Tetra Pak is focusing on China as a key market and innovation hub, investing in local adaptation and expanding into new business areas. The company is addressing challenges in the dairy sector and leveraging growth opportunities in food supplements and processing solutions.
Tetra Pak, a global leader in packaging and processing solutions, is focusing on China as both its largest market and fastest-growing regional innovation hub. The company is expanding its business categories to include food supplements and other sectors to drive new growth.
Financial Performance
Tetra Pak achieved net sales of 12.8 billion euros ($13.9 billion) globally last year, marking a 2% increase year-on-year. The Asia-Pacific region, contributing 33% of the total revenue, plays a significant role in the company’s growth strategy.
Market Dynamics in China
China’s fast-moving consumer goods market saw recovery in the first quarter of 2024, according to the China Shopper Report 2024 by Bain & Company and Kantar Worldpanel China. The packaged food and beverage sector experienced stable growth, with increases of 2.7% and 4.3% respectively. Despite this, the dairy sector faced challenges, including a 2.9% drop in packaged milk sales in the first quarter compared to the previous year.
Shift in Consumer Preferences
Post-pandemic, consumer needs and preferences have shifted significantly. Tetra Pak emphasizes understanding these changes to unlock growth opportunities. The focus has shifted from merely transferring global solutions to tailoring them specifically for the Chinese market, addressing the need for rapid and effective innovation.
Innovation and Local Adaptation
Tetra Pak has upgraded its Product Development Center and established the Development & Technology Center in Kunshan, Jiangsu Province. These centres house workshops, labs, and more than 60 R&D staff, enabling collaborative innovation and shortening product development cycles. The company is focusing on developing tailored packaging solutions for lower-tier and rural markets.
Expansion Beyond Packaging
While packaging remains a major revenue stream, Tetra Pak is expanding its processing business into new categories beyond dairy, such as cheese and ice cream production. The company is also enhancing its technical services to support small and medium-sized producers with versatile and cost-effective production line upgrades.
Technological Advancements
Tetra Pak has developed innovative solutions for leading dairy companies like Yili Dairy and Mengniu Dairy, including the E3/Speed Hyper filling machines with e-beam sterilisation technology. This technology has set new benchmarks for packaging speed, reduced operating costs, and enhanced environmental sustainability.
Market Challenges and Opportunities
The Chinese dairy market faces several challenges, including a declining birthrate, an ageing population, and increased consumer preference for cold-chain products. Despite these challenges, Tetra Pak remains confident in the market’s long-term potential, driven by trends such as health and ‘green’ consumption.
Investment in New Categories
Tetra Pak is investing in new categories such as food service, dietary supplements, and nutrition. Nutrient supplements, in particular, saw significant growth of 20.5% in the first quarter of 2024. The company is leveraging these trends to drive growth in creamier dairy products, functional foods for seniors, and other high-potential areas.
Tetra Pak’s strategic focus on China highlights the country’s importance as a major market and innovation hub. With ongoing investments in local adaptation, technological advancements, and new business categories, Tetra Pak is well-positioned to navigate the evolving landscape and seize growth opportunities in the Chinese food and beverage sector.
