THE INDEX ISSUE 11 / 2018

INSIGHTS & OPPORTUNITIES Online Grocery foreword_02

Thoughts from Dennis

Welcome to the 11th annual Tetra Pak This year’s Tetra Pak Index provides insights Packaging has a key role to play in all of this. Index, which focuses on the rise of online into this new omnichannel world of grocery It’s part and parcel of home delivery, impacting grocery and the unique opportunities it shopping. It’s based on consumer research significantly on both customer satisfaction presents for the food and drink industry. conducted in five countries, plus interviews with and logistics (light weight and space efficiency e-retailers in North America, Europe and China, are key factors). And while its primary purpose The power of the internet is transforming and a global market segmentation study. will always be one of protection and the grocery trade, just as it has revolutionised preservation, it now offers rich potential for so many other retail sectors. There were some It highlights four key trends. Convenience, personalisation and a consumer experience initial challenges. But with most of these now which is driving online demand in all that can both surprise and delight. Thanks addressed, online grocery shopping is on an geographies, as consumers look for ways to smart technology, every package sold unstoppable march, taking an ever-greater to make their time-crunched lives easier. can now carry a unique digital identifier, share of the food retail market. Technology, which is transforming both creating the opportunity for direct one-to-one supply chains and the consumer experience. conversations with consumers (as well as Physical stores are also being reinvented Sustainability, as environmental issues become helping drive efficiencies across the entire through digitalisation, providing consumers more important for consumers, brands supply chain). with extra information on products, personal and retailers, and governments alike. offers and recommendations, automated And personalisation, as marketers look for Looking ahead, this omnichannel revolution cash-free checkout and more – as well as new ways to attract consumers online, build in grocery is not merely going to continue, supporting hubs for rapid local delivery. relationships and drive loyalty. it’s going to accelerate. We look forward to Indeed, offline and online are now merging working with our customers to harness the into an “omnichannel” age, where consumers opportunities it presents. expect to be able to buy whenever, wherever and however they choose, with the ubiquitous smartphone acting as their compass. DENNIS JÖNSSON PRESIDENT & CEO, TETRA PAK GROUP contents_03

contents Overview Analysis Trends 05 Growth & disruption 11 Market forecast: resisters, laggards, 16 Convenience 06 Redefining the consumer experience pioneers, leap-frogging pioneers 19 Technology & performance 08 Physical retail: reinventing to stay relevant 12 Retailer & consumer needs: 23 Sustainability North America, Europe & China 25 Personal & unique 13 Understanding online grocery consumers 27 Summary 28 Research & references

CASE STUDIES 14_Maeil Dairies_Tetra Pak & bigbasket / 17_Di Carlo / 21_Adopt A Cow_Tetra Pak, Ads On Board & Shazam / 22_Puleva / 24_Buzzbox_Koita / 26_JustFoodForDogs overview_04

Overview E-commerce is by far the fastest-growing channel for groceries today. It also has a much wider impact, influencing physical stores – and more. It’s part of a transformation that’s redefining the way consumers buy, experience and react to products, driving innovation and disruption throughout the value chain. overview_05

Growth & disruption Not only do retailers and brands now see We’re now seeing the emergence of online/ To that end, Walmart has acquired Online is by far the fastest growing channel online as a crucial sales channel, they also see offline alliances everywhere, as “bricks and e-commerce companies such as Jet.com for groceries today. Looking at Kantar’s latest it as having an impact far beyond e-commerce: clicks” emerges as the business model of and made significant investments in IT to figures for the global fast-moving consumer its disruptive influence is affecting investment choice in the shift towards an “omnichannel” raise its capabilities. Coming from the other goods (FMCG) market as a whole, online and future plans for all channels. Online approach to retail. “Our strategy is to serve direction, Amazon spent $13.7 billion to buy sales grew 30% in the 12 months to March grocery is being seen less as a battleground customers through e-commerce and our stores Whole Foods, not only to establish a physical 2017, double the figure for the previous year, between insurgent pure players and in a way,” says Walmart CEO Doug consumer-facing presence, but also to turn compared with just 1.3% growth in all FMCG incumbent bricks and mortar vendors, and McMillon.3 “Customers are time-crunched, its stores into a network of hubs close to urban channels.1 And while the picture is very different more as a catalyst for a wider transformation. so we want their shopping experience with consumers. It’s now rolling out free two-hour from market to market, online grocery is “It’s about how online and offline together us to be fast and easy – truly seamless – in all delivery from the grocery chain to Prime expected to continue to grow much faster than can create both a better customer experience the ways they want to shop: in stores, on their subscribers in various US cities, increasing any other channel, albeit from a fairly modest and better efficiency for the entire supply mobile device, or through pickup and delivery.” pressure on traditional retailers to look for base – 4.6% globally. (See also Planet Retail chain,” says Stéphane Roger, Global Director ways to promptly and profitably deliver their figures, below. For more on individual markets of Shopper and Retail, Kantar.2 own fresh food and pantry items. and their growth prospects, see page 11.) In China, e-commerce market leaders Alibaba and JD.com are also investing heavily to Business models • Third party/personal shoppers. Drugstores, Supermarkets Cash & carries, Convenience build an offline presence (see page 08.) “We Hypermarkets Discount Online Currently there are a variety of Services such as pharmacies & & neighbourhood warehouse & forecourt & superstores stores grocery perfumeries stores clubs stores online grocery models: that pick up from retailers service every piece of the consumer journey,” and deliver to consumers are says Kurt Li, Head of Business Intelligence at 4 2012 2017 2022 2012 2017 2022 2012 2017 2022 2012 2017 2022 2012 2017 2022 2012 2017 2022 2012 2017 2022 • Home delivery. Retailers are increasingly popular, not only Alibaba. “Now, with our bricks-and-mortar increasingly prioritising home with consumers but also with retail presence, our touchpoints are no longer $514bn $412bn $367bn $314bn $481bn $925bn $387bn $799bn $294bn $396bn $770bn $335bn $342bn $305bn $455bn delivery due to consumer retail partners: Sam’s Club, $1,714bn $1,659bn $1,848bn limited to online: we have managed to digitise $41bn $21bn $94bn Target and Costco all use demand. But it’s costly, offline behaviour too.” making it difficult for retailers Instacart for fulfilment and to make a profit, especially delivery in the US. as consumers are resistant to • Direct to consumer. Many (if not Meanwhile, brands are becoming e-retailers delivery charges. most) major CPG companies too, and many (if not most) major consumer • Click and collect. Allows are expected to add direct-to- packaged goods (CPG) companies are Fastest growing channels consumers to browse and consumer services over the next expected to experiment with the direct-to- buy online then collect from few years. Some, such as The consumer model over the next few years. a physical outlet, such as a Coca-Cola Company, Unilever, “This is, without a doubt, the greatest retail store, petrol station, post Procter & Gamble, are doing 2.2% 3.2% 3.8% 4.4% 4.8% 5.8% 17.4 % revolution we’ve seen over the last 50 years,” CAGR 2017-2022 CAGR 2017-2022 CAGR 2017-2022 CAGR 2017-2022 CAGR 2017-2022 CAGR 2017-2022 CAGR 2017-2022 office or other commuter- so already. For example, for friendly locations. It’s the first time in The Coca-Cola says John Carroll, Vice President and General PLANET RETAIL GLOBAL RNG PLANET RETAIL appealing to traditional chains Company’s more than 100-year Manager E-commerce, The Coca-Cola Hyper/supermarkets are still the largest channels globally, with a wide footprint and is bottling history, bottlers are Company.5 “The bricks-and-mortar world and but growth is slow. Convenience and discount are the fastest particularly popular in the now delivering select brands the online world are merging. And it’s all being growing physical formats, while online is growing far faster still US, where superstores are directly to consumers’ homes driven by how and where people are shopping.” larger – Walmart now offers a via a pilot called eFulfillment. drivethrough service in more than 1000 stores, for example. overview_06

Redefining the consumer experience E-commerce redefines the way consumers receive, experience and react to products, creating a new circular model with constant innovation and Share Discovery & search disruption at almost every stage. With Third moment of truth Zero moment of truth more ways to buy and more places to get information than ever before, brand to consumer engagement throughout the path-to-purchase, and afterwards, Buy becomes essential. In fact, the more touchpoints a brand makes with its consumers, the better the impact on perception and satisfaction. Receive First moment of truth

Order fulfilment & last mile

Discovery & search to 97% and 93% respectively in Hence Facebook now talks about As consumers spend more time China. Such independent reviews “the three-second audition” and Best versus brand probably will be too. overwhelmingly a search engine and online, so it becomes a key and comments are now rated “thumb-stopping content”. “If it’s Google believes that Google is now seeing a stronger for generics build their basket source of product discovery, the most influential marketing too complex for mobile, it’s too the way consumers strong rise in searches than for brands (81% around that. This is often via blogs and social media, influence after a recommendation complex,” says Matthew Lowe, shop for online for the term “best” in versus 2%). particularly true for 1 and research (which typically from a family member or friend. Head of Online Content & UX at groceries is changing, relation to products, “Consumers are searches for niche 2 means search, via Google or, Given the amount of information UK supermarket Iceland. with the starting point even for traditionally increasingly starting specialist products, increasingly, Amazon). As we consumers are exposed to online, increasingly being low consideration their grocery shopping such as those with reported in last year’s Tetra Pak brands need to work harder than specific products items such as journey without a perceived health Index, 80% of the most active ever to capture attention and get rather than a toothbrushes (up destination – the benefits as food and influential consumer group their message across. Arresting destination where they 100% in two years), starting point is the increasingly evolves online read reviews/ratings on and, crucially, simple messaging fill their basket. It deodorants (up 180%) product,” says Harry into “foodcare”. food and beverages monthly is vital, particularly as mobile is argues that search is or olive oils (up 110%).3 Walker, Head of Hence a simple tip: and 70% do so weekly – rising increasingly the device of choice. a strong proxy for Brands still dominate Industry – Retail at experiment with using consumer demand: for search terms over Google.4 Or, to put common search example, if searches generic products it another way, they terms in the title of for a product are today (70% versus find the key product the product itself to growing, sales 30%) – but growth is they’re looking for via drive sales. overview_07

Consumer posts of images/comments on food and beverages How often?

