2019 – Progress in a demanding market

In the context of a challenging macroeconomic environment – with delays in equipment investments and pricing pressures – Sidel made progress in a number of ways in 2019. Sales developed particularly well within our aseptic PET business, non-alcoholic lines and services. Our new organisational set-up has paid off by strengthening the autonomy of our regional branches and further improving customer proximity. At the same time, there are several areas of our business with the potential for significant improvements. In summary, I would like to thank our employees for all their hard work that has contributed to our achievements during the year.

Sales amounted to €1.4 billion in 2019, which was similar to 2018. Our PET equipment order intake was quite strong, mainly driven by investments in non-alcoholic beverage lines in Asia, Oceania & Africa. On a global scale, it is worth mentioning the leading position we continue to enjoy in aseptic applications and the positive performance recorded in Carbonated Soft Drinks (CSD). Despite severe competition and low investments from major key accounts, we managed to grow in the alcoholic beverages market – traditionally featuring can and glass as the preferred packaging materials.

Customers are continually demanding greater flexibility and more affordable products. We are relentlessly working on the competitiveness, flexibility and sustainability of the solutions we develop, which are all key focus areas for improvement. In addition, we are increasingly looking at the full value chain when addressing new business developments.

The performance of Services surpassed what was achieved in 2018, particularly fuelled by sales of spare parts and maintenance solutions. However, our moulds and line conversions businesses have been impacted by a conservative approach by liquid food players based in Europe, that are waiting to see how the Single Use Plastics (SUP) directive will translate into local regulations. Here, it is important to stress that PET represents 5 per cent of the global plastic production.

“Our entire industry stands at a crossroads right now. It is clear that everyone in the packaging business – including Sidel – needs to evolve, not only in terms of its approach to sustainability, but also in terms of flexibility and digital competences to better serve our customers’ production lines.”

Challenges for the industry and Sidel

I joined the Sidel Group as its new CEO and President on 1 July 2019. There were many things that attracted me to the position, not only the fact that I enjoy new challenges and meeting new people – I also really love the food and beverage industry and think there are many great opportunities ahead of us. This is particularly the case for a company like Sidel that shares my passion for solutions that meet customer needs. Nevertheless, our entire industry stands at a crossroads right now. It is clear that everyone in the packaging business – including Sidel – needs to evolve, not only in terms of its approach to sustainability, but also in terms of flexibility and digital competences to better serve our customers’ production lines.
At Sidel we strive to meet these challenges in various ways. For instance, within filling technologies, our latest solutions such as EvoFILL Can (launched in 2018) and EvoFILL Glass (introduced to the market in 2019) are exactly designed with today’s manufacturers’ requirements in mind, with special focus on greater performance, absolute product quality and expanded versatility. Another example of pushing the boundaries of performance while reducing our demands on the planet is an exciting packaging innovation we launched in 2019 – X-LITE™ Still. This innovative 500 ml PET packaging solution is the world’s lightest bottle for non-pressurised still water (6.5 g), significantly saving on raw material and
energy consumption. We also broadened our capabilities and customer base in packaging design and tooling with the acquisition of COMEP last year, following PET Engineering in 2018, enabling us to address all customers’ packaging needs.

Trend for healthy living creates opportunities for aseptic PET bottling

There are a number of current trends affecting our industry and Sidel. For example, ‘better for you’ beverages and foods are gaining real traction with consumers nearly everywhere. Together with a strong demand for personalised nutrition, which helps promote all-natural products without added sugars and preservatives, such as coconut water, Aloe Vera drinks and almond milk, while also driving product innovations.

This development is leading to an increasing format and recipe diversification, especially in the Liquid Dairy Products (LDP) and Juices, Nectars, Soft Drinks, Isotonics and Teas (JNSDIT) categories, which creates many business opportunities around aseptic bottling. In fact, preservative-free beverages and a widening portfolio call for absolutely safe, easy to operate, cost effective and flexible aseptic solutions.
At Sidel, we are addressing this set of applications as one of our key business areas. Our patented Aseptic Combi Predis™ solution – enabling aseptic PET bottling with dry preform sterilisation – can now count on more than 180 references installed globally.

