“It’s the Best Time to Innovate!”
Abdelghany Eladib, the COO of SIG Combibloc Obeikan, speaks about the effects of the pandemic on the market and the corrective measures to steer businesses back on track
How has the COVID-19 pandemic affected your business?
With national lockdowns, restricted airspace and closed borders, COVID-19 has brought widespread disruption to economies around the world. And this disruption has placed a huge strain on the world’s supply chains, particularly when it comes to the continued provision and movement of food.
From farms and factories to distribution and retail, serious challenges have materialised at every stage of the supply chain. Not least of which has been the restriction and removal of key workers to protect lives, as well as surges in demand for many household goods and items, particularly packaged and shelf-stable food products.
In many markets, food and beverage companies have been classified as essential, meaning a significant proportion of producers and manufacturers have had to stay open, maintain operations as normal and even increase production. All while navigating prohibitive lockdown conditions, following strict social distancing, and implementing stringent pandemic protocols.
As essential suppliers to all food and beverage manufacturers, we made sure to keep the chain going while staying agile to constantly changing circumstances. For many industries, COVID-19 has hugely disrupted traditional supply chain models, particularly raw material sourcing and logistics. But at SIG, we believe we have a strong and resilient supply chain that’s able to cope with the current situation, and is ready for any similar challenges we may face in the future.
Together with our suppliers, we’ve managed to ensure a constant supply and availability of raw materials. Our supply chain also contains planned safety stocks that make us resilient to short-term challenges in inbound and outbound logistics, raw materials and consumables. And thanks to the extraordinary efforts of our teams, we’ve been able to operate at near full capacity. So, while we don’t know how long the current crisis will continue, we’re confident we can keep meeting our customers’ needs – even with spikes in demands.
What were the key learning from this pandemic?
As soon as the coronavirus pandemic hit, millions of people around the world turned to more digital and low-touch solutions. From online food shopping and videoconferencing to telemedicine and remote education, the adoption of online activities was immediate and necessary to continue working, learning, entertaining, procuring daily essentials and connecting with others.
We, at SIG Combibloc Obeikan, have been adopting digitalization across our lines and operations for some time now but with the challenges of the pandemic, these have been proven useful to our customers. We can now support them from afar using our remote support with the help and expertise of skilled talent from across the world anytime and anywhere.
According to insights from consultants McKinsey, the COVID-19 crisis has significantly accelerated the shift to digital and fundamentally shake up the business landscape. Even before the pandemic, McKinsey found that 92% of companies thought their business models would need to change given digitalisation. Today, the crisis has exposed just how vulnerable many businesses are with the only option now to radically accelerate their digital transformation.
For businesses that have already embraced digital transformation, this digital reality won’t have come as a shock. In fact, they’ve been in a position to not only weather the storm, but perhaps emerge from this crisis stronger than ever. Put simply, producers and manufacturers that embrace digital solutions quicker will be better equipped to recover faster and be prepared for any future disruptions in their operations and supply chains.
Did you come across new and innovative opportunities for diversification and monetization?
As countries begin to reopen, all eyes are looking ahead to the ‘next normal’. Current consumer research shows that few expect to go back to their old behaviors any time soon, and will now shop with a greater awareness for food safety, transparency and responsibility. We can also expect a renewed vigor when it comes to new launches, with brands and producers fighting back to emerge from the crisis even stronger.
The same can be expected for manufacturers and their efforts towards digital transformation – accelerating the shift to more digital solutions, remote services and low-touch activities. Looking at the silver lining, this pandemic has triggered a more sustainable way of living and a shift in consumer behaviors.
We witness the emergence of major trends with some appearing locally and others getting popularity in global markets. These include a rise in demand for immunity supplements including ice tea, flavored, water and plant based beverages and finally preference for home cooking and convenient food packages.
We also witnessed an increase in demand for family size shelf stable milk since the pandemic has started accompanied with an increased global demand. As families are staying safe at home, purchases have been focused on shelve stocking for milk products. Many of our partners have been utilizing the flexibility of our machines to produce multiple products and diversify their offerings in the market.
Tell us about ways through which businesses can reshape or hit the restart button?
For businesses in the food and beverage industry, we can highlight few ways or opportunities to dive into the next normal and succeed.
Look at the behavior of the post-corona consumer and re-shift your strategy to cater to new needs: More online shopping. Increasing digital interactions. A greater awareness of food safety. Many of the behaviours seen during COVID-19 are likely to continue for some time with consumers cautious about returning to their old habits. But this caution is being countered with celebration and a demand for new and exciting products.
This is the best time to innovate: Perceived value will be hugely important in economically challenging times while the demand for plant-based products, immunity supplements including ice tea, flavored, water is set to be strong with more preference for home cooking and convenient food packages. All these new demands pave the way for healthier and added-value products.
