Regional Overview: EMEA

2018

NEW CUSTOMER WINS

driven by flexible offer and innovation

Core
Revenue

733 m

2017: €753m

Change at
constant currency

(2.4%)

Introduction

SIG’s aseptic carton packaging business originated in Germany, and Europe remains the largest region globally for aseptic carton packaging. Our largest sleeve production plant is in Linnich, Germany, where we also assemble filling machines. We are present in the Middle East and Africa via our two 50/50 joint ventures, which are based in Saudi Arabia and UAE. The sales of the joint ventures are not consolidated but our share of their net result is recognised in our statement of profit or loss and other comprehensive income, using the equity method.

Market overview

Healthy lifestyle preferences creating new opportunities in Europe
In a relatively mature market, winning strategies must focus on products catering to today’s healthy lifestyle preferences, such as dairy milk substitutes. In addition, flavoured and fermented milk products are gaining in popularity in a number of markets.

In line with their heightened focus on a healthy and balanced diet, consumers in some European markets such as Germany are moving away from sugary drinks including juices and nectars. This is creating opportunities for premium products with a clear target group and benefits. In parallel, consumers looking for healthier alternatives are being drawn to packaged water, which is showing positive growth momentum.

We continue to see increasing demand for convenient packaging solutions that enable and facilitate on-the-go consumption. This in turn is driving growth for smaller pack sizes with various formats, shapes and features such as ease of opening. In addition, aseptic carton packaging is increasingly used for a range of food products such as soups and sauces.

Amid the rising debate in Europe over plastic packaging, the strength of our packs’ environmental credentials is an increasingly important differentiator in our discussions with customers. Cartons are fully recyclable with a high level of renewable material and a lower carbon footprint compared with other forms of packaging. Our sustainable product innovation enables us to help customers respond to new regulatory requirements and meet their own targets for sustainable packaging.

Strong long-term market fundamentals in Middle East Africa
Our joint ventures are present in 17 countries, of which the largest in terms of sales are Saudi Arabia, Egypt, Algeria, Libya, Iraq, South Africa, Kuwait, Turkey and Nigeria. There is potential for expansion in selected markets across the region’s 71 countries.

In 2018, Middle East Africa experienced a challenging macroeconomic and political environment, with GDP fluctuations in the oil-dependent economies and high inflation in several countries. These uncertainties affected household consumption and purchasing power, leading to an increased focus on affordability. They also affected many customers who were faced with foreign currency shortages.

However, markets in the region are seeing positive longterm trends driven by growth in middle-income household expenditure. As a result of increased urbanisation, consumers are shifting more towards convenience and are upgrading from unpackaged/unbranded products to packaged products. With more women entering the workforce, demand for convenient, packaged products will contribute to the rise.

Aseptic carton packaging is currently used largely for non-carbonated soft drinks and white milk. Emerging categories including flavoured milk, cream, evaporated milk and food are expected to augment carton growth in the coming years.

Our performance in 2018

A return to growth in Europe
In 2018, we were able to grow our business in Europe after having experienced a decline in recent years, when soft market conditions were exacerbated by customer consolidation. Recent new customer wins have reduced customer concentration, with growth supported by our new go-to-market approach initiated in 2016, which is enabling us to bring new solutions to the market. In 2018 we gained important new customers such as Princes and Bechtel, who were attracted by our format, volume and filling flexibility, which equips them to meet ever-changing consumer demand. Furthermore, we are building additional business in geographic areas where our market share is currently relatively small, and we successfully entered white space markets such as Portugal and Ireland.

In line with our global initiatives, we have reinvigorated our go-to-market approach and have worked intensively on enhancing our sales organisation over the last two years. This has included the implementation of a new CRM system, changes to our incentive structure and the development of new after-sales offerings.

We continued to deliver new product solutions and innovation to the market, meeting the evolving demands of European consumers. The launch of SIGNATURE PACK addresses the increasing importance attached to sustainable packaging solutions by today’s consumers.

Find out more in the customer success story about how Arla, one of the key dairy players in Europe, introduced this innovation in Germany in 2018

Arla success story

Key European dairy player is the first to choose SIG’s innovative SIGNATURE PACK

In May 2018, Arla Foods Germany became the first company to launch SIGNATURE PACK – the world’s first aseptic carton pack that is 100% linked to plant-based renewable material through a certified mass balance system. Arla now offers its 1 litre 1.5% and 3.8% organic milk (Arla® BIO Weidemilch) in SIGNATURE PACK.

By choosing SIG’s innovative SIGNATURE PACK, Arla is demonstrating its commitment to sustainability while aiming to increase the market share of its organic dairy products.

This new packaging offers Arla a holistic sustainability message for their organic milk cartons which now carry an additional and clear message to consumers: buying this pack promotes the use of renewable raw materials to protect fossil resources, while making a positive impact in reducing the CO2 level compared with a standard carton pack.

We continue to see positive market momentum for combidome, our convenient carton bottle, with new product launches in 2018

Pfanner Getränke GmbH success story

Millennials, as one of today’s key target groups, drink juice differently. So Pfanner Getränke GmbH, an internationally active and long-established premium manufacturer of juices and fruit juice drinks, decided to start serving it differently.

Pfanner’s new juice range, Supersäfte (or “super juices”), is specially developed for the needs of this young, mobile and urban target group. And SIG’s convenient and equally stylish 500ml combidome carton bottle is the perfect packaging solution, standing out from the crowd and helping Pfanner to differentiate.

However, SIG’s involvement in Supersäfte extended way beyond packaging. It involved creating a complete product concept, all the way from product ideas and recipes to overall marketing. Working in partnership, Pfanner and SIG were able to develop Supersäfte as a tailor-made solution for health-conscious young consumers.

Significant scope for expansion in Middle East Africa
The technical robustness and flexibility of our offer enabled us to defend our position in Middle East Africa in the face of temporary market challenges. In 2018, we increased our focus on growing markets and secured a number of new customers across all segments.

Our team continued to partner with customers to drive innovation, building on our value proposition pillars of differentiation, innovation and smart factory solutions. These solutions are supported by the newly launched flagship innovation and reliability centre at our Dubai HQ.

The flexibility of combiblocXSlim helped our customers in Egypt, Algeria and Saudi Arabia to introduce new pack sizes to meet the affordability trend seen in those markets. With combismile, the newly launched package format for “on-the-go” consumption, we were able to enter into a new partnership with the South African market leader for juices. Smart factory solutions included remote services to our customers in Libya and Egypt, as well as the launch of SIG’s first asset performance and field service management pilot at one of our key customers, a leading dairy company in Saudi Arabia.

We continue to invest in our people’s safety and in the development of team capabilities. These investments have been recognised by the King AbdelAziz Quality Gold tier award, bestowed by the Saudi government and by an AA+ BRC rating on food safety.