GLOBAL

Several times a day 18% 15% 16% 16% Once a day 21% 10% 22% 18% Buy Order fulfilment Receive Share At least once a week 16% 21% 41% 26% At least once a month 10% 13% 14% 12% Online shopping drastically & last mile Receiving and unpacking As we reported in last year’s Less often 14% 16% 5% 12% reduces the visual real estate for There is considerable ongoing e-commerce goods is now Tetra Pak Index, connected Never 21% 25% 2% 16% products, especially on mobile. innovation (and investment) in literally part and parcel of the consumers are increasingly Daily 39% 25% 38% 34% So it’s important to ensure that order fulfilment and the last first moment of truth. In a survey sharing opinions and experiences Weekly 55% 46% 79% 60% Monthly they are instantly recognisable mile, particularly in technology of US CPG companies last of food and beverage brands 65% 59% 93% 72% INDEX 2017 TETRA PAK and consistent wherever they development. For more on year, 2 95% agreed that “bad” online. This is particularly true of appear. Copy is also crucial, this, see the Technology & packaging (defined as a package the most active and influential especially in categories such performance trend, page 19. that’s hard to open, unattractive, online consumers: 68% globally as baby food where nutrition or results in damage including (and 90% in China) write reviews In your opinion, what is the In your opinion, what is the and ingredient information is breaks or leaks) can have a at least monthly, with 57% doing impact of BAD packaging impact of GOOD packaging paramount. New ways of negative impact on an online so weekly. And 72% globally ordering, such as subscriptions, customer experience. Moreover, post images/comments on on an online customer on an online customer voice and auto-replenishment 71% said it can ruin an otherwise food and beverages monthly experience? experience? via Amazon Dash and smart positive online purchase – rising to 93% in China, led by appliances (see page 16), are experience. However, 97% commenting on or reviewing making an impact too, changing agreed that a “good” packaging a product (68%) and showing the consumer’s relationship with experience can have a positive something new (60%). Moreover, products and brands. “It’s all impact, with 70% saying it 49% of CPG users say their about convenience – making can even create a memorable e-commerce customers are not your life easier and getting experience. Crucially, 86% only sharing their experiences away from the 90 minutes a week say improved e-commerce with online purchases online, you have to spend in the store,” packaging is the responsibility they are including photos and says The Coca-Cola Company’s of the brand, not the e-retailer. commentary about packaging on John Carroll.1 Secondary packaging is also social media, making packaging, a key issue today (see page both good and bad, more visible No impact 5% No impact 3% 23), while personalisation and than ever before.3      custom experiences are tipped as trends for the Minor positive impact 24% Minor positive impact 27% future (see page 26). Bad packaging can ruin a Good packaging can create customer experience 71% a memorable customer

experience 70% DIMENSIONAL RESEARCH TRENDS IN E-COMMERCE PACKAGING, overview_08

Physical retail: reinventing Digital stores in China’s e-commerce growth, Alibaba has to stay relevant A key player in the reinvention of physical expanded its remit, and in 2017 alone, it Physical stores are experiencing slow growth retail is Amazon, which gained much attention invested $21 billion in deals as it moved into rates due to the impact of increased consumer for its moves into the offline space, both logistics and bricks and mortar retailing. spending online. Consequently, retailers are through its acquisition of Whole Foods and scaling back new store expansion, closing or also its Amazon Go checkout-free concept Its Ling Shou Tong programme is helping investing in smaller formats. But even though store. The first of these opened in Seattle in to upgrade China’s 6m small family-run there be fewer outlets in the future, they will January 2018 selling ready-to-eat foods, meal convenience stores, injecting modern logistics still account for the bulk of spending: shoppers kits and grocery essentials, including its own to revitalise their supply chains and analytics clearly still want to see and feel goods, receive brands such as Wickedly Prime. The store to help them better understand the buying inspiration and advice – and also pick up employs the same types of technologies used behaviour of their customers. But its New goods ordered online. However, such offline in self-driving cars: computer vision, sensor Retail flagship is its Hema supermarkets, which spending may well be influenced by online, fusion and deep learning (see , right). offer smartphone-enhanced shopping via an before or during purchase. app that offers personalised recommendations Similar moves are happening elsewhere, and offers based on captured data. Consumers To ensure they continue to stay relevant in notably in China, which is setting the pace can scan any product to find additional the digital age, bricks and mortar stores are globally for omnichannel retail innovation. information, and cashless payment through working hard to reinvent their offering. Alibaba first announced its “New Retail” the Alibaba platform is also embedded. They are starting to use their stores as social concept – integrating online, offline, logistics hubs, creating memorable experiences that and data across a single value chain – back in can’t be replicated online. They are also 2016. Alibaba became China’s e-commerce now beginning to digitalise the in-store leader by building asset-light marketplaces, experience and better integrate it with online. notably Tmall, its B2C online retail site, the app Personalised digital marketing is starting to for which has been downloaded by some 500m happen in-store, too (see page 25). Chinese consumers. Driven by the slowdown “China is moving much faster than the West in this retail The Amazon Go store in Seattle is evolution because the Western checkout-free. It uses Just Walk Out retail model is built on legacy Technology that detects when products systems. China’s model is are taken from or returned to the shelves disruptive. China does not and keeps track of them in a virtual cart. have the legacy of malls and When the consumer is finished shopping, big-box stores like the West. they just leave the store and their Amazon China has no traditional retail account is charged later. The store offers model to defend.” ready-to-eat items, Amazon Meal Kits Frank Lavin, CEO, ExportNow1 (see page 17) and grocery essentials, such as Amazon’s Wickedly Prime private- brand. The range includes soups, which are packed in Tetra Recart® with the tagline “Time to kick the can”. overview_09

Each Hema store has its own warehouse and The format is already proving to be hugely logistics centre that fulfils and delivers local popular, especially among Chinese migrant online orders – as customers stroll below, workers who want to return to their rural of shopping destined for delivery speed by town of origin, with JD.com saying it receives “Over the last decade, we have over their heads – within 30 minutes. The stores 50,000 applicants from potential franchisees used up benefits provided are designed to be inviting retail destinations, every day. Such stores are currently opening at by China’s rapid e-commerce with super-fresh produce, notably seafood, the rate of a thousand per week, expected to growth. No matter how we which can be prepared and served on the spot. rise to a thousand per day by the end of 2019. look for growth opportunities, we are limited to that 15% of Alibaba aims to have around 50 Hema stores JD.com, Alibaba and others are also busily China’s retail business. Now we by the end of 2018. opening self-service cashier-less convenience want to bring our online tools stores, some more like walk-in vending to the entire retail sector, and Meanwhile, in January 2018, online retail machines than traditional stores. this is a huge leap for us.” giant JD.com opened its first supermarket Chang Bin, Vice President of 7fresh as part of its own “Boundless Retail” Smartphone payment Strategy & Investment, JD.com1 omnichannel vision, which is backed Mobile payments have become so common in China that it is fast by Tencent, the giant Internet services becoming a cashless society. conglomerate that owns WeChat. JD.com The mobile payment market is is also rivalling Alibaba’s convenience store dominated by two apps, WeChat programme, aiming to have a million franchise Pay and AliPay, which have hundreds outlets, run by independent investors, in the of millions of users. Paying by next five years or so, half in rural areas. phone became popular partly because the infrastructure was in place for online, and partly because credit cards never caught on here. Smartphone-scannable QR codes are widely used and mean that anyone can become a merchant, since there is no need for hardware such as card or chip readers. analysis_10

Analysis To understand the global trends of today and tomorrow, and also the key differences from market to market, we commissioned consumer research in five countries, along with a global market segmentation study and interviews with e-retailers in North America, Europe and China. analysis_11

Resisters Leap-frogging pioneers Developing markets with slow growth in online grocery, due to abundance Developing markets with fast growth in online grocery, driven by of physical stores and associated buying experience infrastructure development and demand for convenience

India Brazil Russia Shanghai Bangkok Jakarta Traditional trade to remain Modern trade to benefit from Preference for “touch and feel” A hotspot even in digital Online expected to grow with Online to compete against dominant due to its deep demand for low prices and aspect of physical stores to pace-setter China, thanks to (and complement) modern growing mini-supermarkets as penetration and emotional convenience. Online limited to push continued growth in high internet penetration and trade, as it continues to gain demand for convenience rises attachment with consumers specific segments modern trade advanced logistics trust among consumers and internet access improves

Market forecast Tetra Pak-commissioned research by Euromonitor International Online grocery Modern trade Traditional trade 2016 forecasts the growth of online grocery in key markets by 2030 2030

Laggards Pioneers Developed markets with slow growth in online grocery as rising emphasis on Developed markets with fast growth in online grocery, thanks to rising quality and innovation expected to keep modern trade competitive consumer confidence in online delivery and quality

United States Germany Japan South Korea France United Kingdom Wide choice in modern trade to Modern trade to stay Popularity and widespread Innovative services, notably Convenience, quality, low price Modern trade retailers are keep share high. But millennials competitive as rising income availability of convenience stores on mobile, plus increasing and free delivery are all likely to joining online players in a bid to seeking convenience will levels lead consumers to will pose challenges to online credibility to drive online growth be key in attracting consumers close price gap and create an increasingly go online emphasise quality over price grocery growth as competition intensifies to online grocery omnichannel presence analysis_12

