iStock/Worawee Meepian
www.simon-kucher.com
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Presentation at the European Paper & Packaging Strategy Conference 2018
Packaging trends 2018
Frankfurt, August 30, 2018
Dr. Daniel Bornemann, Partner
Bonn officeWilly-Brandt-Allee 1353113 Bonn, GermanyTel. +49 228 9843 [email protected]
TIME TOPIC
10:00 – 10:30 Registration and welcome coffee
10:30 – 10:45 Welcome and introductionDr. Daniel Bornemann
10:45 – 11:15 Smart packaging: Trends and commercializationDr. Daniel Bornemann
11:15 – 12:00 Smart packaging at Tetra PakEric Schmid
12:00 – 13:00 Networking lunch break
13:00 – 13:45 Value sellingJose Redondo
13:45 – 14:30 Smart corrugated packagingStefan Kunzmann
14:30 – 15:00 Networking coffee break
15:00 – 15:30 Monetizing innovationMark-Daniel Rentschler
15:30 – 16:00 Digitized Pricing: How to use AI and ML to improve profitabilityAleksander Jarosz
16:00 – 16:30 Panel discussion – Smart packaging and digitalizationAll
16:30 – 16:45 Wrap-up and outlook: Smart packaging and digitalizationDr. Daniel Bornemann
16:45 – 18:00 Networking reception with cocktails and snacks
Conference agenda
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 2
Today's keynote speakers
Stefan Kunzmann
Sales, Marketing & Innovation
Director central Europe
DS Smith
Jose Redondo
Global pricing Excellence
Leader
O-I
Eric Schmid
VP Commercial Management
Tetra Pak International
Dr. Daniel Bornemann
Partner
Simon-Kucher & Partners
Mark-Daniel Rentschler
Senior Director
Simon-Kucher & Partners
Aleksander Jarosz
Director
Simon-Kucher & Partners
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 3
Simon-Kucher & Partners at a glance
Growth and competitive strategies
Product portfolio (re-)design
Pricing excellence
Sales strategies and sales channel optimization
Customer-centric digital approaches
End-to-end transformation towards commercial excellence
…
Global presence > 3,000 projects in the last 3 years
World leader in giving advice to companies on howto price their products
Pricing strategy specialists
The world’s leading pricing consultancy
In pricing you offer something nobody else does
BusinessWeek The Economist
Professor Peter DruckerThe Wall Street Journal
World leader in pricing
37 offices worldwide, > 1,100 employees, $300m revenue in 2017Amsterdam Atlanta Barcelona BeijingBonn BostonBrusselsCairoChicagoCologneCopenhagen Dubai FrankfurtGeneva Hamburg Hong KongIstanbul London
LuxembourgMadrid MilanMountain View Munich New York Paris San Francisco Santiago de Chile São PauloShanghaiSingapore StockholmSydney TokyoTorontoViennaWarsawZurich
Best consultancy in marketing, pricing and sales
Source: Forbes, Survey of best management consulting firms in the US, October 2016
Marketing, brand, pricing
Source: Capital, survey of the best consultancies in France, October 2016
Marketing, sales, pricing
Simon-Kucher & Partners
on par with
Boston Consulting Group
McKinsey & Company
Simon-Kucher & Partners
on par with
Boston Consulting Group
McKinsey & Company
1...
Source: brand eins Thema special edition: Consulting –industry report from brand eins Wissen and Statista, online survey, 2014, 2015, 2016, 2017, 2018
Marketing, sales, pricing
Simon-Kucher & Partners1
Source: Financial Times, list of the UK's Leading Management Consultants, January 2018
Marketing, brand, pricing
Simon-Kucher & Partners
on par with
McKinsey & Company
1
Capital Forbesbrand eins/Statista Financial Times
Boston Consulting Group
McKinsey & Company
Boston Consulting Group
......
