Growth at constant currency
Most of the cartons we sell in Asia-Pacific are small in size and therefore suitable for on-the-go consumption, in line with the behaviour and lifestyles of consumers in the region. The COVID-19 crisis naturally reduced the opportunities for purchasing and consuming such products. Taking this into account, our sales in the region held up well, reflecting the essential nature of the products we fill.
In China, customers built up safety stocks during the height of the COVID-19 crisis in order to ensure sufficient supply given the logistical challenges at that time. Following the lifting of lockdowns, consumption gradually returned to a more normal pattern in the second half of the year. An increased concern with healthy nutrition in the aftermath of the crisis led to strong demand for milk.
In the rest of Asia, lockdowns started later and continued for longer. With travel and tourism curtailed, on-the-go consumption continued to be affected in the second half of the year. Schools remained closed in some areas, causing school milk programmes for which our cartons are used to be suspended. While these conditions did have a temporary impact on the purchasing patterns of our customers, the medium- and long-term fundamentals for this subregion remain firmly intact.
Visy Cartons, acquired at the end of November 2019, was successfully integrated into the Asia-Pacific region in 2020. Business in Australia progressed well during the year, and the implementation of synergies is on track.
Health concerns top of mind
New growth categories in Asia-Pacific include beverages with added benefits, such as vitamin drinks, immune system boosters and nutritional drinks. One example is Prolac, a drink launched in 2020 by Dutch Mill Thailand, which is made from milk and soy and boasts a high protein and calcium content along with 13 vitamins and minerals.
Nestlé Vietnam launched a number of products in combismile packs. These included a drinking yoghurt with fibre, inulin and protein under the Acti-V brand and an expansion of the Milo malted milk range to cater to teenagers and young adults looking for nutritious on-the-go drinks.
“combismile is the best choice for winning over the hearts of our teenage audience. Not only is the packaging highly suitable for value-added products, but with its round corners it can be easily picked up and carried about. Add in the combiGo closure for easy opening and closing, and you have a product that will, without a doubt, stand out on supermarket shelves.” – Mr Ali Abbas, Dairy Business Director at Nestlé Vietnam.
Projects are underway to place combismile lines in India and Korea. Also in Korea, Daesang has launched nutritional drinks in microwaveable Heat&Go packs, which have no aluminium layer but offer a similar barrier function and shelf life to standard packs.
“combismile is the best choice for winning over the hearts of our teenage audience.”
Dairy Business Director of Nestlé Vietnam
Tofusan, the market leader in Thailand for pasteurised soy milk, teamed up with SIG to launch Thailand’s first organic UHT soy milk in aseptic carton packs. Tofusan chose SIG because the packaging solution perfectly matched its ‘less is more’ natural premium product. We also recently won a new tender to place more filling machines with the state-owned Dairy Farming Promotion Organization of Thailand (DPO), further expanding our strong partnership.
Most of our APAC business consists of single-serve packs which are suitable for on-the-go consumption. We are now diversifying into larger formats and have won contracts to supply litre-pack filling lines to YHS in Malaysia and Diamond in Indonesia.
Building for the future
In 2020, the construction of our second factory in Suzhou, China, continued according to plan, with the new plant ready to open by the end of the year. The plant is designed to achieve world-class environmental, safety and operational performance. It will be part of our Asia-Pacific production network and will enable us to meet the expected growth in demand in the region.