Retailer & consumer needs For consumers everywhere, the main purpose For e-retailers globally the most important When it comes to design, although European A Tetra Pak-commissioned study carried of packaging is to protect and preserve. performance factors remain speed of delivery consumers appreciate “eccentric” design out in February 2018 interviewed leading Durability of primary packaging is a major and quality of products shipped to consumers, for food and beverage packaging and are e-retailers offering online groceries basic requirement for e-retailers everywhere, along with space-efficient packaging to predicted to see “tasty” (multisensory, even in North America, Europe and China. but the need for secondary packaging varies optimise logistics. Space-efficient packaging edible) packaging as a performance factor Its goal was to understand their sales by region: in North America it is often avoided appeals to consumers, too, particularly by 2025, they prefer a unified design across channels, value chain and packaging as an unnecessary extra cost for e-retailers who in urban areas where living space is often all distribution channels rather than online- needs, as well as to get their perspective may need to repack and aggregate products, tight: it is viewed as a performance factor3 only packaging and products. Chinese on the needs of consumers in their whereas in China, branded secondary and is in demand for consumers in North consumers also appreciate design but they, geographies, both now and in 2025. packaging is seen as a marketing opportunity. America and in China, while in Europe it is and their American counterparts, show a seen as a nice-to-have. strong preference for online-only products Environmental concerns are growing too, and for unique, premium and/or personalised impacting on the use of secondary packaging Currently, safe delivery is seen by e-retailers packaging for e-retail. This trend is expected (see page 23). Demand for sustainable as more important than providing a specific to continue, with e-retailers predicting that packaging generally is on the rise globally: benefit for consumers, such as an “unboxing” the offer of online-only products will be a key in Europe, recyclability is a basic factor1 and it experience. This is true across all geographies decision criterion in consumers’ choice of is likely to become so for American consumers but is expected to change once high-tech vendor by 2025. by 2025. However, it looks set to remain a supply chains and logistics make super-fast value-added factor2 in China due to slow deliveries the norm. Smart packaging, with features that enable take-up by manufacturers. digital purchase and enhanced consumer experience, is particularly highly regarded by Chinese shoppers (where scanning QR codes is already commonplace). It’s also welcomed by e-retailers in the region as it Looking ahead: 5 hot factors for 2025 allows them to experiment with new business 01 Augmented reality via smart packaging models and payment methods. As technology 02 Unboxing experience of online grocery packages advances it seems likely that smart packaging 03 Super-fast delivery will become ever more significant globally 04 Personalised packaging and online-only products in both upstream and downstream logistics 05 Tactile technology that allows consumers to “feel” through unique data codes, as well being used the product at the zero moment of truth increasingly to position online grocery items as premium products. analysis_13

Understanding online Drivers & barriers Clearly, grocery shopping has an inherently Shopping behaviour grocery consumers Our research shows that convenience is by far physical nature with often strong emotional Online grocery is not yet as mature as other Online grocery is a highly distinctive the main driver of online grocery everywhere. and cultural overtones too. The inability to categories in e-commerce, and consumers channel, demonstrating consumer But there are other drivers that vary from inspect goods is one of the biggest barriers can be quite traditional in their shopping behaviour that’s often strikingly different market to market. In China, for example, for online grocery, with quality the leading behaviour. While the trend in physical retail is both to physical retail and to other wider choice is key, particularly the availability concern for consumers everywhere. A desire a shift away from supermarkets towards more e-commerce categories. To understand of international brands. Promotions are to see and touch the product is particularly frequent top-up shopping in local convenience this better, Tetra Pak commissioned a important in Saudi Arabia, and Americans are apparent in the UK, while consumers in the US stores, online grocery shopping is much like consumer research study conducted in also focused on saving money, with coupons want to pick out products themselves. Delivery the traditional weekly trolley shop. five countries: the US, UK, China, South and vouchers playing a big part in their choice is cited as the next biggest barrier, with cost Korea and the Kingdom of Saudi Arabia. of retailer. Discounts and the ability to buy and issues around delivery slots and reliability Consumers often buy to stock up, trading in bulk without the hassle of having to cited as key concerns by consumers. up to bigger package sizes and looking for carry too much weight particularly appeal competitive pricing. They also like multipacks, to consumers in South Korea, the world’s In almost all countries “bricks and clicks” with consumers in our research highlighting most highly developed online market by far, are largely preferred to pure online players that individually wrapped portions help accounting for nearly a fifth of all FMCG trade.1 for grocery shopping. Such retailers have an minimise food waste, are highly suited to opportunity to create more convenient and modern consumption habits (on-the-go and efficient omnichannel fulfilment options, out of home) and also help with diet control (in demonstrating the relevance of the trend for particular when it comes to snacking). The key merging offline and online discussed earlier. life stage that converts consumers to online grocery is starting a family, when the scale Key barrier to online grocery is inability to see the product (and bulk) of shopping becomes bigger, and convenience is arguably even more important.

Food is widely bought for stocking up, I want to pick the products myself 14% I like to see the products 22% I can’t check the quality 20% even when not heavy or cumbersome I like to see the products 10% I want to pick the products myself 13% It’s not as easy as physical shopping 17% Products might not be fresh 10% Prefer physical stores/experience 9% I like to see the products 10% Prefer physical stores/experience 7% Products might not be fresh 8% I don’t trust the delivery times 12% I want/need the products now 6% Delivery is expensive 8% I want/need the products now 8% I like to touch the products 1% I like to touch the products 4% I like to touch the products 4% TOLUNA

Plain water 52% 63% 52% 77% 61% Juices & nectars 51% 72% 62% 60% 66% Coffee-based drinks 49% 52% 63% 77% 64% Tea-based drinks 46% 49% 58% 69% 63% Flavoured water 41% 44% 32% 26% 45%

I like to see the products 13% Products might not be fresh 29% Base: 437 Base: 504 Base: 502 Base: 507 Base: 425 TOLUNA I don’t trust the delivery times 13% I like to see the products 26% I can’t check “best before” date 10% I don’t trust fresh or frozen products 9% Prefer physical stores/experience 9% I don’t trust the delivery times 9% I can’t easily check the quality 7% I can’t easily check the quality 5% I like to touch the products 4% analysis_14

Consumers tend to be loyal both to their Looking ahead Generally speaking, the online grocery Tetra Pak & bigbasket, India UHT has been selling well on familiar brands and their choice of retailer as As speed of delivery and/or collection landscape is expected to continue to online platforms in India, especially in they move to online grocery shopping: in the continue to be improved and the online change at a pace even greater than before metropolitan areas, driven particularly UK, for example, a loyal Tesco store shopper grocery channel matures, consumer behaviour as the various players continue to invest in by convenience and food safety factors. As part of is nearly twice as likely to choose Tesco.com will increasingly follow the offline trend for technology and infrastructure as they strive its strategy to convert consumers in India to UHT for groceries.1 By and large, they are repeat smaller basket sizes, increasing the pressure to appeal to consumers, combat competition milk from other formats, Tetra Pak partnered with shoppers, with little browsing involved. Most on margins for all players. and maintain profitability. It’s also important bigbasket, the country’s #1 online grocery platform with around 0.5m consumers ordering every month online grocery shopping starts from (and stays to note that while many in the West look to across more than 25 cities. with) the website of their e-retailer of choice, Amazon already reports that around two-thirds Amazon as the main disruptor, the view looks The joint campaign targeted 100,000 non-buyers where smart players do all they can to make of deliveries for its service, which quite different in the East, where e-commerce of UHT milk in New Delhi, Mumbai and Bangalore, them feel at home, understanding their needs, can deliver in less than 60 minutes in some penetration is much higher. with banner advertising on the bigbasket analysing their past shopping behaviour, areas, is groceries: not just one-off small items, portal and mobile app offering free samples of and offering them a contextualised, personal but baskets. This subscription-based service For example, China’s online giant JD.com Amul Tazaa and Nandini branded milk in Tetra Pak® shopping experience to make the process as removes key barriers to purchase associated which, like Amazon, has invested heavily in packages. Tetra Pak sponsored the cost of the initiative, while bigbasket managed the logistics, simple and straightforward as possible. with delivery – speed, finding and planning building its own integrated, high-tech logistics delivery and data analytics. slots, cost, etc – and opens the door to the network, has its own global ambitions. It aims Bigbasket tracked six to eight weeks of purchase Finally, while online grocery is less affected top-up/convenience and impulse shopping to bring its e-commerce platform and delivery data to check the uptake in UHT purchases and by mobile than other e-commerce categories, which increasingly accounts for so much of services to the US in the second half of 2018 increase in average business. The result? More mobile is growing rapidly here too. For grocery sales. For example, two-thirds of and Europe as early as 2019, aiming to be than 15,000 new UHT milk buyers after the example, in the UK, a relatively mature Britons now shop for groceries more than once ubiquitous across the continent within “a few promotion period. market, 40% of online grocery purchases in a day, treating stores like “walk-in fridges”, years”.4 It plans to spend €1 billion over the 2017 were made on mobiles,2 so it’s vital to and one in 10 people decide what to buy for next two years in France to set up its own ensure that content is optimised accordingly an evening meal just before they eat it.3 logistics network, and is likely to follow suit and user-friendly apps are available. in the UK and Germany.

