Tetra Pak Presentation 5c5pm

Tetra Pak Analysis Tetra Pak Analysis

June 3rd 2013

Agenda • Background • Key Challenges • Stakeholder Analysis • Risk Management • Recommendations • Q&A

Tetra Pak products

Tetra Pak

http://www.youtube.com/watch?v=eDodQwzfV74&list=PL10C49583D3A632AA

Background • How did we get here? • Milk consumption

• What instigated the challenges? • Melamine scandal

• Why does this impact Tetra Pak significantly? • Most of its eggs in one basket

• How did this happen? • Highly fragmented supply chain

Key Challenges • Milk safety: • Milk producers have struggled with contamination issues • Significantly impacts Tetra Pak, but TP has limited control

• Competition • Substitute product of fresh milk infringing on UHT market space • New entrants into aseptic packaging market; Tetra Pak losing competitive edge. (GA Pack’s price is about 10-15% lower than Tetra Pak) • Alternative packaging methods for fresh milk

Key Challenges • Recycling: • Negative perception of Tetra Pak package recyclability • Lack of infrastructure, equipment, and processes in place for extensive recycling process needed • Risk of change in government recycling policy

HB Clad Plate manufactured from recycled Tetra Pak containers

Stakeholder Analysis Processing plant (Customers)

Suppliers • •

Millions of dairy farmers Tetra Pak

• •

Distribution

Inner Mongolia Yili Group (Yili) China Mengniu Dairy Company (Mengniu)

Consumers • •

UHT milk drinkers National School Milk Program

Stakeholders with impact on Milk Supply Chain • • • •

General istration of Quality Supervision, Inspection and Quarantine (AQSIQ) Ministry of Health • Renmin University of China (Renda Tetra Pak Dairy Research Centre) DeLaval (Sino-Sweden Dairy Industry Centre) • Nai Ban (national milk office) Ministry of Agriculture • Dairy Association of China (Virtual Dairy Farmers School)

Stakeholders with impact on Packaging Supply Chain • • • •

NGOs (eg. WWF) China Green Foundation State Forestry istration Forest Stewardship Council

• • • •

Shandong Tianyi Plastic Co Ltd. Shandong Liacheng University (PolyAl Technology) China Packaging Federation Municipality recycling and waste management partners

Risk Management: Milk Safety Processing plant (Customers)

Suppliers •

Training for dairy farmers and • program for pastureland management to improve milk • quality

Distribution

Consumers

No impact on UHT milk processor quality control Didn’t encourage product recall following scandals

Stakeholders with impact on Milk Supply Chain • • •

Collaborated with DeLaval to create Sino-Sweden Dairy Industry Centre to provide Dairy Farming Proficiency training Tetra Pak and Renmin University of China created Renda Tetra Pak Dairy Research Centre to raw milk production Launched Virtual Dairy Farmers school with Dairy Association of China and China Central Television

Stakeholders with impact on Packaging Supply Chain

Risk Management: Competition Processing plant (Customers)

Suppliers • • •

Training Equipment financing Food product development

• • • • • •

Distribution

Technology innovation • Strategic Alliance Business Intelligence new plants Product diversity (primarily UHT) High packaging cost for customers

for market development

Consumers • •

Cultivate the habit of drinking milk • School milk programs Little to no impact on consumer’s fresh milk preference

Stakeholders with impact on Milk Supply Chain •

Customers and consumers

•

Government and government agencies (National School Milk Office, Ministry of Health, Ministry of Agriculture, AQSIQ) • Risk that China may create stricter anti-trust laws

Stakeholders with impact on Packaging Supply Chain • •

Working with FSC, WWF, and CGF to promote the Forestry Guideline and Forest Certification for forest management. Working with CDA and government agencies to develop technicians and managers for pasture land management

Risk Management: Recycling Working with government agencies •China Circular Economy Law •The industrial standards for recycling

• • • •

Renewable resources New recycling technologies Engineers training Evaluate performance

• • • •

Train waste collectors Higher waste prices Educate communities Collection network

Products from recycling

Waste package processing

Collection of used TP package

Tetra Pak Production

• • •

Technology development (Pyrolysis technology) Equipment leases Raw materials procurement

• Lack of infrastructure for recycling • Risk of change in government recycling policy

• •

HB clad plate Plastic-wood composite

Recommendations • Overall: Leverage stakeholder relationships to decrease risk of market share loss • Milk Safety • Offer QC solution • Suggest expansion of regulations

Recommendations • Competition • Further innovation with packaging • Product diversification options • Explore expansion of milk processor customer base

• Recycling • Enhance relationship with government • Work to defragment recycling supply chain

Appendix I

Appendix II UHT packaging Company Starting Origin Entering in China market Number of employees Major Market Market Share in China

Tetra Pak 1951 Sweden

GA Pack 2001 China

Fresh milk packaging International Paper 1898 United States

1972

2001

1990

22,000

500+

61,500

170+ countries 70% (aseptic packaging)

China and European countries 9.6% (aseptic packaging)

24+

Key Customers Key Advantages

Main products Global position

60%

Bright, Xin Xiwang, Sanyuan and Yantang 1. Market leader in Freash milk 1. Local company (i.e. lobbying government) 2. Diverse products and customers 2. Price 9% lower than Tetra Pak (consumer and commercial)

Mengniu and Yili 1. Market leader in UHT 2. Technology innovation(IP) 1. Aseptic packaging 2. Filling machines 3. Processing solutions World's largest company of food packaging

Aseptic packaging

Plastic lids and paper cups

World's 2nd largest supplier of roll-fed aseptic packaging

World's largest producer of plastic lids and paper cups