It is time to be drive the digital acceleration: The coronavirus pandemic drove life online. And according to industry experts, this is likely to accelerate the digital transformation and fundamentally shake up the business landscape. Because those that embrace digital solutions quicker will be better equipped to recover faster and be prepared for any future disruptions.
Finally, making the right impact: COVID-19 has put the spotlight on companies that are socially responsible – and those that aren’t. Now is the time for brands and producers to consider their contribution to society and their impact on the planet. And, crucially, how they can effectively minimise the footprint of their products and processes. Finally, in a post-corona world, manufacturers need to be more flexible and agile than ever to stay competitive.
What sort of dialogues have you had with your employees, partners, clients about the way forward?
In the food and beverage industry, many producers and manufacturers were defined as businesses providing essential services. This saw many companies not only running day and night to maintain the supply of food but repurposing their production to make sanitising products, offering generous charitable donations, and pledging financial security to employees.
At SIG, we responded with our own range of projects and initiatives to stand up to COVID-19 – to protect our employees, serve our communities, and support our customers and supply chains during a period of uncertainty. It’s been encouraging to see so many companies and organisations coming together to help overcome this crisis. Together with all our customers, partners and suppliers, we’ve been doing what we can to make sure a health crisis doesn’t become a food supply crisis. Our main focus remains on the health and safety of our employees and front liners.
For the way forward, we have been enabling our customers to seize these opportunities to reach new levels of efficiency, productivity and agility in their business, while leveraging the power of our digital solutions, Smart Factory and Connected Pack solutions. We have also been sharing the latest consumer and product trends and have been working with our ACCELERATOR solution.
This is a Modular Marketing Service that can help our customers to launch innovative new products at shorter time, lower costs and with a higher market success rate. In this collaborative journey, we support our customers in turning innovative ideas into final concepts through 4 stages: Ideation, Design, Piloting, and Promotion
Are there any new markets that have opened up with opportunities during the pandemic period?
In recent months, it’s been well reported how many people have been stockpiling grocery basics and essentials, such as packaged goods, toilet paper and cleaning products. Another immediate impact is that out-of-home consumption has dropped significantly while at-home consumption has increased. Online grocery shopping, meanwhile, has also risen in popularity.
According to research from the International Food Information Council this has resulted in a marked change in eating habits with consumers buying more packaged foods, shelf-stable products and easy-to-prepare meals, as well as more snack products. It’s also lead to an increased awareness of product safety with consumer concerns focused firmly on hygiene and food safety.
All of which are areas where SIG’s aseptic packaging, technology and solutions can add real value, enabling producers to provide more safe, convenient and differentiated shelf-stable products.
What sort of growth has the packaging industry seen, considering the growth of online deliveries and the e-commerce market over the past couple of months?
The COVID-19 crisis has plunged the world into an economic recession post government lockdown, leaving behind high unemployment and consumers with lower spending power. The packaging industry globally has seen 5 megatrends over the past few years, which include:
- Rise of e-commerce
- Packaged digitalization
- Change in consumer preference (Price vs. health-conscious)
- Disrupted supply chain
The change in customer preference and disrupted supply chain has further been exacerbated by the pandemic. Consumers are more health conscious and are seeking better alternatives. But the question yet to be answered is at what price. As many economies go into recession and spending power remains low, consumers might resort to cheaper products. From a business perspective, supply chain disruption from lockdown has put massive economic constraint on costs, leaving companies to adjust their strategy accordingly.
Increased loss of business and unemployment, resulting to a marked drop in consumer buying power is impacting how people choose and shop products. Brands and producers need to consider whether their portfolios are aligned with the needs of post-corona consumers.
With an increasing strain on budgets, many will be forced to continue basic or frugal shopping for some time. But it’s important to also remember that following a long period of monotony and restriction, with limited choices and a slowdown in launches, many consumers will actually be looking for new products and added-value experiences. It becomes clear that a one-size-fits-all approach to products won’t work today. Producers need maximum flexibility on their filling lines with the ability to quickly switch between different formats and volumes on the same machine.
With SIG’s agile and flexible filling system, we can enable customers to fill every kind of product from affordable to premium. It’s quick and easy to switch between different formats, volumes, designs and products. For instance, customers can use a single filling machine to fill carton packs in our combibloc, combifit and combistyle formats with the same base dimensions, meaning they can make a product more or less premium in appearance and ingredients.
Our machines even allow customers to fill up to nine different volumes with a single system – and it only takes a few minutes to complete the changeover. Also, if a customer sells internationally, or makes the same product under two different brands, he’ll be able to change pack designs without stopping production.