Maeil , Korea Council™ (FSC™)-labelled become increasingly key. The is ideally suited to online Maeil Dairies , another first for brand’s online growth has been and around 66% of all launched the first a Tetra Pak® package on the so rapid that e-commerce has Tetra Pak ambient white milk organic flavoured Korean market, all of which help now overtaken hypermarkets in sales in South Korea are now milk on to the Korean market to position the product at a channel share, rising from 38% in sold via this channel. under the Sangha Farm brand premium price compared with 2015 to 57% of the total by 2017. Maeil Dairies has built on back in 2013. An innovative the chilled flavoured that Key online sales drivers include its success by expanding its product, it’s sold in the innovative previously dominated the market. convenience, lower price Sangha Farm range from the Tetra Prisma® Aseptic 125 Square Sangha Farm was originally and tailored offerings targeted original two to four flavours – package: easy to hold for the promoted in-store, but with the at families with young children white milk, cocoa, banana and target consumers – children aged rapid growth of e-commerce here – classic online grocery shoppers strawberry – in Tetra Prisma® from one to eight – and perfect – it now accounts for almost 20% Generally speaking, ambient Aseptic 125 Square packages. for single-use consumption. It of the FMCG total,5 and around milk – especially in lightweight, also uses Forest Stewardship 14%6 of beverage – online has logistically efficient cartons – trends_15

Trends We see four key trends shaping online grocery. Convenience, which is driving demand in all geographies. Sustainability, as environmental issues become ever more important. Technology & performance, with both supply chains and the consumer experience being transformed. And Personal & unique, as marketers look for new ways to attract consumers online and build lasting relationships. trends_16

01. Easy replenishment Meanwhile, more than 100 hardware 02. Super-fast delivery/collection 01 Ease of replenishment is one of the main providers are working on building the Dash As discussed, super-fast delivery is a game- Convenience reasons cited by consumers for shopping Replenishment Service into internet-of-things- changer as it removes a major barrier to Convenience is the main driver of online online. Favourites – a personalised shopping enabled smart appliances, from fridges and online grocery and opens the door to impulse grocery in all markets. Consumers are list of products based on past purchases – has dishwashers to electric toothbrushes. “Dash and convenience shopping, rather than just looking for a shopping journey that’s long been a way for consumers to streamline replenishment solves a big problem for stock-ups. Looking ahead, our e-retailer ever faster and easier and they expect online grocery shopping. And automatic manufacturers that make smart machines but survey suggests that super-fast delivery (within a seamless, friction-free experience, replenishment, such as via subscription and don’t want to get into the e-commerce and as little as 10 minutes) is expected to be a not only across devices, but also across Amazon Dash buttons (a wi-fi-connected fulfilment business,” says James McQuivey of value-added service in Europe by 2025, with online and offline. The easier brands and device that reorders a particular favourite Forrester Research. He adds that most people fast delivery a performance factor in North retailers can make this experience, the product with the press of a button), is growing. who use Dash Buttons rarely diverge from the America and China. more successful they will be. “Assistance one product those buttons apply to, effectively is the new battleground for growth,” says Amazon says that more than 55% of its “locking in” consumers. An alternative is super-fast click and collect. Harry Walker, Head of Industry – Retail delivery subscriptions last longer than For example, Sainsbury’s in the UK has trialled at Google.1 “Consumers expect to be 12 months and build loyalty for the long Looking ahead, both auto-replenishment a service that enables customers to order their assisted. Brands that win will provide term. It also says that its Dash buttons, both models and smart appliances that can sense shopping via their Chop Chop app and pick it assistance in the moments that matter: physical and now virtual too, are one of its and reorder products that are running low will up from a store just 30 minutes later. during inspiration and discovery, planning fastest- growing services and that many continue to be key trends going forward to and shopping.” Here are seven ways brands are now seeing more than half of their 2025, according to our e-retailer survey. brands and retailers are doing just that. Amazon orders placed via such devices.

Convenience is driving online grocery shopping Interest in auto-replenishment is strongest in China and South Korea

Base: 437 Base: 504 Base: 502 Base: 507 Base: 425 Not aware 17% 34% 25% 16% 44% Aware and not interested 37% 40% 24% 35% 21% I have my shopping delivered at home Aware and would like to try it 22% 20% 43% 37% 28% I can shop whenever I want Aware and already tried it 24% 6% 9% 12% 7% It’s more convenient Base: 437 Base: 504 Base: 502 Base: 507 Base: 425

No physical effort is required TOLUNA I can buy in bulk without carrying heavy loads I can buy everything without visiting several shops It’s easier to compare products There’s a larger choice of products Amazon says Dash buttons are among its fastest-growing services I can save my shopping list and spend less time shopping I can find promotions not available offline I can edit my basket after I check out There are more discounted products TOLUNA trends_17

03. Convenient packaging 04. Buy it now direct-to-consumer models: a major and 44 are twice as likely to use them as older The trend for smaller families and urbanisation As part of their omnichannel strategy, brand development for CPG companies going consumers – and to have ordered goods and is causing homes to become smaller, with less owners are looking to create consistency and forward, according to our e-retailer survey. services online in the previous three months. storage, making frequent, smaller shopping enable conversion to sales wherever possible. trips more common than the traditional stock- Social commerce – buying direct from a social 05. services In addition to convenience, some say these up. It also makes consumers more appreciative media feed – is increasingly common, notably A relatively new, fast-growing segment that services appeal to younger consumers of space-efficient packaging – in particularly in China through WeChat, but also in the offers consumers a convenient way to cook because they have not been taught how strong demand in China and North America, West, with the addition of buy buttons in social at home without the planning and shopping: to prepare meals by their parents. These and treated as a nice-to-have feature by posts on the rise here too. they just choose from online picture menus, consumers also have a tendency to lean Europeans, according to our e-retailer survey. and pre-measured fresh (and typically high toward natural foods, hence organic, local, Software company Adimo is working with quality) ingredients along with recipes are farm-to-table and speciality diets are all likely packaging has an advantage here, as major brands such as Nestlé and Beyer to delivered to their home. to be fruitful niches going forward. it is already designed to be space-efficient make all forms of marketing, from brand to maximise logistical performance. Looking websites to social media, shoppable via Bridging the gap between home-cooked ahead, space-efficient packaging is expected partner online retailers. Consumers just click meals and takeout, while also minimising food to be a basic requirement by 2025, according an “Add to basket” button, select their waste (see page 24) and removing the barrier to our e-retailer survey. Convenience is also retailer of choice and choose the products of picking out produce, meal kit services are key in secondary packaging. “Frustration-free” they want, which are then added directly to already worth about $5 billion in the US alone, (easy-to-open) packaging is reported as key by their online basket for later purchase. This is according to Packaged Facts.1 Meal kit users e-retailers in our survey. part of the trend towards experimenting with are likely to be younger – adults between 25

Di Carlo Extra Virgin manufactured from FSC™- Olive Oil, Italy certified and controlled sources Convenience, paperboard, are also cited in its Hello Fresh is the world’s leading meal sustainability, quality marketing, along with the ability kit subscription service, operating in nine and innovation are all key selling of the multiple layers to protect countries, notably in Europe and the US, points for Di Carlo Extra Virgin the contents from oxygen and where it is the market #2 after . Olive Oil – Italy’s first ever extra light – the main causes of olive oil It delivers pre-measured “high-quality virgin olive oil to be packed in oxidation. A premium product ingredients sourced straight from the farm” ® Tetra Pak ® packages. Available made with 100% Italian, cold- – some of which are packed in Tetra Recart online via Amazon, ease of pressed olives, it was launched (pictured left) – complete with recipes in a delivery is key to the product in Tetra Prisma® Aseptic convenient box that fits “perfectly in the offering, hence the importance 100 Square packages with a fridge”. In 2017, HelloFresh delivered more of the logistical and distribution convenient, easy-to-open and than 137m meals (up 51% on 2016) to its efficiency of cartons over the reseal cap in January 2018. approximately 1.45m customers. alternatives – traditionally heavy, breakable in the of olive oil. The environmental benefits of the packages, trends_18

06. Voice recently launched its low-cost Tmall Genie, Moreover, 62% say they are likely to use it to 07. Takeout partnerships A lot has been written about the impact of reporting 1m sales of its X1 smart speakers buy something in the next month, while 44% According to NPD, 50% of dinners ordered voice. Some see a threat to the very concept in just the last four months of 2017, double say they order products such as groceries from restaurants in the US today are eaten of brand. They argue that consumers will analyst estimates. at least once a week – a potentially potent at home – and that figure is expected to ask voice apps to add products (milk, juice, combination. Many are open to welcoming grow. Meanwhile, digital ordering has posted washing powder) rather than brands to their Our consumer survey shows that attitudes to brands as part of the experience. They are rapid growth in the last five years, and now shopping list, trusting to the e-retailer’s AI to voice vary from market to market, and there are particularly open to receiving information represents 53% of all delivery orders, up choose for them, creating a key private label clear concerns, particularly about the potential that is helpful and relevant to their lifestyle, from 33% in 2013. To exploit this trend, opportunity – particularly for Amazon, which for mistakes in ordering. However, those that such as updates on deals and promotions, The Coca-Cola Company is piloting partnering is by far the early leader in voice technology have tried voice seem to like it a great deal, and personalised tips to make life easier. with restaurant delivery services such as with its Alexa voice service and Echo speakers. indicating its potential. According to Google, and DoorDash – and with meal-kit 72% of people who own a voice-activated delivery service Chef’d – to add beverages to Partnerships are already forming between speaker say their devices are often used as food orders. It estimates that as little as 10% of e-retailers and voice technology providers. part of their daily routine, while 41% say it all delivery service orders include its products, Ocado recently launched its own voice- feels like talking to a friend or another person.1 so the opportunity is “huge.”2 driven shopping app for Amazon’s Alexa, while Google has partnered with Walmart to offer voice-enabled shopping via its Google Assistant. Meanwhile in China, Alibaba

Interest in voice ordering is particularly strong in China

Not aware 30% 42% 23% 26% 41% Aware and not interested 31% 36% 26% 38% 24% Aware and would like to try it 24% 20% 41% 30% 29% Aware and already tried it 14% 2% 9% 6% 5%

