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As we venture into 2024, the market landscape is rife with new challenges, from mounting inflationary pressure to rapidly evolving consumer demands.
Amid this turbulent backdrop, Laurent Sellier, CEO of Smurfit Kappa The Americas, joins us to offer his insights on exploring the growing trend of box customization, navigating consumer behavior changes, understanding the opportunities in the Central and Latin American markets and many more.
Watch the full interview or read the summary below.
Consumer habits change over time and we have been witnessing many changes in the history of packaging. Probably the most significant one is the move towards e-commerce, which has been taking place over the last decade and accelerated rapidly during the pandemic.
Customers always bring about new demands and requirements. Our duty is to stay close in contact with our customers and understand their needs as they progress towards different channels of distribution.
For instance, e-commerce calls for an unpacking experience, a process that is very different from what we have been used to. We used to produce boxes that were on shelves with all the appeal to the consumer on the outside. Now, we are gearing towards something slightly different: a very neutral box that does not say what it contains but provides an enjoyable unboxing experience for the customer. This calls for different practices, designs and equipment in some cases.
It is about staying in contact with your customers, understanding their needs, accompanying them and being mindful of the trends we see every day.
Customization in box making is a request that we receive more and more from our customers. Technologies like digital printing can help us cater to those needs and be agile when it comes to creating a series of packaging around a theme or for specific events and celebrations that require specific designs.
Some customers have traditional types of approaches in terms of sizing and this largely depends on the types of segments you’re serving. For instance, if you are dedicated to large TVs, the boxes are going to be immense because screens have increased in size quite a lot.
However, particularly in e-commerce, there is a growing request to make sure that the box fits what is being shipped. All e-commerce companies are thinking about this and we are helping them on that route to adapt the size of the box to the product, so you do not have a gigantic box for a tiny product. This trend is happening as we speak.
Plastic is an extremely useful material and I would not describe the situation as a competition between plastic and other materials. It is more about using materials in accordance with the expected lifetime of the product.
For durable goods, plastic is perfectly fine; it is more problematic when plastic is used for items with a short lifespan. If a plastic item is used for two weeks but takes a century to degrade, that is an issue. That is where fiber-based packaging comes into play.
Fiber-based packaging is renewable, recyclable, highly recycled and biodegradable. These characteristics are fundamental and, in my view, crucial for the long-term success of this material. Given the pressure from consumers for sustainable solutions, I cannot envision a future where paper, particularly in packaging, does not win over other types of materials.
As a company, Smurfit Kappa has been operating in Mexico since 1986 and has been present for an extended period. We appreciate the industriousness of Mexico; it is a phenomenal country in terms of people and education. It is also a very business-focused country. Recent events, particularly the rising tensions between the US and China, have led to a redistribution of manufacturing, and Mexico is playing a vital role in this shift by providing a service more directly linked to the US.
However, Mexico also has a large domestic market, and it would be incorrect to view it merely as a country that manufactures for the US. It has a large population, growing economic power and significant domestic consumption. The combination of a strong domestic market and new opportunities makes Mexico an extremely attractive destination in the region. We have invested more than $450 million in Mexico in the last five years and are planning further investments. This demonstrates how much we believe in the country and how much we enjoy operating there.
Central and South America are also places where we have been present as Smurfit Kappa since the late 1980s. It is a continental opportunity with a large population and a lot of growth. Most of these markets offer increasing political and social stability, making it a desirable place to operate. We have been present in all those countries for a long period of time and it has been one of the key pillars of the Smurfit Kappa group ever since it exists in its present shape.
We have also been acquiring companies in those regions in the last few years. We talked about Mexico earlier but also in Argentina and Brazil last year. As you get to know these markets and develop your understanding and knowledge, you can offer the same service, innovation, and quality-focused approach that we offer everywhere else. The team in the Latin American region, together with the Central American region within Smurfit Kappa, have delivered beautiful performances in the region and have helped our customers flourish in those markets as well.
Learn more about developments in the Latin American packaging markets with Fastmarkets’ Latin American Paper Products Monitor.
The general business environment has been somewhat slower than what we have seen in the immediate post-pandemic. 2024 is following 2023 at a somewhat lower pace than what we have experienced in early 2021 and 2022. However, many markets have experienced periods that are a bit slower and periods that are more intense in the past. For the reasons that I have indicated before, I have all confidence that we will return progressively to better days.
Destocking is an element mentioned by many economists and, while the extent of that is unclear, the term destocking by definition has an end to it and we should see a restoration of more normal situation in the markets in 2024.
Moreover, it is crucial to acknowledge the inherent difficulty in predicting the future. With this in mind, our company, led by CEO Tony Smurfit, consistently emphasizes the importance of preparedness. The ability to swiftly adapt and respond to changing circumstances is paramount. When the pandemic struck, we, like everyone else, faced the challenge head-on, organizing the necessary changes with limited time and navigating through the crisis successfully.
Being prepared, agile, reactive, and responsive are all essential qualities in a constantly evolving market. While we cannot control the changes, there is a tremendous opportunity if we proactively prepare our company right.
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