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Most of us are experts in our respective industries, but how do you become an expert in what the consumer wants? Jack Sanders, president and CEO-elect of Sonoco, will discuss Sonoco’s work to satisfy its customers using consumer insight research, and how this was successful in a recent collaboration with Pepperidge Farm on the brand’s popular Baked Naturals® Cracker Chip snack.
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Charting our Course Jack Sanders, President and COO
Structural Packaging Summit Jack Sanders, President and COO Sonoco February 27, 2013
Sonoco Overview
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SALES BY OPERATING SEGMENT (Millions of Dollars)
SALES BY GEOGRAPHY (Percent)
Consumer Trends
Living with less
Price, Value and Innovation are the top criteria
68% are brand switchers/only 5% are loyal to one brand
73% shop in five or more channels
74% are not loyal to a retailer
Have more choice and access than ever
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What is Our Economy Telling Us?
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Mega Trends Impacting Growth
Old Infrastructure New Investments
The Next Billion Consumers
Militarization Following Industrialization
Growing Output of Primary Input
Developing Human Capital
Keeping the Wealthy Healthy
Everything the Same but Nicer
Preparing the Next Best Thing
GDP Contribution: $10 Trillion GDP Contribution: $1 Trillion GDP Contribution: $1 Trillion GDP Contribution: $3 Trillion Rising wealth of emerging economies Intensifying competition for finite
resources Growing demand for commodities increase
volatility. Price inflation intensifies Global supply chain risk
GDP Contribution: $2 Trillion GDP Contribution: $4 Trillion GDP Contribution: $5 Trillion GDP Contribution: $1 Trillion
Massive shift from farm to factory requires investment
Developed economies drive innovation and reform in healthcare
Technology advances generate step-change efficiency gains (3D printing)
Affluent consumers drive premium products and services
Source: Bain Macro Trends Group Analysis, 2011
1 2 3 4
5 6 7 8
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Mega Trends Impacting Growth
Old Infrastructure New Investments
The Next Billion Consumers
Militarization Following Industrialization
Growing Output of Primary Input
Developing Human Capital
Keeping the Wealthy Healthy
Everything the Same but Nicer
Preparing the Next Best Thing
GDP Contribution: $10 Trillion GDP Contribution: $1 Trillion GDP Contribution: $1 Trillion GDP Contribution: $3 Trillion Rising wealth of emerging economies Intensifying competition for finite
resources Growing demand for commodities increase
volatility. Price inflation intensifies Global supply chain risk
GDP Contribution: $2 Trillion GDP Contribution: $4 Trillion GDP Contribution: $5 Trillion GDP Contribution: $1 Trillion
Massive shift from farm to factory requires investment
Developed economies drive innovation and reform in healthcare
Technology advances generate step-change efficiency gains (3D printing)
Affluent consumers drive premium products and services
Source: Bain Macro Trends Group Analysis, 2011
1 2 3 4
5 6 7 8
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Transforming Economy Requires a Different Approach
Market Equilibrium 1947-1990
Oversupply 1991-2007
Demand Contraction 2008-2009
Demand-driven 2010-2025
Global economy in midst of four-phase transformation from a supply-based economy to a demand-based economy
Companies that will win have a competitively advantaged, granular understanding of profitable demand…
…and proactively develop solutions and targeted innovations that anticipate customer need.
Supply-driven Economy Demand-driven Economy
Source: AC Neilsen global economic research study across all industries; SandP 500, completed 2011
If you have to ask your customer what they want, it is already too late…They are telling
your competitors as well.
