Tetra Pak Case study

The challenge of intimacy with a key customer

Group 2
David, Toichiro, Angela, Mansoor, Joe, Andy

Content

Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation Proposition

Content

Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation Proposition

Tetra Pak Company profile

Establishment: 1952.
Founder: Dr. Ruben
Rausing.
Home country: Sweden.

Swedish company

Worlds largest producer of

aseptic carton packaging

Tetra Paks packaging products

Content

Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation Proposition

Five Forces Italian Packaging Industry

Buyer Power
5
3

New entrants

Supplier Power

-1

Rivalry

Substitution

Strong competition and relatively high buyer power

Competitor Analysis Italian Packaging

Tetra Pak
Combibloc
Elopak
Industry
Backgrou
nd

Market leader of
carton package
Innovator of
aseptic

Second largest
of carton
package

Market
share

80% aseptic carton

10% carton
share

Products

Cartons, equipment, Cartons,

services
packaging
systems

Carton &
plastic
systems,
plastic
packaging

Sales
1999
(World)

7 bil EUR

483 mil EUR

767 mil EUR

Vision to
become the
world leader in
non-aseptic
segment.

Strategy
Expand
to
Expand
to
Potential threats
fromtoCombibloc in Expand
Cartons market
with
aggressive
plastics
plastics
pricing strategy and
new designs. plastics
Low price &

Tetra Paks SWOT Analysis

Strengths

Weakness

Market leader in Italian

carton (80% market share).

Primarily dependent on
diary products.

Innovator of aseptic
technology.

Declining sales in Western

Europe

Global knowledge base in

liquid foods industry.

Prices higher than

competitors

Long history and sole

partnership with Pontero.
Key supplier for all biggest
Italian milk companies

Weaker position in plastic

market
Potential crack with
Pontero.
Non-customer focused
orientation.

Tetra Paks SWOT Analysis

Opportunities
Growing plastic pkg market
Rise of new enriched
milk business.
Increasing demand of
space-saving package.
New private milk labels

Threats
Trend of lower cost
packaging.
Reduction of full-fat milk
demand.
Relationship with Pontero
in danger.
Intense competition with
new aggressive
competitors.
Drop of sales in Western
market.

Tetra Paks Organizational structure

President & CEO
Chief Technology
Officer

Chief Technology
Officer
Legal Affairs

Legal Affairs

Legal Affairs

Carton
Division

EU & Africa

Americas

Asia

Plastic
Division

Market
Companies

Market
Companies

Market
Companies

Processing
Division

Traditional organizational structure which focuses on sales and profits.

Lack of focused customer-oriented marketing unit.

Content

Company Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation Proposition

Tetra Paks Marketing Challenges

Challenge of intimacy with key customer
Pontero asks for marketing advice for growth
(Pontero)
Combibloc waits for a chance to replace Tetra Pak

Potential crack with Pontero (KEY CHALLENGE)

Challenge of rising competition &

Combibloc
aggressively aims to cost reduction
declining
market
Plastic market becomes more intensive

Potential threats from competition

What are the real problems

behind the drop of market share?

Italian Milk Industry Overview

Milk Industry
Segmentation

Full Fat

Semiskimmed

Skimmed

Enriched

Mature and concentrated market

Increasing trend of Enriched milk
Market share by segments
7%

100%

Market trend by segments

80%

19%

60%
57%
17%

40%
20%
0%

Full fat

Semi-skimmed

Skimmed

1995
1996
1997
1998
1999
Enriched Milk - All Skimmed - Plain Semi skimmed - Plain
Full fat - Plain

Italian Milk Industry Overview

Buyer Power
5

New entrants

Supplier Power
0

Degree of rivalry

Substitutes

Market share evolution

20.0%
18.0%
18.0%
16.0%
14.0%
10.9%
12.0%
10.0%
8.0%
9.3%
6.0%
4.0%
2.0%
0.0%
35916