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 4
COLOURBOX/Olivier Le Moal
Selected paper and packaging references
Ahlstrom
Albea
Ahlstrom
Antalis
Arjowiggins
August Faller
Avery Dennison
Ball Packaging
Coveris
DS Smith Packaging
Eska
Europapier
Gissler & Pass
Huhtamaki
Hydro
Johns Manville
KHS GmbH
Klöckner Pentaplast
LINPAC-Allibert
Mayr Melnhof
Mauser
Mondi
Nordic Paper
Optima Packaging
Owens-Illinois
Oystar
Papeteries du Leman
Papierfabrik Palm
Papyrus
Prinovis
PSB
Rovema
Sappi
SCA
Schelling
Schoeller Arca Systems
Schott
SGD Pharma
Sidel
STI
Stora Enso
Texen
Thimm
Vetropack
...
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 5
Source: Survey among participants of the European Paper & Packaging Strategy Conference 2018, n = 30
Overall the outlook on the paper and packaging industry is a positive one –Disperse the clouds by seizing digitalization opportunities early on!
COLOURBOX/ Syda-Productions
If you need to give an outlook on the paper and packaging industry in the next five years, how would you describe it?
Sun with some clouds
Cloudy
Bright and sunny
Rainy with many thunderstorms
63%
27%
10%
0%
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 6
COLOURBOX/-
Packaging trends 2018
E-COMMERCE
DIGITAL PRICING
(DIGITAL)
SERVICES
GOING GREEN
MASS
CUSTOMIZATION/
DIGITAL
PRINTING
DYNAMIC PRICING
SMART
PRODUCTS
PLATFORMS
TRANSPARENCY
ONLINE RETAIL
COST
INCREASES
VALUE SELLING
INNOVATIONS
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 7
Source: Survey among participants of the European Paper & Packaging Strategy Conference 2018, n = 30 , multiple answers possible
Going green/sustainability, e-commerce, value selling and handling cost increases viewed as major trends in the paper and packaging industry
COLOURBOX/ Syda-Productions
73%
43%
43%
43%
40%
30%
23%
20%
0%
Going green
e-commerce
Value selling
Cost increases
Smart products
Mass customization/digital printing
Platforms
(Digital) Services
Digital pricing
What do you think are the most important trends in paper and packaging?
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 8
COLOURBOX/-
Packaging trends 2018
E-COMMERCE
DIGITAL PRICING
(DIGITAL)
SERVICES
GOING GREEN
MASS
CUSTOMIZATION/
DIGITAL
PRINTING
DYNAMIC PRICING
PLATFORMS
TRANSPARENCY
ONLINE RETAIL
COST
INCREASES
VALUE SELLING
INNOVATIONS
SMART
PRODUCTS
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 9
GettyImages_nullplus_113511588
Smart packaging products can add value along the value chain
Digitalization of packaging products may have different use cases :
Brand protection
Theft protection
Product quality protection
Customer information and interaction
Optimization of logistic
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 10
iStock/-
62%
10%7% 6%
10%
5%
37%
23%21%
7% 7%5%
One-time payment Licence Flat rate Pay per use Options rate Other
Traditional products
Digital products
Source: Simon-Kucher brief B2B study, November 2016 (n= 59)
Traditional price models are no longer sufficient for smart packaging products
Away from the one-time price of traditional products to flat rates and licenses
The traditional "one-time price" model is replaced by new price models
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 11
COLOURBOX/-
Source: Simon-Kucher
Out-of-the-Box: Smart-Packaging-Blockchain helps to overcome added-value-buyer-dilemma for smart packaging products
AdditionalvalueBuyer 1 Buyer 2
COLOURBOX/ Nick NickCOLOURBOX
Example 1: Item slider
Example 2: RFID logistic
Example 3: RFD freshness
COLOURBOX/ COLOURBOX/ F. GIROU6PA-MAXPPP
GettyImages_gilaxia_621271582
Smart-packaging-blockchainEnd-userDistributor(Own-) brand
Packaging company
Added-value-buyer-dilemmaalongside the value chain
COLOURBOX/-
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 12
Source: Survey among participants of the European Paper & Packaging Strategy Conference 2018, n = 30
Despite being seen as a major trend, smart packaging products are still in their infancy
COLOURBOX/ Syda-Productions
Does your company have smart packaging products?
