India is still an underserved market, says Tetra Pak's Ashutosh Manohar

Be it through social media, or the product pack, the consumer wants to 'talk' to brands, not be 'spoken to', says Manohar

Packaging, from being just a visual differentiator, has become central to brand strategy today. How is that change determining Tetra Pak’s development plans?

The food and beverage industry is embarking on its biggest transformation in decades, leveraging new technology to improve food quality, increase plant efficiency and boost productivity. Digital transformation is the central part of Tetra Pak’s strategy as well, and we are working with our customers and technology partners to embrace Industry 4.0. 

Some of the things that we’re working on include automated quality control, augmented reality remote support and predictive maintenance. With the help of such interventions, we are able to offer our customers improved productivity through data-driven insights, and improved quality assurance using greater automation through IT and robotics. Embracing these digital advancements has led to increase in productivity, reduced costs and delivered increased profitability for our customers’ businesses. 

The latest innovation for us, and a truly transformational one, is the introduction of smart packaging earlier this month. Brand owners now have access to a complete smart packaging ecosystem built around dynamic QR codes that allow each package to be tracked, monitored and interacted with throughout the supply chain. Our digital package includes three components: code generation and printing on packages, a secure cloud solution for managing the data collected, and a consumer-facing front-end in the form of an app or a microsite on the internet.

What impact are these moves likely to have on the client’s supply chain?

Our latest innovation is smart packaging, and India is one of just three select Tetra Pak markets to be introducing this technology using a specialised printer. The dynamic QR code that lies at the heart of this technology is what will add the ‘smart’ to smart packaging. We are excited about the potential of this technology and therefore we have invested in creating the whole ecosystem — from generating to printing the codes using a specialised printing machine, to developing the apps. It is a turnkey solution for our customers.

Unlike a static code which has been around for a while, a smart QR code gives each package a unique identity. It can be used to take the end user to different addresses every time it is scanned, depending on the brand owner’s requirement. Each and every package can be monitored, creating new opportunities for efficient stock management, distribution and automation. Also, this means that consumer interaction can be customised, offering him a personalised experience, which was not possible earlier. 

Consider this. With a supply chain that’s linked from end to end, brands can make traceability more transparent, sharing information with consumers right down to the farm that a particular juice comes from. The package can be the gateway to a consumer engagement programme — say, a scratch and win contest, a unique identifier for an online competition, a loyalty token or a means of creating a one-to-one channel with individual consumers. It can even be used through the post-consumer recycling value chain by providing links to the location of the nearest recycling centre.

We are excited about the possibilities that this technology opens up and will be launching our first pilots with two leading F&B brands shortly. Over the past year, the increase in fuel and commodity prices and exchange rate fluctuations have also put significant pressure on supply chains. F&B brands can significantly reduce overall costs through innovations like ambient packaging solutions that do not require a cold chain.

Given the rapid changes all around, what are the key challenges facing the packaging industry?

Brands in India have to constantly walk the line between the global consumer who does not mind paying extra for quality, image and convenience, and the value seeker for whom affordability is important. A one-size-fits-all strategy cannot work. Prevention of adulteration is another challenge that is critical to ensure food safety for consumers. While some packaging alternatives are tamper-evident, many others can be easily compromised.

Regulatory developments like the Extended Producer Responsibility framework or plastic ban that are being introduced in some states have positive implications for us. We have been developing a recycling ecosystem for over 15 years and one in three Tetra Pak cartons sold in India are already being recycled. But even with our experience and existing network of recyclers, collection partners, NGOs etc, it is difficult to address the issue state by state. The need is for uniform national policies that can allow the industry to take a long-term strategic approach to address the issue of waste management. 

How important is India in Tetra Pak’s global plans?

The biggest difference between India and any other country in the region is the sheer diversity of the market — the mini-India’s within India. Businesses must walk the line between attracting the deeper-in-the-pyramid consumer, while also meeting the demands of the evolved consumer. India is still largely driven by the value-conscious consumer compared to other markets in the region. While there is rapid urbanisation, and appetite for other benefits, the price of a product prevails.

The unorganised sector continues to rule in India. For example, the overall liquid white milk market in India is about 62.8 billion litres, of which only 42 per cent is packaged. All other countries in the region are primarily driven by packaged milk. Similarly, modern retail contributes just 10 per cent to the FMCG sales compared to over 50 per cent in other markets. Ecommerce in India contributes just 1.3 per cent to the branded packaged FMCG sales, compared to markets like China where ecommerce contribution is more than 20 per cent.

How important is India in Tetra Pak’s global plans?

We are in a unique business as the only end-to-end solutions partner for the food and beverage industry. Our business is not just about packaging material and filling machines, but also equipment on which food/beverages is processed. In addition, we have a large services business which helps our customers improve performance, optimise costs and ensure food safety throughout the lifecycle of their operations. In essence, our market is really the overall F&B market in India. 

India’s food market is expected to touch $540 billion by 2020 and has been growing at the rate of 12 per cent annually for the past five years. This means that F&B brands are increasingly looking for partners that can offer integrated solutions. 

For example, if we look at just one subset — the packaged beverage market in India — that alone is pegged at 66 billion litres, growing at a compound annual growth rate of 7.7 per cent for the last three years. That said, the market is still highly underserved, and we believe that it will continue to grow fast for at least the next two decades. Add to this the potential of the processing of foods like cheese, paneer, fruit pulp, milk powder etc, and we have only just touched the tip of the iceberg so far. That is what makes India one of the fastest growing market for Tetra Pak globally.

How and in what ways has the packaged food market in India evolved over the last few years? What does the consumer want?

The packaged food market has evolved significantly over the past few years. Primarily based on the changing consumer demand, the consumer of today is looking at a few key things from their pack. One personalisation. Customisation of products and personalisation of the consumer’s experience can be a game changer. The package needs to talk to 'you’, not your demographic. The next issue is convenience. A growing number of millennials, working couples and their active lifestyles is giving rise to a need for on-the-go consumption and the need for packaging that minimises effort like boiling/storage/daily purchases. Then comes engagement with brands. Whether on social media, or on the pack, the consumer wants to ‘talk’ to brands, not just be ‘spoken to’. Again, food safety is a concern for consumers, as well as for regulatory bodies. Consumers are also looking for more sustainable packaging options that do not harm the environment, and are holding brands accountable for their environment footprint.