Asia’s Beverage Industry: Change Is Coming

Monday, September 18th, 2017

The East is still tracing behind the West in terms of many industries, including that of beverage, but change is coming, says Eric Shaffner, Sales Vice President for Asia, Middle East and Africa, Sidel.

It is very interesting to watch one market and use it to predict the future of another market, he said, citing a few examples.

The first he mentioned regarded the beverage packaging industry. With the West, one would see more differentiation in the different segments. “It’s quite common now in Western countries that you have premium packaging, mass production packaging, and an entrance product packaging that would be based on commodity and price.” This segmentation is less present in Asia still, though one would observe a small presentation of premium packaging. “There is yet to see full and clear segmentation, but it is coming,” he said.

The second example he cited was of niche markets. As of four years ago, you would not be able to find sparkling water in Japan, he said. “But today, you start to see it, and you see even local producers of sparkling water. These manufacturers are enjoying fantastic growth because it’s a small niche market, and the demand is there.”

With the more sophisticated West where sparkling water can be found everywhere, this niche market has further developed to produce segmentations even within still water. There is light and strong sparkling water to suit consumers, he said, and this is a trend. Japan is a good illustration of this as the niche market has developed in just four years, so the development of niche markets will come, he said.

A third example he mentioned was for that of complete line solutions. Complete lines include all machines, designs, engineering, equipment and services, from the entrance up to the palletiser, all from one supplier, Mr Schaffner defines. He sees this to very much be the future of the beverage industry, as it is fast becoming the norm for many production lines across the world, including but not limited to juice, liquid dairies, sensitive beverages, liquid yoghurts, and milk.

It did not used to be the norm though, despite it having existed as early as 80 years ago, he said. When it did first catch on, it was only in the beer sector, but now it has spread to all other sectors.

When asked why the increasing adoption for complete line solutions only now, he said that first and foremost, before complete line solutions could even be offered, suppliers needed to be mature. “If you have weak machines that in time will become the problem of the whole line, then you will have customers that are not happy. So to be able to offer complete line solutions, you have to be able to make sure that every component of the line is the best in class level, and that takes time for companies.”

Today, there are multiple suppliers across the industry for various complete line solutions. Previously customers had to be persuaded and convinced to think about other machines than the one they wanted, that is now a thing of the past, said Mr Schaffner. The majority of customers today say they do not have the time or resources to compare the competence of one machine and the next; they just want a complete line solution that they can use to produce their products at their specified capacity and speed and their desired packaging.

Convenience is the essence of customers today, he said, so it is up to the suppliers to provide that. For example, once a customer has given their specifications on the line, Sidel does everything from planning the layout of the machines to engineering, and making sure the machines can talk to each other; an advantage of having machines in the line by the same supplier.

Another advantage would be the confidence that complete line solutions can give customers; customers immediately know who to contact for enquiries or services if they need help with a certain machine. For problems involving machines from different suppliers, it is always easy for these suppliers to push the blame away when a problem comes up in the line, he said.

A third advantage would be that using machines by the same supplier more or less guarantees that a manufacturer can upgrade to newer models in time. This is as new models would likely be built with the existing ones in mind, which would be convenient for customers to swap over, rather than invest in an entirely new line.

These are just a few examples, but definitely in the future for the beverage industry, change is coming.