47%
23%
17%
13%
No
Yes, with limited success
Yes, currently in development
Yes, already successfully launched
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 13
COLOURBOX/-
Packaging trends 2018
E-COMMERCE
DIGITAL PRICING
GOING GREEN
DYNAMIC PRICING
PLATFORMS
TRANSPARENCY
ONLINE RETAIL
COST
INCREASES
VALUE SELLING
INNOVATIONS
SMART
PRODUCTS
(DIGITAL)
SERVICES
MASS
CUSTOMIZATION/
DIGITAL
PRINTING
COLOURBOX/-
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 14
Mass customization through digital printing
VALUE UP COST DOWN
Mass customization
Nutella Coca Cola
Small batch production
HP
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GettyImages_lleerogers_185078287
GettyImages_sergeyryzhov_692837826
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 15
Source: Survey among participants of the European Paper & Packaging Strategy Conference 2018, n = 30
The majority of participants sees a significant revenue share (>25%) for mass customization in the near future
COLOURBOX/ Syda-Productions
What share of business will "mass customization" represent in the next 5 years within the whole industry?
Minor share of the total business (25-50%)
Some share of the total business (10-25%)
Major share of the total business (over 50%)
Play only a niche role (<10%)
None (0%)
I don’t know
40%
27%
20%
13%
0%
0%
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 16
Packaging trends 2018
COLOURBOX/-
DIGITAL PRICING
(DIGITAL)
SERVICES
GOING GREEN
MASS
CUSTOMIZATION/
DIGITAL
PRINTING
DYNAMIC PRICING
PLATFORMS
TRANSPARENCY
ONLINE RETAIL
COST
INCREASES
VALUE SELLING
INNOVATIONS
SMART
PRODUCTS
E-COMMERCE
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 17
Packaging industry example: Several companies have launched online shops
COLOURBOX/-
Certain online shops already exist in packaging
Shops are not easy to find and consistent across the company
Very few compelling offerings
Very limited user experience
Other industries have progressed much further
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 18
COLOURBOX/Dima Sobko
Source: Simon-Kucher
e-channels in B2B: Simon-Kucher framework
Key questions:
What is the underlying strategy? What are main objectives of the e-channel?
Which market and customer segmentsare targeted?
Which parts of the product portfolio are offered? Which service (quality) is offered?
What is our pricing approach for the e-channel?
Is the e-channel an active sales or passive distribution channel?
1
2
3
4
5
E-channel in B2B
Strategy/objectives
Product
Sales/channel
1
3
4
5
Market/customer
2
€
Pricing
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 19
Source: Survey among participants of the European Paper & Packaging Strategy Conference 2018, n = 30
E-commerce will be used to generate additional sales and drive customers’ convenience
COLOURBOX/ Syda-Productions
What do you think will be the major goals of online shops/e-commerce in the industry?
Generate additional sales(e.g. with new customer segments)
Increase convenience for customers
Cost saving in sales
Generate attention and interest towards products and services
52%
48%
31%
21%
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 20
Source: Survey among participants of the European Paper & Packaging Strategy Conference 2018, n = 30
… however, the total share of online business is expected to remain rather low in the near future – Do P&P companies lack the right strategy?
COLOURBOX/ Syda-Productions
What share of products will be sold online in the next 5 years within the whole industry?