Base: 437 Base: 504 Base: 502 Base: 507 Base: 425 TOLUNA

What voice users would like to receive from brands

Information about deals, sales and promotions 52% Personalised tips and information to make my life easier 48% Information about upcoming events or activities 42% Options to find business information (eg store location, hours) 39% Access to customer service or support 38% GOOGLE/PEERLESS INSIGHTS trends_19

“The key to success in e-commerce is winning Not surprisingly, automated pick rates in the Data carriers 02 in logistics and supply chain,” says Marc Lore, latest CFCs are many times higher than the Value chains are being transformed by a raft Technology & performance President and CEO of Walmart eCommerce.1 manual equivalent. CFCs also have much of technologies that interconnect via the Technology is transforming both supply Generally speaking, there have been two better demand management, lower waste, internet of things2 to allow consistent data to chains and the consumer’s relationship models to address this: physical retailers and better picking accuracy and consistency: be used throughout, boosting efficiency and with shopping and products alike. leverage their store network with products substitutions (a major issue in our consumer transparency, and ultimately allowing every picked, largely manually, at the store nearest survey) are also much lower, as the consumer product (and indeed their component parts) to the consumer and sent out for delivery can see what’s in stock almost in real time – if to be automatically tracked and interacted from there or set aside for collection; while it’s not available, it can’t be ordered. with from end to end. e-commerce pure players use high-tech, highly automated central warehouses, also known as However, Amazon’s $13.7 billion acquisition The #1 technology trend identified in our customer fulfilment centres (CFCs). of Whole Foods has added a new twist to the e-retailer survey is a key enabler of this logistics models, as has Alibaba’s New Retail transformational data chain: data carrier For example, at Ocado’s 18-acre CFC in drive in China. Such moves are not only about systems such as RFID (Radio Frequency Hampshire (one of three in the UK), hundreds moving into physical stores, they’re also about IDentification) and QR (Quick Response) of robots process and pick around 65,000 building a network of delivery nodes closer codes. As its name suggests, RFID uses radio customer orders per week, assisted by just two to consumers for rapid grocery delivery. This waves to automatically identify and track tags or three maintenance engineers on standby. suggests that the traditional store network attached to objects and has a huge array of Ocado not only uses its own infrastructure to (for example, 90% of Americans live within ten both upstream and downstream applications, offer fulfilment as a service to domestic rivals, miles of a Walmart) may be the best approach from inventory management to anti-counterfeit it’s also now turned solution provider, selling for e-commerce, not to mention omnichannel, measures to smart store enablement. its Ocado Smart Platform (from mobile app after all. But the challenge remains to make to automated warehouse technology to van the execution sufficiently efficient to remain routing software) to give retailers worldwide competitive and profitable, especially a “more cost efficient and lower-risk way as basket sizes fall and consumers prove of launching or improving online grocery stubbornly resistant to delivery charges. businesses with limited capital investment”. It has already signed a number of deals, notably with Kroger in the US.

RFID functionality Applications/benefits: supply chain management Applications/benefits: retail Applications/benefits: consumer • Automated identification • Increase inventory accuracy • Store management improvement • Augmented reality and product engagement • Medium-distance geo-tracking • Avoid out-of stocks • Anti-theft security • Internet of things devices in home, such as smart fridge • Real-time product tracking • Increase product availability • Data collection on sales • • Quality monitoring • Speed up receipt product process and warehousing performance • Retrieval/collection of product after online purchase • Readable information no matter • Reduce shrinkage (expiry, loss, theft) • Anti-counterfeit measures

the position of the package upstream • Enable automation for shipment, warehousing • Smart store enablement

and delivery downstream FROST & SULLIVAN trends_20

In our survey, individual e-retailers reported Robotics The whole process, from parcel sorting to that RFID implementation had: RFID at Tetra Pak Looking ahead, the increased use of robots loading on to trucks, is fully automated. The • reduced the risk of out-of-stocks by 20%; Tetra Pak is currently to pick and pack products for shipment first of its kind in the world, the centre has • reduced inventory costs by 10%; piloting using RFID to emerged as the #1 trend for 2025 in our a capacity of about 9000 parcels per hour – transfer packaging material • reduced labour costs by 10% to 20%; e-retailer survey. As already mentioned, robots around four times the volume of its old human- information between • increased sales by 20% by significantly its factories and filling are already widely used by Ocado, and also run centres. Its Delta robots can pick 2000 improving inventory. machines at customer sites, by Amazon, which has deployed more than to 3000 items per hour – 10 times more than which promises a number of 100,000 Kiva robots in 25 of its around 150 human workers, representing a $15,000 saving Looking ahead, as the shift towards benefits: CFCs worldwide, helping to cut the “click to in labour costs per day. Orders are packed omnichannel introduces further complexity, ship” cycle from roughly 60-75 minutes to 15 in the right-size box automatically, reducing RFID benefits will increase, while continued • Reduction of operator minutes.1 Amazon is now running competitions corrugated cost by 20%. dependence through falling costs of tags will allow them to be to encourage researchers and engineers to automatic reading of tags applied at an ever more granular level. • Mitigation of incident risk build a robot that can identify, sort, and pack Automation and robotics adds to e-retailers Currently the cost is still generally too high by automatically matching goods from items they see on warehouse frustration with secondary packaging on to place on individual items (unless they are packaging material and shelves, automating the majority of the work inbound goods from suppliers, which very high value); the usual application today filled product content required to fulfil an Amazon order. needs to be removed prior to repacking is and sometimes . QR codes • Increased traceability for dispatch to consumers – a significant are a more affordable solution for tagging • Optimised logistics and But the most advanced use of robotics and cost. As Sverker Lindbo, Head of Concept warehousing on an item level, also allowing for innovative • Waste reduction. automation today is arguably in China. In Development at Ocado, put it in last year’s interactions with consumers through smart August 2017, JD.com, China’s second-biggest Tetra Pak Index: “In time, all products supplied packaging (see page 22). e-commerce player after Alibaba, announced to us will need to be unpackable and pickable it had inaugurated its first unmanned sorting by robots (they hate !).” centre in Kunshan, near Shanghai, as a key part of its strategy to build an intelligent and Last mile highly efficient logistics system. Last-mile delivery – the shipment between the final storage hub and the customers’ home – is the most expensive and inefficient part of order fulfilment. Hence the appeal to traditional retailers of click and collect services, which are often now widely available 01. Ready meals the package during the fulfilment solve packing of ready meals in a Concepts both at stores (where collecting consumers Concept: Given the growing process, rather than in the home. nice-looking and efficient way,” Over the last year, Tetra Pak has been working can often be tempted to make additional on a research project with a design consultancy trend for prepared food, a logical said one. “Ready meals is the purchases) and other convenient sites. to explore new ways of creating and capturing next step is for pre-packed meals Feedback: E-retailers recognised disruptor of e-commerce,” said value in an increasingly omnichannel that are delivered from e-retailers that ready meals in various another. Younger consumers Alternatively, as mentioned, retailers can utilise hot and ready to eat, complete forms would be a key part of without families – a group that marketplace, and to identify potential areas delivery service partners such as Instacart. with drinks, disposal cutlery and their future business, and that already orders a lot of takeaways – for R&D. A number of concepts were serviettes. These could include appropriate packaging would particularly saw the benefits. developed and tested with both e-retailers long-life products that are be key. “One of our biggest and consumers. Here, and on the following designed to be heated through concerns for e-commerce is to pages, are four of them. trends_21

Automation is another way to lower costs: a smartphone to drive traffic Deutsche Bank has estimated that automation 02. Online grocery-ready 03. Repack for online grocery to a website, or create some through the use of drones and robots can package Concept: Certain types of other call to action or value- reduce the last-mile delivery cost by as Concept: Secondary packaging, packaging are clearly unsuited for added activity. much as 80%. To that end, JD.com and such as film wrap on product online grocery, due to their In December 2017, Tetra Pak partnered with Ads On Board Amazon have both set up special divisions to trays, adds considerable time weight, lack of robustness and/or and complexity for e-retailers – tendency to damage other items to promote the environmental investigate intelligent and unmanned logistics. some e-commerce pure players packed alongside them. Some benefits of carton packaging Both are experimenting with drones. report that removing such e-retailers won’t even stock cans as part of its Good Packaging packaging prior to repacking for or plastic cups for such reasons. For a Good Life campaign. It In February 2018, JD.com was awarded a fulfilment accounts for 10% of Carton packaging, however, is distributed 30,000 free flavoured trial licence to test unmanned drone delivery costs. This concept aims either one of the package formats water packages, printed with on a large scale in China.1 Depending on the to redesign secondary packaging preferred for this channel, being marketing messages and a to reduce such complexity, durable, stable, lightweight and Tetra Pak, Ads On Shazam code that triggered an success of this pilot, JD.com has said it aims or to reinforce primary packs to space efficient. So the thinking Board & Shazam, instant prize draw, via electric to make delivery drone operations standard remove the need for secondary behind this concept was simply France taxi and shared scooter services in two years. It has already partnered with US packaging entirely. to widen the category scope of Ads On Board is in Paris. The innovative prizes tech firm Nvidia to deploy a million drones in cartons, packing products that a French startup that allows included table football tables, China over the next five years. JD.com founder Feedback: Retailers saw that might otherwise be packed in less advertisers to reach consumers music amplifiers and bow ties, and CEO Richard Liu said in 2017 that using this would minimise waste and suitable formats. via messages on packaged/ all made out of FSC™-certified cartons or packaging material. drones in the delivery chain could reduce improve storage handling. “It bottled water distributed in turns the into a multipack,” Feedback: E-retailers saw taxis, on public transport, at The campaign reached 130,000 logistics costs by at least 70%. said one, while an e-commerce that this was good for their events and outlets and more. consumers, 25% of whom pure player summarised it as environmental image – It has partnered with Shazam, activated the Shazam code JD.com is also working with Nvidia on a “what comes in, goes out”. particularly important online, due which is famous for its music and spent 90 seconds interacting ground-based logistics robot called JDrover, There was no direct consumer to the younger demographic. recognition app but also offers with the prize draw, generating which is already being used for delivery on feedback as this concept is driven They particularly saw an image technology, allowing 32,000 leads for Tetra Pak – university campuses across China. Elsewhere, by e-retailer needs – although opportunity for private label, Ads On Board to print on-pack and very positive feedback pictures that can be scanned by on social media. the Co-op supermarket is trialling using six- consumers are clearly sensitive which both sells well online both to damaged packages and and offers greater scope for wheeled robots from Starship Technologies to wasteful over-packing. innovation. And they saw the to deliver chilled groceries in the UK. In a potential for improved package previous trial, the same robots were used performance, with less waste. to deliver hot takeaways.

