Exploring the Aseptic Packaging Force on its Flexible Side

Arnaud Quetin, Global Executive Director Asepticarnaud.quetin@sealedair.com

Unwrapping Packaging and putting it at the heart of NPD 27.06.17

Pouch

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Growth drivers for aseptic

Improved quality of

longlife foods

Increaseddemand forfood safety

Supply chain cost

savings

Demand for more natural

products

Foodwaste

reduction

Capability to gain market

share

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Advances in processing technologies allows higher

quality, superior organoleptic properties (less heat stress Vs.

hot fill - retain more vitamins,

exhibit more natural texture,

color, flavor, taste).

Improved Quality of long-life foods

Long life right-for-me foods

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Cross-contamination causes most product recalls

In UK pathogenic micro-organisms were the largest contributor

to the total number of recorded incidents in 2015 according to

FSA – Food Standards Agency.

One of the major threats for food industry

profitability.

There is a need for more stringent food safety

standards.

Increased demand for Food Safety

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Demand for more natural added value products

80% consumers agree that dairy foods with

low or reduced sugar are better for their health

(DSM Global Insights 2015).

Among consumers who say they are watching

their weight, 81% read the nutritional panel on

product labels (The Hartman Group).

Protein-based drinks and snacks are among

few growing aseptic segments in UK.

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Food Waste Reduction

About one third of all the food that is produced is

wasted…despite consumers , processors &

distributors endeavor to optimize their

wastage.

If many food squandering is due to expired date,

then increased aseptic products shelf life for months have more chance to be eaten than

thrown away.

OUR

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Supply Chain Costs Savings

No cold chain logistics required.

Retailers may prefer ambient products, because

distribution costs are lower. Aseptic technologies make it

possible, though products may still need to go in the

chilled cabinet for consumers acceptance. Similarly,

same logistics convenience applies for e-commerce.

Aseptic filling is usually made at ambient temperature.

This allows to down gauge packaging materials.

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Capability to gain market share

World demand for aseptic packaging in 2020

is +437 billion units +5 % CAGR 15-20 (Zenith

International and Warrick Research - Global Aseptic

Packaging 2015).

Though aseptic use in UK remains modest.

Aseptic innovation is a genuine game changer

to strengthen FMCG’s products portfolio.

Huge possibilities in terms of R&D food and

beverage formulation, but CAPEX challenges.

Stand Up Pouch

Stand Up Pouches one of the fastest growing packages

Source: Euromonitor International Passport

Stand-Up Pouches December 2016

8,78%

Forecast Pouches

global market to grow

CAGR 8.78% 2016-2020.

60 Billion units of stand up pouches sold in the retail environment in 2016

Source: MarketStudyReport.com 2016

Global Stand-up Pouches Market 16-20

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Growth drivers for pouch

On-the-GoDemand

for Smaller

Branding

The Kid Factor

Transparency

Signifier of

Quality

Consumers want on-the-go food…

Convenience Portable & Resealable Some can be used in oven or microwave

Significant number of adults are “grazing”

on food, rather than eating regular meals.

This is often a response to long working

hours or lengthy commutes.

In 2015, Mark Bull, chief exec. of HR firm Randstad UK, observed:

“British workers are embracing longer commutes to work, particularly

as the housing crisis nudges them further out into the suburbs.”

The UK house price index soared by 142% between 2000 and 2015.

Source: Euromonitor International Passport

Stand-Up Pouches December 201613

Single-person households drive demand for smaller pack sizes

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0-100g 101-300 g 301-500 g 501-750+ g

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Global Sauces, Dressing and Condiments in Stand Up Pouches By Size Bands 2016 And Growth 2016-2020

2016 Volume % CAGR 2016-2020Salad dressing – 90ml

Demand for smaller…is driven by growing number of single-person households

Source: Euromonitor International

30%of the global population by 2020 will be Millennials

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2016 2017 2018 2019 2020Vo

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Global RTDs/High-Strength Premixes in Stand Up Pouches By Pack Size 2016-2020

187 ml 250 ml 296 ml

1500 ml 1750 ml Single-serve RTD cocktails

in pouches for millennials

RTD – 187 ml

Demand for smaller…is driven by hectic lifestyles

Source: Euromonitor International

The Kid Factor…

• In a 2015 post, UK-based parenting blog

“What Me and the Boys Say” reviewed

Petit Filous fromage frais in pouches.

• The blogger wrote: “The pouches are an

ideal size to pack in a lunch bag… and

they are the perfect size for little hands.

