Live at PackExpo
Sonoco's chief calls on packagers to develop new strategies
providers across the whole supply chain Sonoco's chief executive
officer Harris De Loach Jr. said yesterday.
"One thing is certain -- business as usual for packaging companies is not an option, and that is not all bad," he told those attending PackExpo, here in this US city.
DeLoach, who is also the company's chairman and president, was speaking about the ripples of change coursing through the $450bn global packaging industry.
His speech represents a welcome sign to food and drink processors that packaging companies are beginning to have quicker response times to their changing needs.
High costs, fickle consumers, and retailer purchasing power are putting pressure on processors, who must in turn respond to the fast changing tastes and opportunitys in a rapidly expanding global market.
"I also believe that those packaging companies who will enjoy success are those able and willing to change from being so fixated on their historical products and service to becoming more focused on what the customer wants and needs and then executes by developing and delivering solutions," continued DeLoach.
He called on packaging companies to add value to their products and services as a means of avoiding "being perceived as a commodity to be purchased solely on the basis of lowest price".
He advised them to become capable of providing full-service packaging solutions for their clients across their entire packaging supply chain on a global basis.
They must also develop relationships with customers outside of normal purchasing channels by reducing costs and increasing productivity.
They must also provide one interface for the client, rather than forcing them to deal with multiple representatives for different products and services, he said.
Another trend transforming the industry is the increasing need of customers to bring more products to the market at faster speeds. In turn, packaging providers must help their customers from conception to rollout.
He cited the growing demand for low fat and non-fat products as one example of changing tastes. Demand for convenience products that reduce meal preparation time is also part of the transformation in the packaging sector.
Fears about bioterrorism are driving changes toward increased tamper resistant packaging, which should also contain warning indicators of attempts at tampering.
Other strategies involve developing new avenues to grow customers' sales by applying new packaging technologies, differentiating designs and targeted marketing applications.
He noted that the increasing number of private label products are part of the drive by powerful retailers to increase their operating margins.
"Before it was an industry driven by volume," he said. "It is a trend that can significantly affect customer, packager relationships."
DeLoach said increasing consumer environmental awareness and a growing preference for reduced and recycled packaging has become key issue for the packaging industry.
"Consumers want to do business with companies which have embraced sustainability as an operating objective," he said. "Packaging companies can either be lightening rods or white knights as consumer product goods companies are looking to packaging to help them meet retailers' expectations."
He also warned US packaging providers not to rest on their laurels in a global environment where competition has intensified.
"The possibilities for success in packaging will be determined by how well we organize our efforts at developing products and services based on the changing needs of customers and the marketplace," he said.
Sonoco, which had revenues of $3.5bn in 2005, has transformed itself into attempting to meet the changing market he said.