Looking ahead, our e-retailer survey suggests Adopt A Cow, China name suggest, Adopt A Cow’s webcam, 24 hours a day, and even been extended to offline stores. that the use of technology in order fulfilment Premium ambient innovative approach is to allow pay a visit and stay at the farm The product’s price point is lower and the last mile could cut delivery times to white milk and consumers to “adopt” a cow for two nights a year. Seasonal than premium ambient white within 10 minutes of purchase by 2025. This yoghurt are for a year, so they know exactly and monthly schemes are also milk, since the company claims would significantly change consumer attitudes growing categories in China, a where their milk is coming from: available. The company was its marketing approach saves on to online grocery shopping, driving them to market where concerns about in return, they receive 60 cartons financed via Kickstarter and all advertising costs, allowing them buy in smaller amounts, more frequently, often food safety mean consumers of ambient white milk per year. subscriptions and purchases were to provide both value for money particularly appreciate products Adopters can scan a unique QR originally managed exclusively and high quality. for immediate consumption; to store less; and that are fully traceable. As its code to view “their” cow via online, but now distribution has to be much more conscious of food waste. trends_22

How a Tetra Pak end-to-end Puleva as an innovation leader – solution delivers complete an important consideration The smart package • With a supply chain that’s With Tetra Pak alone producing traceability and innovative for this brand. Packaging clearly has a key interlinked from end to end, some 190 billion packages per consumer engagement Consumers download the role to play in the optimised brands can make traceability year, the potential reach of Puleva Tido app, available via e-commerce supply chain. more transparent, sharing digital packages is substantially Google Play and Apple Store, Cartons have always been information with consumers greater than any social media and use it to scan the unique code particularly suited to the right down to the farm or platform. As we reported in the carried on the top of every Puleva channel due to their light grove that a particular product Tetra Pak Index last year, 65% Data management platform Tetra Brik® Aseptic Slim 200 weight and logistical and comes from. of the most influential online Single cloud-based platform package. They get a point for storage efficiency. Now smart consumers in both the US and stores and manages all data every scanned code, enabling packaging allows each carton • The package can be the UK would be very interested them to participate in draws for to be tracked, monitored and gateway to a customer in such package interactivity, a range of prizes, including trips interacted with throughout engagement programme: rising to 89% in China, to Disneyland Paris, BMX bikes the supply chain, creating new a lottery ticket, a unique where QR scanning is more 01 Upstream and hoverboards. There are opportunities for efficient stock identifier for an online commonplace and where such processing and filling also direct prizes for the management, distribution and competition, a loyalty token digital packages are already traceability 10,000 quickest users to scan automation. It creates new or a means of creating a one- proving successful. Product can be traced throughout six packages. Using the app is opportunities for consumer to-one channel with individual production, right back easy and fun, and any questions interaction too. The key to the consumers. Tetra Pak has developed a to the source are answered in real time by the technology is digital , consumer engagement solution app’s support team. which makes it possible to • The information flow can be based on this technology, 02 Digital printing Unique code for every The campaign is promoted print a unique digital code two-way, allowing producers which integrates with its wider smart package digitally on the pack itself, on multipack on each and every package. to capture specific, valuable digitalisation offering (see Puleva, Spain printed at Tetra Pak secondary packaging, at point This can be scanned by both information about their diagram and case study, right). converting factory Tetra Pak first of sale in 250 hypermarkets specialist devices and ordinary consumers as part of the piloted its unique 03 Downstream nationwide, on the brand smartphones alike, allowing all digital code interaction. code-based package traceability website and through Facebook, kinds of innovative possibilities: customer engagement solution After filling, the smart Instagram, Twitter and YouTube. package can be with Binzagr CoRo’s SunTop The campaign is still ongoing, tracked right the way orange juice in Saudi Arabia but early feedback has been to the consumer in January 2017. Following the highly positive. pilot’s success, the solution 04 Consumer “This technology gives our engagement is now being used by Puleva, customers the opportunity to Consumer can a Lactalis subsidiary in Spain, completely rethink the way 04. Localised production and packaging unit that keeps also saw the potential, but as scan package with for a promotion for its market- smartphone to get they engage with consumers Concept: E-commerce is a great production local and investment much for physical as virtual stores. leading flavoured milk drinks. product information and their approach to business channel for small brands: they low, while also being able to fill For consumers, the concept met or participate Launched in March 2018 and promotion,” says Elena Moruzzi, don’t need to fight for shelf space small runs to test new products a strong desire for items to be in engagement running until June, its objectives Director Project & Portfolio and can be more visible online in a targeted way. It minimises fresher and for the supply chain programme are to increase both household Management at Tetra Pak. “It’s than in physical stores. However, the need to transport the fresh to their doorstep to be reduced. penetration and average 05 Customer portal really opening up a one-to-one such smaller producers often product; it travels once ambient Supporting local also has a big Brand owner can purchase. On a wider level, by communication channel between don’t have access to their own packed instead. consumer appeal and is already access and analyse being the first in Europe to use our customers and the end processing and filling machines a strong trend. personal and sales this kind of technology, the data captured consumer in a way that hasn’t and so have to use co-packers, Feedback: Small brands, and promotion also helps to position by consumer been possible before.” sometimes very distant. This startups in particular, saw this as engagement solution concept is for a mobile processing “a dream come true”. Retailers trends_23

Packaging is particularly important for Secondary packaging Pressure on plastic 03 e-commerce customers, due to the need for Online grocery shoppers are highly critical Plastic packaging is under pressure, with Sustainability safe delivery. Not surprisingly, perhaps, our of secondary packaging, which they often high profile initiatives under way to reduce As sustainability becomes increasingly survey shows that consumers everywhere consider to be both unnecessary and its impact on the environment, especially important for consumers, companies consider products being delivered intact environmentally unfriendly, not least because the oceans. This is particularly apparent in and governments alike, it is becoming and undamaged as overwhelmingly the most secondary pack bags are often made of plastic. Europe. In January 2018, the EU adopted the a hot topic in many geographies and its important criterion for a delivery service1 – but According to our survey, 80% of consumers first-ever European Strategy for Plastics in a impact can be felt in numerous ways. environmental concerns are growing. in South Korea – the most developed country Circular Economy, which aims to transform for e-commerce – and 74% in the US say they the way plastic products are designed, As the move to e-commerce and omnichannel would avoid goods that come in several layers used, produced and recycled.4 A number of makes supply chains more complex, this can for environmental reasons. companies quickly pledged to support the have a negative impact not only on cost, but strategy, including Tetra Pak.5 also on emissions, as deliveries become more Generally, consumers prefer companies frequent and fragmented – hence both brands to invest in only one pack, as long as it can The UK is a good example of activity in and e-retailers need to be ever more focused properly protect the product, according to this area, largely thanks to a wave of public on reducing carbon footprint. our consumer research. And according to our concern after the issue was highlighted in interviews with e-retailers, most large players a popular TV programme, Blue Planet – Packaging can be a key lever in achieving prefer to ship with only one pack for efficiency demonstrating just how quickly consumer this. For example, a life cycle assessment2 of reasons; hence the durability of primary opinion can change. In January, UK Tetra Recart® found that it accounted for five packaging is a major basic requirement. That supermarket Iceland committed to become

times less CO2 emissions compared with cans said, some smaller e-retailers say they still the first major retailer globally to eliminate and glass .3 Amazon uses Tetra Recart® for use secondary packaging as they see it as a plastic packaging from all of its own-brand its Wickedly Prime soup range, marketed with marketing opportunity. products by the end of 2023, and most others the slogan “time to kick the can”. have made their own pledges in this area. Our research suggests that flexible packaging products, bubble packaging, air pillows, fill products and the like are expected to Our research shows that recyclability continue their dominance for the time being is increasingly important for e-retailers Plastic spotlight packaging solutions at will increasingly shift to due to cost efficiency. Looking ahead, usage everywhere and that recyclability/easy A recent report by Mintel7 the point of purchase. the circular economy, of moulded pulp and paperboard protectors to fit to local waste management system made these predictions • In the short term, with the aim of increasing is expected to grow dramatically in rigid is a performance factor in North America about plastic packaging: solutions that currently recycling rates to remove packaging, due to its sustainable nature, and will be a basic factor by 2025 – as it is • Increased consumer appear niche, such as from as well as consistent pricing. already in Europe. awareness of, and sourcing ocean plastic landfill and potentially concern over, plastic in as a material source, will from the sea. Brands will the sea will drive changes become mainstream be expected to drive this “Focusing on innovation, better packaging in consumer perceptions and drive consumer change by committing design and end-of-use systems will of packaging and result expectation for novel to using a (significantly) not only generate long-term benefits in greater importance brand-led solutions. increased proportion of for the environment, but is also a huge • In the longer term, focus recycled content. being placed on “green” economic opportunity.” Ellen MacArthur, Ellen MacArthur Foundation6 trends_24

