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Annual production of 5bn-7bn packages needed to establish facility: Tetra Pak official - Daily News Egypt

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Annual production of 5bn-7bn packages needed to establish facility: Tetra Pak official

Company’s production and net sales expected to grow by 20% in 2015


Tetra Pak’s managing director Andres Lindgren (Photo Courtesy of Tetra Pak)
Tetra Pak’s managing director Andres Lindgren
(Photo Courtesy of Tetra Pak)

On the occasion of the national milk day, Daily News Egypt sat down with leading packaging company Tetra Pak’s managing director Andres Lindgren to discuss the company’s plans to pump new investment and to construct a packaging facility.

What is Tetra Pak’s market share in Egypt’s milk packaging segment?

That’s a very high share. We would be probably 85% and 90%. Still, the packaged milk is not more than 30% of the total milk market because you basically have 70% loose milk. So when you look at our market share of milk, you are not really comparing us with other packaging companies because we see that there’s an opportunity to grow the market based on the loose milk part. The main concern is that there is a lot of chemicals in the loose milk, which is not good for the consumers.

How do you see that share growing in the coming years?

We see good growth of packaged milk over the past years. Over the past five years, we probably doubled that share.

How many packages does Tetra Pak produce per year? What’s the share of milk in that figure?

We basically do 3bn packages today. And it is almost split even between milk, juice and nectar, and cheese. Cheese is as large for us as milk. So 1bn packages for each

What is your fastest growing segment packaging?

Over the last few years, it has been cheese. It is has been growing tremendously fast. If you look back a bit, and look from 2011 until 2012, it almost doubled and had a 90% increase in a single year. After that it grew by 45% and after that it has been having a 15% to 20% growth level.

Do you expect that to be the case in coming years?

Yes, I think that it. The biggest difference between cheese and juice and milk is that [packaged] juice and milk can be quite expensive, compared to some comparable products. [Packaged] cheese has actually the same cost as loose cheese. For that reason you can penetrate far down to the consumer with that type of product. So the question here is more about cheaper packaging, smaller package and then distribution. So that is what our producer focused a lot on. For example, you can have an EGP 1 cheese package. I think cheese will continue to grow a lot because the base is very big.

Who are your biggest customers in milk packaging?

Faragalla is the largest one we have for juice and nectars, and it will continue to be the biggest. On the milk side, Juhayna is the biggest, and they have close to 70% of the packaged white milk market today. Regarding cheese, we have two producers that have grown a lot, and these are Domty and Obourland.

Does the company plan to pump in new investments in the coming five years?

As we do not have a factory here today, the investments are mainly what we do with customers on marketing. Here [in Egypt], we are still a very small company, no more than 90 people.

Do you plan to establish any production facility in Egypt?

It’s a question of volume. Eventually, we will but we have to reach a bit more volume than we have today and the reason for that is that there is an economy of scale in these types of factories. If you set up a factory here without utilising it properly, the cost will become higher. It is quiet easy to take material from countries over the Red Sea or Turkey and bring it to Alexandria [port]. It is not very complicated and more cost efficient. Once we know we can utilise the factory, then we can establish it. The time frame for that is very difficult to announce. If the future growth is like what it is now, then we’ll probably have one within five years.

What is the volume of production that we are talking about here?

Between 5bn to 7bn packages before it will be justified. If you justify it from the point of utilisation and a cost of point of view, then it makes sense. As soon as you have a local factory, your service to customers increase from the view of customers of course, it is a big step when you do that.  But it has to make economic sense as well.

What is the predicted growth in the company’s profit in 2015?

If you go back to 2011, we more than doubled our net sales over that period. It has been very good years. The food industry did well even during the time of instability. Compare 2011 to 2010 it was rather flat, but after that we have seen very good year-on-year growth. If your production figures, which is a lead indicator, the line almost come straight after each other. There’s a 15% to 20% growth year-on-year. This year it looks like we are going to meet our target. We see good growth in Egypt.

So how much would production grow by the end of this year compared to the previous one?

Around 20% this year for both production and net sales.

 

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