Four ways to achieve and maintain a power price point
Discover the keys to affordable beverage production
Great news for beverage producers around the world who want to meet their consumers’ need for affordable products while still maintaining their own margins - even against a backdrop of fluctuating costs. Tetra Pak has launched a revolutionary new filling machine, the Tetra Pak®/E3 Speed Hyper, which delivers the world’s fastest portion package production at the same time as reducing operational costs*.
Attracting single coin spenders
In the food and beverage sector, consumers with limited purchasing power represent the single biggest slice of the world market and, with the widespread effects of inflation, their numbers have grown. As a brand owner, you don’t want to and can’t afford to ignore them. One way to meet their needs is by adopting a power price point or single-coin price point strategy. Historically, this has proven a strong and attractive marketing argument for brands selling in low-income markets. To achieve it, producers sell their branded goods in smaller, or single serve package formats at an affordable price.
Reverse engineering
In their quest to achieve the power price point, beverage producers apply reverse engineering. This means they start with a target price (e.g. five rupees in India) and then work backwards, matching the product formulation and package size to meet the target price with a trustworthy, branded product. Think of small sachets of shampoo or skin cream. And, in this case, small packages of ready-to-drink beverages.
Sustaining the low price
A producer’s capability to offer smaller volumes of product in single-serve formats at an affordable price is therefore crucial. But a power price point strategy can be hard to sustain, even when everything’s going your way. Each part of the value chain has its needs. Producers need not only the means for low-cost production but also the flexibility to adapt over time - to economic upturns and downturns, inflation, changes in exchange rates, or varying raw ingredient and utilities prices.
Meanwhile, retailers - often very small local shops or kiosks - want to earn a profit on the products they sell. And consumers want safely packaged food and beverages from brands they can trust, at a price they can afford.
A new filling machine built for the job
The new Tetra Pak E3/Speed Hyper filling machine, featuring the eBeam packaging material sterilization system, is an important ingredient for producers looking to gain a foothold among low-income consumers. Whether it’s flavoured milk, nutritional drinks for kids, fortified dairy products, juices, nectars or still drinks, Tetra Pak’s new filling machine supports a power price point strategy. Here, we explain how:
1. Keep production costs down
Low production costs are naturally a key driver for businesses looking to attract consumers with very limited purchasing power. Tetra Pak/E3 Speed Hyper uses breakthrough electron beam (eBeam) technology instead of traditional hydrogen peroxide for packaging material sterilisation. Without compromising the sterilisation effect, eBeam cuts chemical consumption by 99% and can reduce water consumption by up to 45%*. It also reduces energy consumption by about a third and produces less waste*. With this level of savings on running costs, you can more easily stick to a power price strategy, even when prices rise in other areas.
2. Up to 40,000 packages per hour
eBeam is much faster than the traditional hydrogen peroxide sterilisation method. Indeed, it is the very reason the new machine can run at such high speeds. Capable of producing 40,000 packages per hour on a footprint of 8,774 mm X 4,141 mm – the Tetra Pak/E3 Speed Hyper gives you an output per square metre that’s so far unrivalled in the carton packaging industry.
How does this help you? On the one hand, the combination of a high throughput and limited footprint lets you keep costs in check. And if you have growth ambitions, it lets you ramp up production without necessarily expanding factory space.
3. Change to new package formats as the market evolves
Several packages are available on the Tetra Pak E3/Speed Hyper (e.g. Tetra Brik® Aseptic 250 Base, Tetra Brik® Aseptic 200 Slim Leaf , Tetra Brik® Aseptic 125 Slim Leaf and Tetra Brik Aseptic 250 Slim) and we have a strong packaging development pipeline for the future. This means you will be able to adjust package size according to market needs and, if necessary, downsize in order to continue offering your products at the same price point.
4. Underfilling option for further flexibility
In addition, the Tetra Pak/E3 Speed Hyper is designed for under-filling on all package volumes. This gives further flexibility in pricing strategies. Should the cost of juice concentrate or sugar rise, the ability to underfill could be key to keeping products affordable. For well-known international brands, this may also be an important factor in the development of a new generation of loyal customers. Access to branded products through small packages gives low-income consumers the opportunity to try something new; something that they may later go on to buy in larger formats, as their incomes grow.
*Compared to the Tetra Pak® A3/Speed