Looking ahead, as awareness of the circular tonnes of fresh and ambient food it distributed has a valuable role to play here, reducing economy increases, we expect awareness to in 2017, which it says is thanks to its short waste thanks to its long without expand from end-of-life to sustainable and supply chain and other efficiencies.2 the need for an energy-intensive . renewable sourcing. Carton packaging Complemented by resealable closures, these already has a strong story to tell here. Packaging can play a key role here. For packages can help extend the life of products Tetra Pak ® packages are largely composed example, 50% of US food shoppers believe that and reduce waste in the home, which is where of paperboard, manufactured from the right packaging can help to reduce food most food waste occurs. Buzzbox, USA FSC™-certified and controlled sources, while waste.3 Again, there is a wider environmental Available direct from the brand website the polymers for the and caps are connection: eco-friendly packaging materials E-retailers may increasingly factor this into and through retail locations, Buzzbox increasingly made from renewable sugarcane. are the focus of the majority of new food and their marketing, targeting younger consumers positions itself as “the world’s first drink products released in North and Latin who tend to be more sensitive to sustainability and finest eco-friendly cocktail” and leverages While sustainability generally is a less America that mention “waste”, for example.4 issues – and indeed the social media influencers strongly on the positive image of its “recyclable, prominent issue in China today, growing who are likely to play a key role in changing eco-friendly and energy-efficient” carton environmental concerns and waste Looking ahead, as with public concern on attitudes to sustainability going forward. packaging. It’s the first spirit player in the US to use Tetra Pak ® packages, which it claims require 40% to management improvement is expected to plastic waste and other sustainability issues, 50% fewer trucks, 54% less energy and produce make and recyclability we expect awareness of personal food waste 60% less solid waste compared with cans. Billed as an important value-added factor by 2025, to continue to grow. Aseptic carton packaging “handcrafted premium drinks, made with only according to our e-retailer survey. natural ingredients” and no preservatives or artificial flavours, Buzzbox’s eight premium Food waste cocktails were launched in the summer of As awareness of food waste becomes more 2016. “Buzzbox is committed to making great cocktails available in a sustainable way,” says acute, brands and retailers alike need to Rod Vandenbos, Buzzbox founder and CEO. “We demonstrate their efforts to reduce and chose Tetra Pak because their commitment to a even eradicate it. Almost 1 billion people green lifestyle reflects our own convictions. We all today suffer food insecurity, while one third of need to do our part to safeguard our environment.” food produced is wasted – about 1.3 billion tonnes each year. This goes hand in hand with Koita Happy Milk, techniques to research the free of artificial hormones and accounting for 10% of total wider environmental concerns: if food waste UAE Consumers attitudes of parents around antibiotics, co-packed in Italy. sales and growing. It also sells was a country, it would be the third biggest in UAE – a growth the Middle East to a “clean All that is added are vitamins A through traditional premium emitter of greenhouse gases globally after market for – milk” solution. Key demands and D3, which are welcomed in outlets in the UAE, with 22% China and the US.1 have a strong appreciation of included: no toxic pesticides/ the local market. The range also weighted distribution in A class milk’s health benefits. Koita, hormones/antibiotics; healthy includes lactose-free milk and retail and hypermarkets. Dubai Food waste is an area where e-retailers can a relative newcomer, has yet long-lasting, to prevent non-dairy varieties, including is its main market, where it has demonstrate a competitive advantage over introduced a local ambient milk spoilage in hot environments; non-GMO soya milk. 40% distribution. It recently brand that focuses heavily on rigid certification/production Koita is now the #1 player in started to export to the Gulf traditional bricks-and-mortar stores. In March the particular health benefits regulations with fair treatment the UAE in sales. Cooperation Council markets, 2018, Ocado published food waste statistics of organic, environmentally of cows; and eco-friendly It recently introduced a regular where volumes are picking up, for the first time, showing a total figure of friendly milk. Founded in 2013, packaging. system for its and it now has a presence in the 0.02% – just 1 in 6000 items among the 2200 Koita spent more than two The result is Happy Milk: customers, who can subscribe Levant region too. years using online social media organic milk sourced from online, and it also sells through and other innovative polling Italian grass-fed cows certified standard e-commerce channels, trends_25

Online-only products are used by e-retailers as Zero moment of truth: Research/buy Personalised digital marketing is also 04 a major driver for attracting shoppers online E-retailers are using consumer data to make now happening in-store. The Coca-Cola Personal & unique as consumers are increasingly interested in the shopping experience ever more personal. Company has launched point-of-sale display E-retailers are using online-only niche products (particularly relating to health “Personalisation is the buzzword for good systems that show personalised messages to items and personalised products and and wellness) that can be hard to find in reason,” says Clodagh Moriarty, Director of approaching shoppers: proximity technology experiences to attract shoppers online mainstream stores. For example, Ocado aims Online at Sainsbury’s in the UK.1 “Consumers leverages built-in smartphone features and build loyal relationships. to have two products in every shopper’s basket respond well to us knowing their context.” and Google’s Eddystone wireless beacon that are unavailable elsewhere, while Amazon Knowing current and previous baskets technology, allowing a store to receive and is leveraging its “infinite shelf space”, adding enables prompts to purchase before and while interpret their preferences and habits to greater variety from iconic local shops to its shopping, and after the basket is complete, deliver contextually relevant content in real grocery service, bringing a offering reminders if favourites have been time. Powered by Google Cloud, the system level of specialisation that traditional retailers forgotten, plus other helpful, timely prompts: can offer custom branded video, e-coupons can’t match, especially when discounters are 20% of customers add an average of two extra and other promotional content. A 250-store squeezing product choice. items, says Moriarty. pilot with the Albertsons grocery chain delivered a one-month return on investment.2 Private label is also healthier than ever, with e-retailers offering shoppers unique, high- quality, high-value goods to lock them in. E-retailers are able to leverage their rich customer data to identify the most desirable, and profitable, products for their private label – a threat to bricks and mortar supermarkets that have long relied on such products to offset loss leaders and remain profitable.

Looking ahead, e-retailers and brands are expected to appeal to consumers on an ever more personal level: customisation of products and personalisation in consumer 5 ways to drive sales online 3 journey and delivery are expected to be Clodagh Moriarty, Director of Online, Sainsbury’s key differentiators going forward. This was • Know the customer who is shopping and understand their basket identified as one of the main trends looking • Facilitate their ease of shop above all else • Keep any messaging simple ahead to 2025, according to our e-retailer • Be aware of the ecosystem in which the customer is shopping research. Indeed, the opportunities for • Get involved in A/B testing4 personalisation are already apparent at every stage of the consumer journey: trends_26

First moment of truth: unboxing experience Second moment of truth: experience Third moment of truth: share Our consumer research shows that unboxing Brands are using consumer data to create As mentioned earlier, posting images and impacts on the consumer product experience, custom products in ever smaller batches to comments of products is increasingly common, and our e-retailer interviews confirm that it’s meet more specialist niche needs. “We have particularly in China. The idea behind such perceived today as a value-added service. 20m consumers who are actively talking to posts is sharing: an experience, something However, many e-retailers have been slow to us in our data bank monthly,” says Jeffrey, interesting or new or, especially in China, to explore the opportunity. An annual unboxing Minfang Lu, CEO & Executive Director, China comment on/review a product. These posts survey1 in the UK found that while e-retailers Mengniu Dairy.2 “We know exactly who they provide brands with a golden opportunity to have made “significant improvements” in An annual unboxing survey in are, how they behave and how they interact make a personal connection, which is often their use of packaging to protect products, the UK found that there was with us, and we use this to adjust our products welcomed – and sometimes even expected. there is “considerable scope” to enhance the considerable scope to enhance and formulation in order to meet their needs. consumer experience by improving the way the consumer experience As we reported in last year’s Tetra Pak the secondary package looks and performs. by improving the way the “We need to see how we can… actively Index, the most active and influential online secondary package looks and engage with our consumers, to provide consumers who write reviews/comments tag This is a key area that can be addressed by performs. It found that 38% personalised, individualised products for the the relevant brands at least some of the time, brands embracing the direct-to-consumer had no brand on the box, inside young and old, because they all have different and just over a third always do. Some 78% say model. Purina is a good example. For its or outside, and 30% did not needs. For example, we are working on how that they expect the brand to reply, rising to reflect the values of the brand. premium, all-natural Beyond range, it created to get our products to be more interesting and 93% in China. Moreover, 90% say that a reply a packaging design free from the traditional to have a different taste profile that appeals improves their brand perception, underscoring messaging needed on the shelf, plus a specially to a younger audience. How can we give the importance of engaging online. Globally, designed and branded shipper box and insert, consumers much more than nutrition? We almost half of this group have daily interactions resulting in a unique unboxing experience. need to give them enjoyment. We need to with brands on social media. give them excitement.” Looking ahead, the next step is personalised packaging: it’s already seen as a growth area by e-retailers, particularly in North America, where it’s expected to be a performance factor and a JustFoodForDogs, USA decision criterion by 2025. JustFoodForDogs describes itself as the world’s first “dog kitchen”. They use USDA-certified ingredients intended for human consumption (from high quality restaurant supply companies) to create healthy, nutritionally balanced recipes for dogs. Their food is prepared fresh in kitchens open to the public and sold fresh or frozen in retail and online, without the use of any preservatives. Products are now available in Tetra Recart® 390 Unboxing is a fun Midi with full-top perforation for easy serving. time for me and the ® 52% 28% 57% 65% 76% With the launch in Tetra Recart , JustFoodForDogs aesthetics of the cardboard meets a desire for freshness and quality in a box are part of it shelf-stable format that complements the brand’s Base: 437 Base: 504 Base: 502 Base: 507 Base: 425 TOLUNA existing refrigerated and frozen offerings. summary_27

