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October 18, 2011

SWEDEN: Challenges remain in emerging markets – Tetra Pak CEO

Despite the company's advances, challenges remain in emerging markets, according to Tetra Pak CEO Dennis Jonsson.

Despite the company’s advances, challenges remain in emerging markets, according to Tetra Pak CEO Dennis Jonsson.

Jonsson, who has helmed the packaging giant since 2007, said penetrating India, which has a growing dairy market, has proved difficult because of barriers to foreign investment and a lack of modernisation. He is, however, confident about the future because of the growth in modern retail in the country.

“When it comes to India, for us it has always had fantastic potential. It’s the biggest dairy consumer and producer in the world but so far most milk is still hand-packed”, he said.

“But there have been a lot of projects and with modern retail and that will change.

“I think many of us processors have seen great opportunities. It is happening but it’s happening much slower than we projected earlier. We are getting double digit growth but we haven’t seen the explosion that happened in other countries like China and Brazil.

“We hope it happens in India but we haven’t seen that quick explosion.”

Tetra Pak has a plant in Chakan that makes up to 5bn packages annually and in February announced plans for a US$130m second facility at Chakan in Western India. The company’s annual sales in India stand at $190m, which it expects to double by 2013.

The company has achieved strong growth in China, but Jonsson admits Tetra Pak was adversely affected by the 2008 melamine scandal, where Chinese dairy producers were found to be adding the chemical to milk and baby formula, killing six and affecting hundreds of thousands.

Jonsson said: “When this happened dairy consumption went down by 50% and it stayed there for a while.

“For us it was a wake up call. You can’t control this sort of thing but you must have the right processes in place.

“For us it’s been extremely important to collaborate with our customers to ensure quality in the first place.”

The company has also pledged to drive growth in its food packaging products, such as the Tetra Recart or Tetra Brik Aseptic packages.

Jonsson added: “We see a lot of potential in food processing and packaging and have set an objective to increase sales by eightfold in the category.

“It’s a category where we haven’t been very active, but we also believe we have a great product portfolio and it’s primarily through that we’ll see growth.”

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