Some share of the total business (10-25%)
Play only a niche role (<10%)
Minor share of the total business (25-50%)
Major share of the total business (over 50%)
None (0%)
I don’t know
37%
30%
27%
7%
0%
0%
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 21
COLOURBOX/Tetiana-Vitsenko
Packaging trends 2018
E-COMMERCE
DIGITAL PRICING
GOING GREEN
MASS
CUSTOMIZATION/
DIGITAL
PRINTING
DYNAMIC PRICING
PLATFORMS
TRANSPARENCY
ONLINE RETAIL
COST
INCREASES
VALUE SELLING
INNOVATIONS
SMART
PRODUCTS
(DIGITAL)
SERVICES
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 22
iStock/Boarding1Now; iStock/filistimlyanin
Services support you to escape from the commodity trap
81% of all paper
packaging companies face increased pricing pressure
65% of all
companies believe that growing low price competition is one reason for increased pricing pressure
Every second company
wants to change its
customers' perception of
value and price to reduce pricing
pressure
Differentiated and clearly
communicated service offering
is a very effective way
to increase
customer value perception
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 23
Source: Simon-Kucher & Partners
Define digital services based on future trends
Deriving strategic routes(segment-specific and integrated)
Trends & Beliefs
I
Longlist strategic
routes
II
Automaticcheck-out Traceability
(RFID)
Masscustomization …
Incremental change
Hyper-personalization
Sustainability
Connectivity …
Revolution ahead
11
22
33
4n
E.g. : "Become a solution/ service provider"
E.g. : "Take out supply chain cost"
E.g. : "Sell new innovative product"
E.g. : "Have best customer journey experience"
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 24
Source: Survey among participants of the European Paper & Packaging Strategy Conference 2018, n = 30
The importance of digital services is widely acknowledged by the industry –how well equipped are paper and packaging companies to monetize them?
COLOURBOX/ Syda-Productions
How important will digital services be in the future for the industry?
Digital services will play an important role as revenue stream
Digital services will be a nice to have add-on
Digital services? – I think the industry should start monetizing normal services first
Digital services will not play a role at all
53%
23%
23%
0%
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 25
COLOURBOX/hurricanehank
E-COMMERCE
DIGITAL PRICING
GOING GREEN
MASS
CUSTOMIZATION/
DIGITAL
PRINTING
DYNAMIC PRICING
PLATFORMS
TRANSPARENCY
ONLINE RETAIL
VALUE SELLING
INNOVATIONS
SMART
PRODUCTS
(DIGITAL)
SERVICES
Packaging trends 2018
COST
INCREASES
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 26
Legislation PUSH
COLOURBOX/-COLOURBOX/Milous Chab
Going green – topic gets traction
Increased EU-regulationtowards sustainable packaging
Increased demand for sustainable options by customers andend consumers
Going green
COLOURBOX/hurricanehank
Going Green
75% by 2025
Paper and cardboard
E.g. new 2018 legislation definesrecycling targets for packaging:
Packaging customers’ preferences for green packaging are growing, e.g.:
Customer preference PULL
German REWEgroup selling bananas only without packaging
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 27
GettyImages/-
E-COMMERCE
DIGITAL PRICING
GOING GREEN
MASS
CUSTOMIZATION/
DIGITAL
PRINTING
DYNAMIC PRICING
PLATFORMS
TRANSPARENCY
ONLINE RETAIL
VALUE SELLING
INNOVATIONS
SMART
PRODUCTS
(DIGITAL)
SERVICES
Packaging trends 2018
COST
INCREASES
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 28
COLOURBOX/ -
Index fluctuations are normal – some indices with high increases this year
1.000
1.050
1.100
1.150
1.200
1.250
1.300
1.350
1.400
1.450
1.500
Jul 17 Sep 17 Nov 17 Jan 18 Mrz 18 Mai 18
PET Platts PET ICIS PET KI
PET indexfor EUR/t
+30%
+32%
+22%
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 29
Project examples anonymized for confidentiality reasons
A delayed response to increased raw material costs results in immediate margin losses
Anticipating cost dynamics and acting accordingly is key!
Days
Prices
Net prices
Raw material price decrease
Raw material cost based minimum prices
Raw material price increase
Gross margin
0
Project example
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 30
5 Step price increase program
Define price increase strategy
Exploit product-related potential
Use customer differentiation
Increase forterms and services
Prepare for communication
Set price increase targets
Understand basis for price increase
Use price potential for:
Products with high USP
Secondary products
Product lifecycle
Segment customers for price increases.
Differentiate for:
Small customers
Industries with lower price sensitivity
Customers with poor price quality
Stop margin slippage through systematizing terms and conditions
Monetize the service offering
Thoroughly prepare internal and customer communication
1
2
3
4
5
INCREASE YOUR SUCCESS!
01_Simon-Kucher_Industry trends in paper and packaging_Daniel Bornemann_inclSurvey.pptx 31
www.simon-kucher.com
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