Summary

Fast-growing online grocery For insights into the future of Some brands are reacting Lightweight, logistically 01is not only a key channel in 04omnichannel grocery, look to 07by embracing a direct-to- 10efficient carton packaging its own right, it’s a major disruptor of China, which is leading the world in consumer model, and as many as 80% has a valuable role to play, both other channels too. Offline and online disruptive innovation in the grocery of CPGs are predicted to try this route in reducing cost and carbon are merging to “create both a better space. “China is moving much faster by 2025. Personalisation of products footprint, and this is being used as customer experience and better than the West because the Western and packaging are expected to be key a differentiator by some brands and efficiency for the entire supply chain.” model is built on legacy systems. differentiators going forward. e-retailers. E-retailers report that China’s model is disruptive. China space-efficient packaging can reduce Convenience is the main does not have the legacy of malls and As products become more transport volume by 30% to 50%. It 02 driver as consumers expect an big-box stores. It has no traditional 08personal and niche, brands also appeals to urban consumers in “omnichannel” experience that’s fast, retail model to defend.” will need to become more nimble, small homes with limited storage. easy and seamless. “Brands that win formulating and producing in will provide assistance in the moments Online grocery shopping smaller batches to meet consumers’ Supply chains are being that matter: during inspiration and 05today is still largely for changing needs. 11transformed by a raft of discovery, planning and shopping. stocking up. Expect that to change as technologies including data carriers Assistance is the new battleground delivery becomes faster, prompting Packaging is key to such as RFID and QR codes, for growth.” the shift to convenience shopping – 09e-commerce, with an Blockchain and robotics, boosting little and often – that is such a major overwhelming majority of consumers efficiency and transparency. Mobile is the omnichannel part of physical retail. As basket sizes saying it can have a positive impact – Traditional retailers need to invest to 03device of choice, and reduce, pressure on margins will or ruin an otherwise positive purchase stay competitive. “The key to success e-retailers and brands alike need to increase for all players. experience. Its main use is seen to in e-commerce is winning in logistics ensure it’s central to their consumer be preservation and protection, but and supply chain.” offering. “If it’s too complex for Personalisation is key environmental concerns are growing. mobile, it’s too complex.” As online, 06both to communicating Use of secondary packaging Smart packaging has a key mobile will become increasingly with consumers and customising and plastics are already issues, 12 role to play, both in the digital key to in-store retail, providing the shopping experience. This is and recyclability is increasingly supply chain and also the consumer extra information, personal contributing to an ongoing shift in important for consumers and experience, creating an interactive recommendations and offers, and the balance of power from brands e-retailers alike everywhere. one-to-one channel with individual automated cashless checkout. to e-retailers, who possess the consumers, providing opportunities biggest store of personal data and for communication, marketing and can therefore “own” the consumer data capture alike. relationship – while developing their own private label offering. research & references_28

Research & references

Research methodology Report references & footnotes 14-3 Waitrose Food & Drink Report, 2017 plastic_waste.htm The research for this Index includes three reports 05-1 Kantar Worldpanel, 52 weeks to March 2017 14-4 China’s e-commerce giant JD.com to take on 23-5 Tetra Pak was among the first companies to specially commissioned by Tetra Pak: 05-2 The Future of E-commerce in FMCG, Issue 4, Amazon in Europe, FT.com, 4 February, 2018 pledge to support the strategy, promising to: work with 1. A report by Euromonitor International that created November 2017, Kantar Worldpanel https://www.ft.com/content/c04ee23a-07b5-11e8- industry partners to ensure that by 2030, recycling a market development index driven by channel 05-3 Walmart 2017 annual report 9650-9c0ad2d7c5b5 solutions are in place for all components of beverage segmentation, retailer and brand presence. These 05-4 See 05-2 14-5 Kantar Worldpanel, 52 weeks ending March 2017 cartons so they can be fully recycled across Europe; three factors are presented both at a country and a 05-5 From route to market to route to me: 6 ways 14-6 Kantar Homepanel, 52 weeks ending June 2017 substantially increase the use of plastics made from megacity level, in order to understand areas of growth Coca-Cola is embracing the e-commerce revolution, 16-1 See 06-2 renewable feedstock; and use recycled plastics once over the next 10 to 15 years. 20 February, 2018 https://www.coca-colacompany. 17-1 https://www.packagedfacts.com/Meal-Kits- they are validated as safe and are legally acceptable for 2. A consumer behaviour research project by Toluna com/stories/from-route-to-market-to-route-to-me-6- Delivery-Services-Edition-10975993/ use as a food contact material. that investigated the path to purchase in several ways-coca-cola-is-embracing-the-ecommerce- 18-1 5 ways voice assistance is shaping consumer 23-6 www.ellenmacarthurfoundation.org categories for online grocery shopping. It consisted revolution behavior https://www.thinkwithgoogle.com/ 23-7 2018 Global Packaging Trends, Mintel of a qualitative community for US and UK and a 06-1 Euromonitor Lifestyle Trends 2016 consumer-insights/voice-assistance-consumer- 24-1 https://www.unilever.com/sustainable-living/ quantitative survey to understand the reasons behind 06-2 The Grocer Conference 2018: How to Win experience/ reducing-environmental-impact/waste-and- purchases online in US, UK, China, Korea and Kingdom in Online Grocery 18-2 See 05-5 packaging/reducing-food-waste/#244-420995 of Saudi Arabia. 06-3 Google Data, US, January to June 2015 versus 19-1 See 05-3 24-2 Ocado has three high-tech customer fulfilment 3. Voice of E-retailers report by Frost & Sullivan, January to June 2017 19-2 The network of physical devices, vehicles, home centres (CFCs) to redistribute all its products in the UK. compiled from qualitative interviews with 11 e-retailers 06-4 See 06-2 appliances and other items embedded with It cites a number of benefits as a result. Products come based in North America, Europe and China. 07-1 See 05-5 electronics, software, sensors, actuators and straight from the supplier and are sent out for delivery 07-2 Trends in E-commerce Packaging: A Survey for connectivity which enables these objects to connect the same day. Forecasting comes with much less risk of Packaging Stakeholders, Dimensional Research for and exchange data. food waste than with bricks and mortar stores. A section Jabil, May 2017 20-1 According to a Deutsche Bank note published in of each CFC is refrigerated, and vans are chilled too, 07-3 See 07-2 June 2016, based on Amazon’s metrics. helping to extend product life and thereby reduce food 08-1 The future of retail is happening right now in 21-1 JD Logistics unveils world’s first unmanned waste in the home, which is where most occurs. Ocado China, 25 May, 2018 http://www.alizila.com/future-of- intelligent distribution station in Xi’an, Pandaily, also works with suppliers to ensure products arrive in retail-happening-in-china/ 25 February 2018 https://pandaily.com/jd-logistics- packaging suitable for automated processes, while 09-1 Amazon, take note: how China’s e-commerce unveils-worlds-first-unmanned-intelligent-distribution- bespoke software calculates how best to pack items – kings will create totally new ways to shop, Forbes.com, station-xian/ all of which reduces damage and waste still further. 12 October, 2017 https://www.forbes.com/sites/ 23-1 In our survey, the possibility of products getting 24-3 http://www.mintel.com/blog/food-market-news/ ywang/2017/10/12/amazon-take-note-how-chinas-e- damaged in transit is a significant barrier to online thought-bubble-food-waste-in-the-americas commerce-kings-will-create-totally-new-ways-to- grocery shopping, particularly in South Korea where 24-4 Mintel Global New Products Database, July 2016 shop/#64a47f755d3d almost a third (31%) of customers cite it as a concern. to July 2017 12-1 Basic factors: Default expectations of consumers. It’s also a barrier for 21% of Americans, who particularly 25-1 See 06-2 When done well, consumers remain neutral; when appreciate Amazon for its highly protected and secure 25-2 Coca-Cola bringing Google-powered digital done badly (or not at all), consumers are very dissatisfied. parcels, citing that damaged/dented products signage system to retail, restaurants, cinemas and 12-2 Value-added factors: Factors that surprise and delivered by them are rare. more, The Coca-Cola Company, 12 April, 2017 delight consumers, but don’t cause dissatisfaction when 23-2 Life cycle analysis (LCA) is a standardised method https://www.coca-colacompany.com/stories/ absent because they are not expected to be present. to evaluate the global environmental impacts of a coca-cola-bringing-google-powered-digital-signage- 12-3 Performance factors: The better these are product throughout its life cycle (from material system-to-reta performed, the more satisfaction they bring; the worse production through transport to recycling/disposal). 25-3 See 06-2 they are performed, the more dissatisfaction they bring. 23-3 This comparative LCA study was performed by 25-4 In web analytics, A/B testing is a controlled 13-1 19.7%, 52 weeks ending March 2017, Kantar Ifeu, Germany, according to ISO 14040/44. Peer experiment with two variants, A and B Worldpanel reviewed by a third-party panel. Results represent 26-1 Macfarlane Packaging’s Unboxing Survey 2017 14-1 Kantar Worldpanel European average situation (EU+28), 2017. Category 26-2 Digitizing dairy in China, McKinsey Quarterly, 14-2 UK FMCG Deep Dive: Taking Stock of the Future Canned Tomatoes. Study commissioned by Tetra Pak. March 2018 https://www.mckinsey.com/global- of Grocery, Criteo, May 2017 23-4 http://ec.europa.eu/environment/waste/ themes/china/digitizing-dairy-in-china “The rise of online grocery should be seen as an opportunity for food and beverage brands, and packaging can play a key role in realising this. In particular, smart packaging helps drive greater transparency and efficiency in the supply chain, up and down stream, while also enabling a direct, interactive relationship with the consumer via the product itself. We believe this now tried and tested technology can help our customers explore new avenues, driving growth in the years ahead.” Alexandre Carvalho, Global Marketing Services Director, Tetra Pak

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