There was a time when the then nascent packaged dairy and juice industry in the country couldn’t stop touting the benefi
There was a time when the then nascent packaged dairy and juice industry in the country couldn’t stop touting the benefits of carton packaging for their products. The times there are a changing for the packaging industry, with Nestle Pakistan recently launching its Fruita Vitals in PET bottles, a clear departure from the previous carton packaging, currently being advertised on TV and social media.
PET bottles are plastic bottles made of this difficult to pronounce chemical called ‘polyethylene terephthalate’. And this is the first time any market leading Pakistani packaged dairy and juice company has introduced aseptic PET packaging for juices. This packaging is reportedly ‘100 percent recyclable’, although the jury is still out there on whether Pakistanis will be too concerned about the impact of plastic on the environment.
But the fact that Nestle Pakistan is eyeing to convert to all its packaging to recyclable material over the next 7-10 years suggests changing under currents in the packaging industry at home. Nestle’s move, however, according to industry sources say, is also aimed giving flexibility to the company to experiment with various shapes and appeal to the aesthetics sense of consumers, and also of course better manage the cost of final produce.
Carton packaging also popularly known as tetra-packs had been dominating the packaged milk and juice industry since the industry grew roots in Pakistan. It continues to enjoy a big share in the market. However, with the cost of domestically produced carton packaging going up, industry players are looking for options. For instance, Pepsi’s Slice operations in Pakistan uses packaging by a certain Chinese player called Greatview Aseptic Packaging, and so does Nestle. Meanwhile, E-Food and Nurpur have been using Ecolean style of packaging for its smaller dairy packs. And now Nestle is experimenting with PET bottles for its litre packs.
To date, these trends have made a dent on the revenue growth of Tetra-Pak, the main supplier of carton packaging in Pakistan, but they haven’t had a life-threatening impact. But with one of the leading packaged dairy and juice players - Nestle – now experimenting with PET bottles for litre packs, questions loom over the packaging industry dynamics.
It may well be a matter of time before Nestle and other juice players switch to aseptic PET bottles even for their 200-250 milli-litre (ML) to seek cost efficiency. Since 200-250 ML pack size contribute about two-thirds of total packaged juice sales in the industry, a conversion to PET in that segment can trigger a real change in direction. This is especially considering that, according to brand managers’ consumer insights, juice and flavoured milk consumers prefer the experience of gulping the liquid rather than using the straw.
The saviour for carton pack producers, however, could be an overall growth in the size of packaged dairy and juice industry. Channel checks report that as and when the minimum milk pasteurisation law is fully implemented in Punjab, the packaged milk industry could see a big shift in the next five to seven years, at least quadrupling its share in the total dairy industry.
In addition to the legal stick, the government is also trying to halve the cost of milk production in the country by importing the right cattle breed and rolling out incentives for the right environment and fodder for the cattle. If that plan is successful, packaged dairy prices can fall allowing it to better compete with loose milk, and in turn increase the industry size of packaging industry – at least for dairy segment.
Nestle’s introduction of PET bottles can take away some share of carton packs but because the packaged dairy segment offers a far more volumetric growth potential than the packaged juice business, rest assured carton packs are here to stay for a foreseeable future.