Oversupply worsens as supply chains grow in efficiency Demand return spotty and uneven, slower growing and more volatile Entering hyper-competition: Flat demand and significant increase in lower-cost supply Organic growth will be much more difficult Productivity, pricing, profit pressures
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Platform 2010 2014 Change '10-'14 CAGR
Flexible $129 $148 $19 3.5% Rigid Plastics $144 $179 $35 5.6%
Paper $210 $235 $25 2.8% Metal $106 $114 $8 1.9% Glass $45 $50 $5 2.6% Other $34 $33 $(1) -0.4% Total $668 $760 $92 3.3%
2010 Total: $670 Billion 2014 Projected: $760 Billion
58% ($54 billion) of global expansion is
plastics and flexibles
CAGR 3.3%
Paper 31.4%
Rigid Plastics 21.6%
Flexible 19.3%
Metal 15.9%
Glass 6.7%
Other 5.1%
Paper 30.9%
Rigid Plastics 23.6%
Flexible 19.5%
Metal 15.1%
Glass 6.6%
Other 4.4%
Transforming Packaging Reality Global Packaging Market
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Growth in Packaging Driven by Emerging Markets
RegionNorth
AmericaWestern Europe Australasia Japan Other Asia
Eastern Europe
South/ Central
AmericaAfrica Middle East World
Share of consumption 22% 24% 2% 11% 24% 6% 6% 3% 3% 100%
By end-use category
Food $206,377 54,077 58,144 4,605 23,774 33,808 11,491 8,718 5,964 5,796 206,377
Beverage $73,518 19,458 21,094 1,900 7,088 11,252 5,051 3,199 2,392 2,084 73,518
Healthcare $25,997 8,479 6,252 597 3,463 4,075 1,112 749 697 573 25,997
Cosmetics $18,557 4,282 5,081 341 2,230 2,771 1,092 2,092 241 427 18,557
Other consumer2 $79,907 22,763 21,973 1,418 9,438 13,836 4,213 2,914 1,837 1,515 79,907
Other3 $264,475 54,879 67,438 3,101 25,259 62,978 17,625 16,730 6,912 9,553 264,475
Total market size 163,938 179,982 11,962 71,252 128,720 40,584 34,402 18,043 19,948 668,831
< 2%2 - 5%> 5%
3 Industria l , bulk, transport
Developed Markets Emerging Markets
Packaging consumption and growth rates by end use and region 2010 - 2016E1
CAGR 2011 - 2016E
1 At constant 2010 prices , 2010 data for Global Markets2 Household chemica ls , tobacco, electronics , DIY, toys
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A new middle class growing in emerging markets…contributing $10 trillion growth by 2020
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They live in a dozen emerging countries, not only fast-growing BRIC nations
Western multinationals expect to find 70 percent of their future growth in emerging economies
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Lead/Expert Consult
In-store Promotion Displays
Merchandising mix
Cross merchandising
In-store POS
In/On pack coupons
Partnerships
Events
Other Promotion Direct mail
Sampling
Demos
In-store media
Out-of-store media
Properties
Primary Packaging Design
Engineering
Messaging/Claims
Special packs
At-shelf presentation
Proprietary Consumer Research Suite Customizable qualitative and quantitative methods
Rapid consumer feedback/insights to accelerate innovation Ethnography Social Media
Analysis
Digital Surveys and Communities
Various Data (Syndicated/Transactional)
• IRI • A.C. Nielsen • Euromonitor • Dunnhumby
Eye-Tracking
Insight Groups CLT and One-on-One
LifeBytesTM
Search Technology
Changing our Marketing Focus Sonoco’s Insights Capabilities
Informed by Insights
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Pepperidge Farm Case Study
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In the beginning…
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Consumers want Reclose
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Consumers want Reclose
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Consumers want Reclose
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Consumers want Reclose
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CPG’s want to maintain their brand in front of the Consumer
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Sealtab® Reclose
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Sealtab® is a Win/Win Solution
Meets consumer needs Reclose (freshness perception, product containment) Portability On-the-go convenience Easy to understand/easy to use
Meets CPG requirements Runs on existing assets No capital required No negative impact to production efficiencies Keeps brand in front of consumer – no need to
repackage Integrates seamlessly into graphics Innovative packaging - differentiation from others on
the aisle
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Lego Solution
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Satisfy the Customer
Mission: Become the acknowledged
leader in high quality, innovative,
value-creating packaging solutions
that “Satisfy the Customer.”
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