here to stay; so we have to adopt the changes which the modern world is adopting,” Abbas said.

Published in The Express Tribune, January 2^nd, 2013.                

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