SIG breaks ground for a new packaging plant in Gujarat

Schweizerische Industrie Gesellschaft (SIG), a world-leading packaging solutions provider, laid the foundation for its first aseptic carton plant in India. The Swiss company plans to invest approximately INR 8.8 billion in phases, for the facility being constructed in Ahmedabad, Gujarat. This will be the 10th aseptic carton plant of the global packaging solutions provider who celebrated its 170th anniversary this year.

SIG is a leading solutions provider of packaging, offering a unique portfolio of aseptic carton, bag-in-box, and spouted pouch. It works in partnership with its customers to bring food and beverage products to consumers around the world in a safe, sustainable, and affordable way.  Sustainability is integral to its business, therefore, being the first to offer beverage cartons made with recycled polymers produced from post-consumer plastic waste. The mixed plastic waste that is collected is treated in a process that enhances the material and transforms it into a high-quality food grade material. Interestingly, SIG has also developed tethered caps ready for market launch well in advance of the 2024. European Union’s Single-Use Plastics Directive includes a requirement for all single-use beverage containers to come with their caps attached by July 2024 to help ensure the caps are disposed of and recycled together with the rest of the pack.

Founded in 1853, SIG is headquartered in Neuhausen, Switzerland, and is listed on the SIX Swiss Exchange. SIG customer base spreads over 100 countries and produced 49 billion packs and generated €3.1 billion in revenue in 2022. Ms. Vandana Tandan, Head of Markets India and Bangladesh at SIG, shares SIG plans in the Indian market.

What is the strategy behind investing in production facilities in India?

Ms. Tandan: There has been a significant surge in demand for packaged foods and beverages in the country, driven by rapid urbanisation, rising disposable incomes, and evolving consumption patterns. Currently, the Indian food and beverage packaging industry is flourishing, and it is anticipated to continue on this path. These factors actually influenced our decision to set up our 10th global aseptic packaging plant in the city of Ahmedabad, Gujarat. We believe that the strategic move will enable us to stay closer to the consumers and serve them better.  Furthermore, it will help us understand their evolving needs and adapt much faster.

Another reason is that India is also the world's leading milk producer and ranks among the largest juice producers globally. Our focus segment is mainly dairy and juices. The new plant will support the growing dairy and non-carbonated soft drink filler base in the country. SIG offers a wide range of packaging options to cater to the diverse needs of the consumer. From the easy-to-carry 80 ml pack to the 1000 ml family size, we have an exceptional portfolio of aseptic cartons. All our carton packages are made from responsibly sourced material and are designed to be fully recyclable.

How big is the Indian markets in terms of beverage cartons talking about value and volumes and does SIG aspire to have a bigger share in the next five years?

Ms. Tandan: With a rising population and increasing disposable income, people are consuming more juices, soft drinks and dairy products. This trend presents a range of opportunities for producers and suppliers, operating within the industry to innovate and introduce new products to the market. By 2029, the food and beverage packaging industry is expected to touch the US$86 billion mark, representing a significant portion of the global packaging product industry. Therefore, in terms of both value and volume, the Indian beverage packaging market is vast and has a lot of potential. SIG aspires to have a significant market share in this market in the next five years.

Why was Ahmedabad chosen as a plant location, any specific reason?

Ms. Tandan: Several factors favoured Ahmedabad when we were deciding on the location for our first aseptic manufacturing plant in the country. The city, situated in the Western state of Gujarat has a well-connected transport grid, facilitating the easy transportation of products across the country. Additionally, the city is known for its business-friendly and government incentives, making it an attractive destination.

Does upcoming plant entirely focus on the Indian market or does SIG have any plans to cater to adjoining Southeast Asian markets in the future?

Ms. Tandan: Our goal is to manufacture 4 billion packs per year following a € 100 million investment in the Ahmedabad plant between the next two years from 2023-25. With this capacity, we intend to expand our presence across the country, and the adjacent Bangladesh market. Beyond 2025, we plan to further increase the manufacturing capacity to 10 billion packs per year through subsequent investments in the plant. Following this expansion, we may consider catering to other countries from the India plant. However, it depends on several factors, and nothing can be said with absolute certainty at present.

What challenges and opportunities are there in the Indian market?

Ms. Tandan: We entered the Indian market in 2018, and over the past five years, we have succeeded in securing a fair share of the market. Based on our experience, we can say that the Indian market is unique in its own way. There are challenges such as complex regulations and infrastructure limitations; however, the country presents many more opportunities to grow and innovate. The vast population, a rising middle class, and the Government of India's initiatives like "Make in India" help us navigate these challenges and move forward in India's evolving business landscape.

What would be the initial plant capacity, when the plant is expected to operate to full capacity and achieve 10 billion pack capacity annually?

Ms. Tandan: Following the groundbreaking ceremony of the Ahmedabad plant in the last week of September, construction work is in full swing. Our target is to commence commercial production by the end of 2024. After an initial investment of 100 million euros in a phased manner, we will easily achieve a production capacity of up to 4 billion packs per year by the end of 2024. With subsequent investments, the capacity will be increased to 10 billion packs per year, but this will happen in phases. We are hopeful that by the end of this decade, the Ahmedabad plant will operate at full capacity.

Why SIG has decided to expand in Asia and what would be its future plans in this market?

Ms. Tandan: Asia is the most populous continent in the world, with roughly 60% of the world's population living here. Many Asian countries are undergoing rapid economic transformation at present. Urbanisation and rising purchasing power are presenting opportunities for the food and beverage industry to tap into its growing consumer base and expand the markets. Additionally, governments are providing incentives to invest in their countries, and the market is comparatively less competitive. Therefore, there are plenty of positive reasons to expand in the Asian market.

This is the first plant in India, but SIG has had a presence in India for the last five years. Committed to delivering foods and beverages to consumers in a safe, sustainable, and affordable manner, we ventured into the Indian market in 2018. The journey so far has been exciting and filled with opportunities. In these five years, we have witnessed exponential growth and successfully established ourselves as a trusted brand in the market.

Currently, we are serving some of the leading food and beverage companies in the country, including Amul, Coca-Cola, Parle Agro, PepsiCo, KMF, Milky Mist, Dabur, ITC, Haldiram’s, and many more. Additionally, we have established three warehouses in different parts of the country to strengthen the supply chain system.