16.0%
13.0%
12.0%

35977

36039

36100

36161

Pontero

36220

36281

36342

Filo

36404

36465

Andina

Threats for Pontero from intense competition

25

Shelf place trend in shops

Average Sales per shop

20

Feb/Mar 99

15

Oct/Nov 99

10

Feb/Mar 98

5
0

35916

Oct/Nov 98
35977

36039

36100

Pontero

36161

36220

Filo

36281

36342

Andina

36404

36465

5,000

Andina

10,000

Filo

Pontero

15,000

Ponteros performance
70
60
50
40
30
20
10
0

60

Number of outlets

29

Pontero

Filo

Pontero Brand Profiles

1998

100%
80%
60%
40%
20%
0%

21

Andina

Strong distribution network and brand perception

But losing advantages in some segments
Consumer research

1999 Pontero

1999 Andina
60%
50%
52%
40%
45%
30%
30%
40%
20% 24% 31%
37% 37%
37%
24% 27%
23% 25%
30%19%
30%
26%
23%
19% 21%
10%
0%

Ponteros SWOT Analysis

Strengths
Market leader in full-fat,

Weakness
Losing market share.

skimmed and semi-

Losing shelf space.

skimmed.

Higher production costs.

Extensive national
distribution.
Diversified product
portfolio.
Strong relationship with
leading packaging

Declining margin in
premium products.
Narrowed brand
positioning.

Ponteros SWOT Analysis

Opportunities
Business expansion
opportunities
Growing semi-skimmed
segment.
Potential enriched milk
segment
Growth of alternative
beverages.

Threats
Declining full-fat milk
segment.
Growing substitutions for
milks.
Brand damage if wrong
move.
Increasing private label
milks

Reasons of falling market

share:
Less effective distribution.
Sales drops.
Ignore new market trends.

Conte
Company
nt Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition

Addressing Solutions
Advantages

Disadvantages

Eva

Ignore a new trend of

market.
Do nothing to
recover market
share.
Impact to Tetra Pak
business.

2.5

Abandon
Enriched
milk
altogether

Protect Ponteros
brand image.

Reintroduce
enriched
milk with a
twist

Catch the trend of new Potential risks to

market.
brand image.
May recover share
Threaten
loss.
relationship of
Tetra Pak and
New business for Tetra
Pak
Pontero

Aggressive
plan to
improve
Ponteros
current
operations

Do not against
Ponteros philosophy.
Recover Ponteros
share loss.
New business for Tetra
Pak

High investment in
marketing

Addressing Solutions for Pontero

Advantages

Disadvantages

Eva

Ignore a new trend of

market.
Do nothing to
recover market
share.
Impact to Tetra Pak
business.

2.5

Abandon
Enriched
milk
altogether

Protect Ponteros
brand image.

Reintroduce
enriched
milk with a
twist

Catch the trend of new Potential risks to

market.
brand image.
May recover share
Threaten
loss.
relationship of
Tetra Pak and
New business for Tetra
Pak
Pontero

Aggressive
plan to
improve
Ponteros
current
operations

Do not against
Ponteros philosophy.
Recover Ponteros
share loss.
New business for Tetra
Pak

High investment in
marketing

Conte
Company
nt Profile
Performance Evaluation
Marketing Challenges
Solutions Assessment
Implementation
Proposition

Improving sales by aggressive marketing

mix
PRODUCT

New
packaging

New multi-function
design

Skimmed milks to
niche markets

Develop milk substitutes

Micro-filtered milk

Improving sales by aggressive marketing

mix
PLACE

Increase trade discount

New channels

Improving sales by aggressive marketing

mix
PROMOTION

Promotional TV Ads

Celebrity testimonial

Social responsibility
activities

Social events

Suggestion for Enriched milk

Enriched milk is new trend of the market

but against Ponteros philosophy.
Enriched Milk Acquisition
Develop in separated brands to avoid brand
conflicts

Other actions for Tetra Pak in future

Evolve current organizational structure
Establish independent marketing department to
work more strategically with customers

Avoid

another Pontero in the future

Align with customers business strategy

Implement a CRM system

Thank you