“ ‘better for you’ beverages and foods are gaining real traction with consumers nearly everywhere”

We design packages for recycling

We also see a strong focus on environmentally friendly packaging, which is a clear priority for our planet. At Sidel, we translate our commitment to sustainable packaging into three areas. Firstly, we are optimising current packaging with our RightWeight™ programme to ensure that the package’s weight is minimised but still maintains its technical properties and high consumer appeal. Secondly, we lead the refillable PET segment, with the technological expertise and a worldwide reputation in this market. Most importantly, we are designing to recycle, for instance, by working with our customers to increase the recycled content in their packages. On this note, it is key to remember that PET is the only plastic packaging material that can be recycled bottle-to-bottle. This is why we expect growth to be progressively captured by recycled PET, which can be brought back into the value chain as a valuable resource.

Being the knowledge partner for our PET customers

One important way for us to contribute to a better environment is to become the knowledge partner for PET customers. We do this through our innovation capabilities and our packaging design expertise: for instance, we are establishing the correct infrastructure to test the complete lifecycle of the bottle in-house, plus deepening our existing co-operations across the plastics industry. Working together with every actor in the value chain is key, if we want to achieve a packaging change that lasts.
In this regard, we have enhanced the Sidel portfolio with our own design agency. By combining the design and branding capabilities with our engineering competences, we’ll make sure the bottle will not only be aesthetically pleasing but will also perform optimally across the value chain – to offer a unique proposition and, even more importantly, the ideal consumer experience.

“To help our customers protect their competitiveness while reducing their impacts on the planet we are re-shaping our services offering, with the goal to move from ‘equipment providers’ to ‘guaranteed performance partners’.”

Re-shaping our service offering

To help our customers protect their competitiveness while reducing their impacts on the planet we are re-shaping our services offering, with the goal to move from ‘equipment providers’ to ‘guaranteed performance partners’.

We are doing this across three strategic directions: first and foremost, by strengthening our services foundations. Secondly, by shifting from reactive to preventive maintenance, and thirdly by placing greater focus on digitalisation.

Clear focus on our strategic plan

Our three-year strategic plan has a focus, among other things, on continued leadership in aseptic PET packaging, driving more business in services and revising our approach for stand-alone equipment. In a flat equipment market, price pressure will remain, and we believe that by leveraging the strengths and the width of our equipment portfolio we can achieve the right balance between lines and stand-alone sales, for better pricing and the greater utilisation of our assets. Two key enablers will be instrumental in securing our success in the market – our responsibility to raise awareness around sustainability within the liquid food industry, and the digitalisation of our equipment, our services and the way we work. The third enabler will be to drive productivity in how we work, in collaboration with suppliers, customers and colleagues.

“Among other things, our recently revamped filling portfolio for can and glass can help us offset some flatness in the PET market. In addition, we are also reviewing how our ‘End to End’ packaging offering will adapt and best contribute to the circular economy.”

Focus areas for 2020

With 2020 looking like another challenging year, at Sidel we have implemented a number of initiatives to strengthen our position in the market. Among other things, our recently revamped filling portfolio for can and glass can help us offset some flatness in the PET market. In addition, we are also reviewing how our ‘End to End’ packaging offering will adapt and best contribute to the circular economy. This is already leading to the development of a consolidated packaging solution by encompassing primary, secondary and tertiary packaging and the best environmental impact of the complete production line.

The current escalating situation involving the COVID 19 pandemic is bringing further uncertainty to the business for the year. While we monitor the situation, our first priority is preserving our employees health while we contribute to our mission to support our customers to deliver beverage and other products all around the world.

 

Monica Gimre