SubscribeMay 2005. South America is an important growth market. This is why the region is in the focus of the global expansion strategy of SIG Combibloc, a world-leading manufacturer of aseptic beverage cartons and the corresponding filling machines. The company recently signed a strategic partnership agreement with Frimesa, one of Brazil's major food suppliers, and envisages signing more such agreements in the region going forward.
Our key task is to set new trends in South America,says W. Walter Schäfers, managing director of sales, marketing and service at SIG Combibloc. According to estimations, Brazil will be the fifth largest economy in 2050 after China, the USA, India and Japan, with a gross national product of US$ 6.07 trillion (Wilson & Purushothaman, Goldman Sachs & Co.).
The market volume for aseptic beverage cartons in South America is about seven billion litres and rising. The major share of 80 percent is accounted for by Brazil, followed by Argentina with seven percent and Chile with four percent. While the world market grows by three to four percent on average, Brazil is developing at a rate of up to seven percent.
This growth potential was the reason why SIG Combibloc decided to reinforce its presence in the region by means of strategic partnerships. The close cooperation with Frimesa marked the starting point. Frimesa, a cooperative trading in the meat and milk market, is one of the major food suppliers in Brazil. Building on a very strong presence in the south of the country, the company generated a turnover of about EUR 146 million in 2004. “We are currently expanding our range by adding dairy products which offer a higher added value and which are produced using state-of-the-art technology.
Therefore the connection to SIG Combibloc is an important step for us, says Valter Vanzella, general director of Frimesa. In Brazil, Frimesa expects a growth in dairy products of 30 percent until 2006 - which corresponds to about one million litres more every day. We want to establish condensed milk as one of the key products of our company in the domestic market,” says Mr Vanzella. Currently, Brazil already has the world’s biggest consumption of condensed milk. Particularly the sweetened variation is indispensible in South America’s biggest country.
Sweetened condensed milk arrived in Brazil by the late 19th century and soon became an ingredient of many national dishes - especially in desserts like Brigadeiros; this sweet confectionery is mainly made of sweetened condensed milk. In the past ten years, consumption of condensed milk in Brazil rose by 30 percent from about 150,000 tons in 1994 to about 200,000 in 2004. Continued growth to approximately 300,000 tons until 2008 is projected.
Convincing technology
For packaging the sweetened condensed milk, Frimesa put up a dedicated production unit in Marechal Cândido Rondon where the condensed milk is filled into aseptic beverage cartons on filling machines from SIG Combibloc. An expansion of the product line is already in the pipeline, says Mr Vanzella: “About two years after the installation of the plant, the entire capacity in Marechal Cândido Rondon is planned to be used for conventional and low-calory condensed milk as well as for filling creams and sauces.
Thanks to the flexibility of the SIG Combibloc filling machines we are able to fill various volumes. The system technology and the versatility of the machines were the decisive criteria for the selection of SIG Combibloc as business partner.
SIG Combibloc has maintained a sales and service company in Brazil for seven years now. The team located in São Paulo will first focus on market penetration and the expansion of the cooperation with multinational customers. It is above all the broad range of possible formats and filling volumes, which allows manufacturers to clearly differentiate their products in the market, that will bring us closer to this objective, explains Achim Lubbe, managing director of SIG Combibloc South America.
The establishment of a packaging plant on the South-American continent is part of a medium-term strategy adopted by the SIG management. Such a plant would become viable as soon as adequate market shares are won. The packaging sleeves for the South-American market are currently imported from the company’s European packaging material plants.
Currently, SIG Combibloc operates packaging plants in Germany (5), Austria (1), Great Britain (1), Thailand (1) and China (1). Another packaging plant in Saudi Arabia will be officially inaugurated this year.
Caption 1: Convenient, safe and easy to open: the Brazilian food manufacturer Frimesa uses the aseptic carton packaging of SIG Combibloc for its sweetened condensed milk. We want to establish condensed milk as one of the key products of our company in the domestic market, says Valter Vanzella, general director of Frimesa.
Photo: SIG Combibloc
Caption 2: Brazil has the world’s biggest consumption of condensed milk. Particularly the sweetened variation is indispensible in South America’s biggest country. Sweetened condensed milk became an ingredient of many national dishes - especially in desserts like Brigadeiros which are mainly made of sweetened condensed milk.
SIG Combibloc is one of the world's leading system suppliers of aseptic beverage cartons and filling machines. Employing approx. 4,060 people, the company recorded sales of EUR 1,075 million in 2004. SIG Combibloc is a division of SIG Holding AG, Neuhausen am Rheinfall.
Brazilian market is a focus of the global expansion strategy