Structural Packaging Summit: Using Consumer Insights to Satisfy the Customer

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Most of us are experts in our respective industries, but how do you become an expert in what the consumer wants? Jack Sanders, president and CEO-elect of Sonoco, will discuss Sonoco’s work to satisfy its customers using consumer insight research, and how this was successful in a recent collaboration with Pepperidge Farm on the brand’s popular Baked Naturals® Cracker Chip snack.

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Structural Packaging Summit: Using Consumer Insights to Satisfy the Customer

  1. 1. Structural Packaging SummitJack Sanders, our CourseCharting President and COOSonocoJack Sanders, President and COOFebruary 27, 2013
  2. 2. Sonoco Overview SALES BY OPERATING SEGMENT SALES BY GEOGRAPHY (Millions of Dollars) (Percent) 2
  3. 3. Consumer Trends Living with less Price, Value and Innovation are the top criteria 68% are brand switchers/only 5% are loyal to one brand 73% shop in five or more channels 74% are not loyal to a retailer Have more choice and access than ever 4
  4. 4. What is Our Economy Telling Us? 4
  5. 5. Mega Trends Impacting Growth 1 The Next Billion Consumers 2 Old Infrastructure New Investments 3 Militarization Following Industrialization 4 Growing Output of Primary Input Intensifying competition for finite Growing demand for commodities increase Rising wealth of emerging economies Global supply chain risk resources volatility. Price inflation intensifies GDP Contribution: $10 Trillion GDP Contribution: $1 Trillion GDP Contribution: $1 Trillion GDP Contribution: $3 Trillion 5 Developing Human Capital 6 Keeping the Wealthy Healthy 7 Everything the Same but Nicer 8 Preparing the Next Best Thing Massive shift from farm to factory Developed economies drive innovation Affluent consumers drive premium Technology advances generate step- requires investment and reform in healthcare products and services change efficiency gains (3D printing) GDP Contribution: $2 Trillion GDP Contribution: $4 Trillion GDP Contribution: $5 Trillion GDP Contribution: $1 TrillionSource: Bain Macro Trends Group Analysis, 2011 5
  6. 6. Mega Trends Impacting Growth 1 The Next Billion Consumers 2 Old Infrastructure New Investments 3 Militarization Following Industrialization 4 Growing Output of Primary Input Intensifying competition for finite Growing demand for commodities increase Rising wealth of emerging economies Global supply chain risk resources volatility. Price inflation intensifies GDP Contribution: $10 Trillion GDP Contribution: $1 Trillion GDP Contribution: $1 Trillion GDP Contribution: $3 Trillion 5 Developing Human Capital 6 Keeping the Wealthy Healthy 7 Everything the Same but Nicer 8 Preparing the Next Best Thing Massive shift from farm to factory Developed economies drive innovation Affluent consumers drive premium Technology advances generate step- requires investment and reform in healthcare products and services change efficiency gains (3D printing) GDP Contribution: $2 Trillion GDP Contribution: $4 Trillion GDP Contribution: $5 Trillion GDP Contribution: $1 TrillionSource: Bain Macro Trends Group Analysis, 2011 6
  7. 7. Transforming Economy Requires a Different Approach Global economy in midst of four-phase transformation from a supply-based economy to a demand-based economy Market Demand Demand-driven Oversupply Equilibrium Contraction 1991-2007 2010-2025 1947-1990 2008-2009 Supply-driven Economy Demand-driven Economy  Oversupply worsens as supply chains grow in efficiency  Demand return spotty and uneven, slower growing and more volatile  Entering hyper-competition: Flat demand and significant increase in lower-cost supply  Organic growth will be much more difficult  Productivity, pricing, profit pressures Companies that will win have a competitively advantaged, granular If you have to ask your customer what they understanding of profitable demand… want, it is already too late…They are telling …and proactively develop solutions and targeted innovations that your competitors as well. anticipate customer need. Source: AC Neilsen global economic research study across all industries; SandP 500, completed 2011 7