The kids found it really easy to eat the

yoghurt through the straw-like spout, and

I loved the fact there was no need to

take a spoon… The fact that they are

resealable is a bonus… my habitual non-

finishers can save the rest for later with

no mess.”

Busy parents value the fact that babies can feed

themselves using pouches.

Source: Euromonitor International Passport

Stand-Up Pouches December 201616

Transparency…

• See-through helps simplifying your

packaging and focus on enhancingyour product.

• Nearly one third of shoppers (30%) gauge

how fresh a product is by its appearance,

rather than its use-by date. Clear

packaging can help increase shoppers’

initial perception of food freshness and demonstrates that what you see is

what you get.

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Pouch as a signifier of Quality…

…Stand-up pouches are lightweight and yet robust, and are widely perceived by many consumers as a signifier of quality.

Bifurcation is a notable trendWith some consumers increasingly price conscious, while others are more willing to pay a premium for quality

Sometimes, the same consumer can prioritise value for moneywhen shopping for one item and quality when shopping for another

Example, even a difficult economic environmental, value sales of organic packaged food exhibited strong real terms growth in both Western Europe and North America between 2010 and 2015, of 21% and 20%, respectively.

Source: Euromonitor International Passport

Stand-Up Pouches December 201618

…Leading to Branding opportunities

APPEAR MORE EXCLUSIVE AND

THUS COMMAND HIGHER MARGINS

BABY BOOMERS ARE MORE

TRUSTING OF BRANDS AND WILL

BUY A PRODUCT FOR ITS NAME

MILLENNIALS

WANT TO SEE THE

PRODUCT AND

READ THE

INGREDIENTS

ORGANIC MIMIC LOOK

THROUGH MATTE FINISHES

MULTIPLE SHAPE

POSSIBILITIES FOR SHELF

DIFFERENTIATION

Source: Euromonitor International Passport

Stand-Up Pouches December 201619

ADD EXTRA CONVENIENCE FOR

THICK PRODUCTS

Premium consumer experience – Premium valuePouch Market Positioning examples: Baby Food in UK

HiPP

1 x 130g Pot

GBP: 1.29 (€ 1.64)

Euro 12.61Kg

HiPP

1 x 190g Pouch

GBP: 0.99 (€ 1.26)

Euro 6.63/Kg

HiPP

1 x 230g Pot

GBP: 1.71 (€ 2.18)

Euro 9.48/Kg

Source: Waitrose 30.09.14

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+33%

Premium consumer experience – Premium valuePouch Market Positioning examples: Custard in Spain

Nestle Petit Nesquik

6 x 60g Pot

€ 1.14

€ 3.17/Kg

Source: Auchan, Mataro - Spain 09.07.16

Nestle Nesquik Yoco Go!

4 x 80g Pouch

€ 2.19

€ 7.30/Kg

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+230%

Premium consumer experience – Premium valuePouch Market Positioning examples: USA

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HappyFamily - Stonyfield

Organic whole milk Yogurt

1 x 24 oz Pot

USD: 3.99

USD 0.17/oz

HappyFamily - Stonyfield

Organic whole milk Yogurt

1 x 3.7 oz Pouch

USD: 1.69

USD 0.46/oz +270%

Goodbelly

Probiotics

1 x 32 oz cardboard

USD: 3.99

USD 0.12/oz

Lifeway

Whole milk kefir Probiotics

2 x 16 oz Pouch

USD: 5.99

USD 0.37/oz +208%

Yogurt

Source: Whole Foods Market / Miami 18.06.16

Probiotics

Consumer-preferred

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…can create new consumer engagement in traditional categories

…packaging will drive preference when it fulfills an untapped need or drives new relevance / brand re-invent

Retail customers reality

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…does your new format help retailers establish a new price point?

Placement

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…how complicated is it to stock, shop and face?

…where should pouched products formats live?

…Traditional volume of product per linear inch no longer true

…Is your packaging choice increasing or eliminating facings?

…Retailers need labor savings (less actions to stock products)

…Retail buyer focus on gross margin return on investment,

…inventory turnover and seasonality

Planograms and

replenishment efficiency

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Do you face a commodity product situation?

Key takeaways

Growth of aseptic processed foods and high consumers’ acceptance of

stand up pouch format jointly lead to create new consumers’ experiences.

Multiple consumers market segment from babies, toddlers, kids, millennials,

yuppies and elderly with an array of food & beverage applications.

The aseptic pouch innovation can fuel new NPD business case and show

that consumers like it, that it fits with your brand values, and of course, that it

makes money.

Exploring the Aseptic Force on its Flexible Side