Q: How do you view the importance of emerging markets with regards to the beverage industry?
Emerging economies are attractive markets for consumer packaged goods manufacturers, including companies within the beverage sector, because of the increase in consumer spending in these geographies. According to a report by the market research provider Euromonitor, population growth is forecasted to grow three times greater in emerging markets than in developed economies between 2013 and 2020. These regions now account for 50 per cent of global GDP. Developing markets in the beverage can sector are expected to continue to grow at a substantially faster rate than the overall global average of 3 per cent.
Q: What are some of the trends and patterns of growth you’re seeing in the Asia Pacific region? What is Crown doing to address this growth?
The Asia Pacific region has experienced significant growth over the last several years with beverage cans in particular growing faster than many other packaging formats. Increasing household income, purchasing power and tourism have driven investment in areas such as Vietnam and Cambodia. Crown operates four beverage can manufacturing facilities in Vietnam and two in Cambodia, where we are adding a third that will start up in 2016. In Thailand, consumer preference for smaller serving sizes has led to Crown commissioning a new beverage can line in 2015. Also, consumer demand for carbonated beverages and ready-to-drink teas and coffees has steadily increased in Thailand.
Q:What about in other emerging countries?
In Brazil, the world’s third largest beer market by volume, there has been a shift from other types of packaging towards the use of aluminium beverage cans due to a move toward off-premise consumption. In addition, the average household is shrinking in size while the number of single households is increasing at a corresponding rate. In response, Crown has introduced a number of different can sizes that have met the evolving demand and even created new consumption occasions for beer. For example, nine-ounce cans are increasingly popular within Brazil’s beach communities. We are also seeing smaller serving sizes growing in popularity in Mexico.
Moving to the Middle East and Turkey, the markets are primarily comprised of carbonated soft drinks and non-carbonated beverages such as juice and tea. In an effort to meet regional and local requirements, we recently announced plans to add a second manufacturing line to our Osmaniye, Turkey plant, Crown’s second facility in the country, which first commenced operation in 2013.
Q: Are there similarities among consumer preferences in the beverage industry in these markets? How is metal packaging suited to meet these needs?
There are similarities in terms of consumer preferences within some of the emerging economies. For example, middle class consumers in these markets are showing greater awareness of sustainability and the impact that food packaging has on the environment.
In Colombia, beverage brands can meet consumers’ interest in reducing their ecological footprint by creating smaller packaging formats. Similarly, in Turkey, consumers are seeking more recyclable packaging. Metal packaging is particularly suitable to these needs, as it is less bulky than other materials, easy to ship and store and also infinitely recyclable.
Certain economies such as Malaysia place a strong emphasis on safety when it comes to food and beverage consumption. In this segment, packaging formats that offer tamper-free barriers for beverages are critical. Aluminium cans provide an airtight barrier to keep beverages safe from oxygen and light, more so than other packaging formats. Cans also chill beverages quickly, requiring less energy for consumers to realize the fresh, cool taste of their chosen drink.
Q: What should beverage brands look for in a packaging partner when doing business in these countries?
Emerging markets have grown significantly over the last few years and are expected to continue to grow. We have substantially increased our presence in these markets, through constructing new production facilities, adding select capacity to existing plants and completing strategic acquisitions.
In Latin America in 2014, Crown opened a new facility in Teresina, Brazil and added a line in Cabreuva. In 2015, we completed the acquisition of EMPAQUE, which were Heineken’s packaging assets in Mexico. Also in 2015, in Asia Pacific, we added a new line in Thailand, which is designed to produce the popular slim can, and we will open our third plant in Cambodia this year.
Q: How do you ensure success in these regions?
The key to succeeding in emerging economies is to understand their vast diversity and also to cultivate our customers’ growth. Branding decisions require careful adaptation to consumer preferences and tastes, and ultimately a flexible approach.