  8. 8. Transforming Packaging RealityGlobal Packaging Market 2010 Total: $670 Billion 2014 Projected: $760 Billion Other Other Glass 5.1% Glass 4.4% 6.7% 6.6% Paper Paper 31.4% Metal 30.9% Metal 15.1% 15.9% CAGR 3.3% Flexible Flexible Rigid Rigid 19.3% 19.5% Plastics Plastics 21.6% 23.6% Change Platform 2010 2014 CAGR 10-14 Flexible $129 $148 $19 3.5% Rigid Plastics $144 $179 $35 5.6% 58% ($54 billion) of Paper $210 $235 $25 2.8% global expansion is Metal $106 $114 $8 1.9% plastics and flexibles Glass $45 $50 $5 2.6% Other $34 $33 $(1) -0.4% Total $668 $760 $92 3.3% 8
  9. 9. Growth in Packaging Driven by Emerging MarketsPackaging consumption and growth rates by end use and region 2010 - 2016E1 Developed Markets Emerging Markets South/ North Western EasternRegion Australasia Japan Other Asia Central Africa Middle East World America Europe Europe AmericaShare of 22% 24% 2% 11% 24% 6% 6% 3% 3% 100%consumptionBy end-usecategoryFood $206,377 54,077 58,144 4,605 23,774 33,808 11,491 8,718 5,964 5,796 206,377Beverage $73,518 19,458 21,094 1,900 7,088 11,252 5,051 3,199 2,392 2,084 73,518Healthcare $25,997 8,479 6,252 597 3,463 4,075 1,112 749 697 573 25,997Cosmetics $18,557 4,282 5,081 341 2,230 2,771 1,092 2,092 241 427 18,557Other consumer2 $79,907 22,763 21,973 1,418 9,438 13,836 4,213 2,914 1,837 1,515 79,907 3Other $264,475 54,879 67,438 3,101 25,259 62,978 17,625 16,730 6,912 9,553 264,475Total market size 163,938 179,982 11,962 71,252 128,720 40,584 34,402 18,043 19,948 668,831 CAGR 2011 - 2016E < 2% 2 - 5% > 5% 1 At cons ta nt 2010 pri ces , 2010 da ta for Gl oba l Ma rkets 2 Hous ehol d chemi ca l s , toba cco, el ectroni cs , DIY, toys 3 Indus tri a l , bul k, tra ns port 9
  10. 10. A new middle class growing in emergingmarkets…contributing $10 trillion growthby 2020 10
  11. 11. They live in a dozen emerging countries,not only fast-growing BRIC nations 11
  12. 12. Western multinationals expect to find 70 percentof their future growth in emerging economies 12
  13. 13. Changing our Marketing FocusSonoco’s Insights Capabilities Lead/Expert Consult  Primary Packaging  In-store Promotion  Other Promotion  Design  Displays  Direct mail  Engineering  Merchandising mix  Sampling  Messaging/Claims  Cross merchandising  Demos  Special packs  In-store POS  In-store media  At-shelf presentation  In/On pack coupons  Out-of-store media  Partnerships  Properties  Events Informed by Insights Proprietary Consumer Research Suite Customizable qualitative and quantitative methods Rapid consumer feedback/insights to accelerate innovation Ethnography Insight Groups Social Media Digital Surveys Eye-Tracking Various Data CLT and One-on-One Analysis and Communities (Syndicated/Transactional) • IRI • A.C. Nielsen LifeBytesTM • Euromonitor Search • Dunnhumby Technology 13
  14. 14. Pepperidge Farm Case Study 14
  15. 15. In the beginning… 15
  16. 16. Consumers want Reclose 16
  17. 17. Consumers want Reclose 17
  18. 18. Consumers want Reclose 18
  19. 19. Consumers want Reclose 19
  20. 20. CPG’s want to maintain their brand in front ofthe Consumer 20
  21. 21. ®Sealtab Reclose 21
  22. 22. ®Sealtab is a Win/Win Solution Meets consumer needs  Reclose (freshness perception, product containment)  Portability  On-the-go convenience  Easy to understand/easy to use Meets CPG requirements  Runs on existing assets  No capital required  No negative impact to production efficiencies  Keeps brand in front of consumer – no need to repackage  Integrates seamlessly into graphics  Innovative packaging - differentiation from others on the aisle 22
  23. 23. Lego Solution 23
  24. 24. Satisfy the Customer Mission: Become the acknowledged leader in high quality, innovative, value-creating packaging solutions that “Satisfy the Customer.” 24

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