Tim Sykes visited Tetra Pak headquarters in Denton, Texas, for the launch of the latest edition of the company's latest Consumer Generations report series. In the process, he learnt not just a great deal about the world's fastest growing consumer group, but about a unique innovation model based on a combination of end user market intelligence and supply chain collaboration.

Tetra Pak's annual Consumer Generations White Paper is renowned for its in-depth analysis of consumers by their age, needs and spending habits. This autumn, the company unveiled its insights into the food and beverage market for seniors (defined as those aged 60 and over) which, thanks to the improvement and proliferation of healthcare, globally constitutes a large and rapidly growing demographic. Drawing on a mixture of extensive original research and collation of existing academic resources, and featuring insights from 27 countries across developed and developing markets including Japan, the US and Brazil, the report delves into the packaging interactions and shopping experience of ageing consumers, identifying in the process product opportunities. 

Perhaps the headline finding of the white paper is the sheer weight of the older consumer in the marketplace. As Libby Costin, vice president for global marketing, summarised, "Seniors have more disposable income than previous generations, and are poised to become one of the most important consumer groups over the next decade with a total spending power of US$10 trillion by 2020. Moreover, they spend 20 per cent of their income on food and beverages. This creates a huge opportunity for manufacturers to respond to their needs." 

Drilling into the detail of the report reveals that the task of realising these opportunities means creating new products that respond to the distinct needs of the ageing demographic, and that appeal to them in a sensitive manner. We learn, for instance, that 32 per cent of Seniors actively look for products and services that help them lead a healthy lifestyle. They demand greater quality, with 92 per cent finding product quality very important, and they are willing to pay more for it. They prefer traditional tastes to 'experimental' ones. This preference for the familiar extends beyond the product to the packaging, which they want to look and feel traditional, rather than appear overly radical or be 'different for different sake.' Moreover, Seniors are more loyal as shoppers than the average consumer. Once they find a brand that satisfies them, 30 per cent usually don't experiment with new ones. They tend to shop closer to home, and in smaller stores. 

Generally, we discover, the older consumer dislikes being made to feel old by marketers. They prefer products and packaging that are subtle: ones that are ageless but appeal indirectly to their demographic, rather than those that appear directly targeted at them because of their age. Therefore, any overtly 'For Seniors!' branding tends to be unappealing. The language and marketing around a product should appeal to them without directly addressing their age.

Products tailored for Seniors

Nevertheless, Tetra Pak demonstrates there are clear opportunities for products in the food and beverage market that specifically target Seniors. With more time on their hands, greater spending power and a growing interest in leisure pursuits, Seniors value a healthy, active lifestyle, and want to use food and drinks to improve their health. The white paper shows that they are willing to pay a premium for products that contain healthy ingredients. In particular, there is an opportunity for products that fortify food and drinks with additional minerals and vitamins. Seniors are heavy consumers of health supplements. Products that are fortified to promote stronger bones, or better digestive or cardiovascular health are likely to be particularly popular in developed markets, where there are higher incomes and a greater awareness of senior-specific health issues. Conversely, Seniors are more focused on low-salt, low-sugar, low-calorie and low-fat diets than other adults. Offering products that offer less of the 'bad' is just as big an opportunity as those that offer more of the 'good.' 

Of course, senior consumers tend to interact with packaged goods differently, as the ageing process presents physical challenges. As eyesight deteriorates and wrist strength declines, packages have to be easy to handle, easy to open and easy to read. The white paper suggests that products aimed at this demographic should use larger prints, more striking images and clearer labelling. Closures should require less force for opening. Packaging should be lightweight but robust in order to enable better holding. In addition, it is recommended that brand owners create packages that deliver longer shelf life to minimise shopping trips.

Insights feeding innovation

So how do these insights into ageing consumers fit into the Tetra Pak business model? 

"It's crucial for us to be knowledgeable in the industry's our products serve," Libby Costin told Packaging Europe. "There is a lot of packaging knowledge woven into the white paper, but also many insights into the end user markets. There are concrete benefits to collecting and sharing this market intelligence. By working more effectively with long-term customers using the insights of such research, we can identify new spaces in the market and create the most effective products to serve these. As a result, both Tetra Pak and our customer will benefit. The right product with the right differentiation for an emerging market need will deliver us both volume."

It's important to emphasise that this sharing is in no way confined to the theoretical realm. As part of the visit to Denton, Tetra Pak opened the doors of its Customer Innovation Centre - one of several across the globe - and pilot plant, designed as a creative and technical space for collaborative product development. Featuring product formulation facilities, testing equipment, a packaging line to fine-tune the prototypes, the centre also contains an 'ideation room' in which creative experts, designers and branding specialists from Tetra Pak can sit down with brand owners. Here the task is to translate market insights such as those carried in Consumer Generations into viable, concrete brands that can be launched onto the marketplace. 

Collaborative innovation has become a buzzword across the packaging industry but few businesses have applied the principle to quite such a profound degree. "More than many B2B companies, we think it's very important to understand the customers of our customers," said Ms Costin. "We have customers with whom we have decades-long relationships. Many of these are family businesses, and many rely on us to bring a broader understanding of their markets and every part of the value chain - starting from consumer and retailer, but also understanding the whole distribution chain. Collaboration is about continuing to bring them new ideas. In our ideation room, we use our methodology to reveal insights about the market. In the course of spending two or three days with a customer, pooling our knowledge, we always come up with fresh ideas." 

The profile of customers taking up the opportunity of the Customer Innovation Centre is unexpectedly diverse. "When we started planning these centres, we assumed there was no way the big guys would have need the support and resources we were offering," remarked Ms Costin. "In fact, we've been surprised to find that they are equally attractive to our bigger and smaller customers. Sometimes the global brand owners won't use certain resources, such as our branding service, because they have plenty of branding expertise of their own. They might not use the formulation service, but they would be keen to undergo the product ideation process. Having undertaken some 130 engagements in the last 18 months, we find that the customer list is about half and half multinational and smaller customers." 

Two-way learning 

As a company that goes out of its way to understand its customer's customers, Tetra Pak naturally sees the process of collaborative product development as an opportunity to learn as well as impart its own knowledge. While customers take full ownership of product concepts that they select at the end of a session, ideas that are left over are collected and kept in order to feed future ideation. Meanwhile, the insights gathered from close discussion with brand owners and from market research ultimately inform Tetra Pak's own product devilment in the longer term.

"Clearly, we can't develop bespoke packaging formats with customers, because this would involve developing whole new systems, projects that would stretch to several years," said Ms Costin. "By contrast, customer innovation projects might take place over six to eight months. However, we certainly collect the ideas that come from these customer sessions - and if we keep seeing certain themes and trends popping up, this can inform our own future innovations."

Ultimately, the model of assembling market intelligence, know-how and hardware in once place is a recipe for accelerating the process of bringing viable products to market. 

"We've had the pilot plants for a long time," Ms Costin concluded. "In aseptic packaging it's important to test any product going through an aseptic filling line, to make sure the product is safe and tastes good before it goes to market. We've always run those sorts of trials. Introducing the Customer Innovation Centres has been a step-change, adding new capabilities - pointing out gaps in the market, offering product design, product formulation, which we are including more and more in our sessions. It's not so much a case of customers being unable to do it without us, but of making it easier for them, being able to do it all under one roof. That's where the acceleration comes in. The market requires a faster turnaround of new products than ever before. Consumers want that. And our services make it possible."

The Consumer Generations White Paper can be downloaded by following the link from: www.tetrapak.com/about/newsarchive/food-beverage-opportunities-in-senior-market