Tetra Pak India believes it will grow only if it works to improve its customers' performance. Name all the beverages and food packaging companies that advertise on TV. Chances are, you'll stop at one. Even that one has been on television for just over a month, where actress Tabu has been expounding the qualities of good milk "" rather, Tetra Pak-ed milk.
Interestingly, the ads feature the actress with milk cartons of rival brands "" Nestle, Amul, Mother Dairy, Gagan and so on, all together. That begs the question, why?
How does a packaging company gain from pushing different brands? Tetra Pak India believes the logic is simple: "Every carton that these companies sell is where we make money. Unless they grow, we will not grow."
The logic "" to foster the customer's growth "" is not restricted to the current ads. In fact, it's been the cornerstone of Tetra Pak India's growth strategy for the past couple of years.
The company, which is a 100 per cent subsidiary of its 55-year-old Swedish parent, and has been operating in India for the past nine years, is now using its years of experience "" both international and local "" to support and motivate both its existing and new India customers expand their market base and offer safe, high quality product variety.
Internally, the company has restructured and refocused from being a mere equipment supplier to one equipped with the knowledge and support base "" on every business front, from product formulations and design to distribution and retail "" to help its customers grow.
Tetra Pak's forte for long has been the aseptic processing and packaging it offers to different products "" milk and dairy, beverages and other food products.
This involves ultra-high treatment (UHT, heating at very high temperatures for a few seconds) that removes various micro-organisms without much damage to nutrients and flavour, and then packing the product in a six-layer package that keeps it fresh and safe without adding preservatives or refrigeration for six months.
Industry sources say the nearest competition offers packaging with a shelf life of 10 to 12 days, that too, under refrigerated conditions. The only other company offering aseptic packaging is DuPont's Liquibox "" but then it's focused on primarily on the high capacity ( over 200 litres) bulk export segment.
According to Rajiv Dhar, director, Indian Institute of Packaging and secretary general, Asian Packaging Federation, the overall packaging market in India is worth Rs 650 billion of which 30 to 40 per cent is for food packaging; aseptic and retort (used to pack ready-to-eat foods) packaging account for just 4 to 5 per cent of the market.
Clearly, Tetra Pak is eyeing a greater share in this market, which is growing by 16 to18 per cent a year. The company produced some 2.4 billion packages in 2003; last year the figure was 2.5 billion and it is aiming for 2.7 billion by this year end.
It has identified UHT milk and beverages as key growth areas, targeting an increase from 750 million packages in 2004 to 1.3 billion packages by the year-end.
Tetra Pak decided on a more consumer-centric approach, focusing on supporting customers bring out better products and reaching out to more consumers, some three years ago.
The reasons, says Drummond Rimmer, business development director, Tetra Pak India, were the way the food and beverages market was growing and the consumer was changing.
For instance, just 10 years ago nobody would have imagined that bottled water could be successul in India. Today, there are close to 200 bottled water brands in the country.
"We think there will be similar growth for carton milk and other aseptic packaged products as well. That's why Tetra Pak is now more directly involved with customers and consumers," explains Rimmer.
Tetra Pak focuses on two areas under its customer-consumer centric approach. One, to drive growth for existing customers and, two, helping new entrants with their forays.
Says Henrik Hauggaard, managing director, Tetra Pak India, "We have noticed an increased demand for properly processed and packed foods."
The first step is to help existing customers make their products more available "" at more outlets, to more people. To ensure unbiased research, the company has roped in AC Nielsen to study product movement in stores and outlets across 22 cities.
Tetra Pak then shares this information with its customers and suggests the stores/outlets they need to target, where they've missed out and how they can improve.
Says Rimmer , "We also offer suggestions to customers on how to improve the visibility of their products in the stores."
The assistance isn't restricted to proferring advice and sharing market information. Tetra Pak is also actively helping organisations improve their distribution channels.
For instance, the Karnataka Milk Federation (KMF) was finding it difficult to penetrate the market and increase its market share. Once Tetra Pak came on board, it hired a local agency that helped it recruit a sales force.
KMF and Tetra Pak then jointly trained this team on the advantages of carton milk, handling cartons and also on the sales front. The distributors were also taught to sell the product in the right way.
Then Tetra Pak and KMF followed up with monthly checks. The entire network was built from scratch, with Tetra Pak's active involvement "" from corporate policies to retail and distributor strategies, and reimbursement of salesmen.
Rimmer says KMF's performance improved almost immediately. "That was a win-win for both the organisations. They sell more, they'll buy more packages from us," he adds.
Availability of stocks isn't the only issue. If sales aren't at the required level, there's a very real danger of stocks reaching their expiry date and going waste.
Clearly, that's a loss for everyone in the value chain. Thanks to its tie up with AC Nielsen, Tetra Pak is in a unique position of being able to track ageing stocks at different stores.
It passes on that knowledge and advises its customers to rotate stocks between stores, based on the demand pattern. The Delhi-based Amrit Foods, which owns milk products brand Gagan, is one company that's benefited this way.
Says Amrit Foods Managing Director A K Tyagi, "Tetra Pak has helped us expand our market base."
But a lot of Tetra Pak's work starts at the manufacturing stage. It has set up a product design studio that works out conceptual designs for customers.
While all companies "" big or small "" have their own design agencies, Tetra Pak showcases them new concepts and ideas. "We do mockups that help stimulate customers into seeing that the package looks great as well," says Rimmer.
For instance, earlier Vijaya Milk cartons were coloured in different shades, but there was no product differentiation. Based on Tetra Pak's advice, the company changed its packaging so that different colours indicated different fat levels in the milk "" red for low fat, blue for standardised and so on.
Earlier this year, Tetra Pak was closely involved with the new packaging for mango drink Frooti, too. It worked actively with design firm Yellow to ensure the printed packs matched the colours, graphics and quality that were intended.
"At each stage of the execution process, our team was deeply involved with the people at Tetra Pak," says Sujay Nanavati, business head, Yellow.
The customer connection goes right down to product innovation. Tetra Pak has set up a Product Development Innovation Centre at its Pune factory, which works with customers on developing new formulations and products.
"Based on our experiments, we are able to suggest new ideas to customers, as well as help them tweak their products to suit local tastes," says Rimmer.
Amrit Foods claims that it will soon be launching new milk products based on formulations and flavours suggested by Tetra Pak.
The product innovation assistance is best demonstrated by the experience of new entrant Balan Food. When the company decided to launch a low-fat, drinking yoghurt in south India, Tetra Pak swung into action.
Based on its research in south Asia, it was able to suggest flavours that would work (strawberry, orange and apple) and even the target customer "" 6- to 14-year-olds (preferences for tea or coffee increase after that).
Says Balan Foods Managing Director Nanda Kumar, "We see Tetra Pak not as another packaging company but as an associate in our business activities." If Yo Miruna takes off, Tetra Pak's strategy will be vindicated.
