SIG Group (SIGNc.S): Notes From Expert Call: How Dairy Players Choose Their Packaging Partners

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SIG Group (SIGNc.S): Notes From Expert Call: How Dairy Players Choose Their Packaging Partners

ing but remains balanced at roughly 50/50

today. The trajectory is seen as directionally moving toward a commoditization of the

products over the next five years, yet currently split evenly. Commoditization is defined

by price equilibrium and quality predictability, whereby no supplier can crash prices to

drive demand and none overcharges. Certain segments resist this dynamic:

high-viscosity yogurt drinks are not commoditized, reflecting sustainability measures

co-developed with Tetra Pak and SIG. The increasing material quality of non-system

suppliers supports the broader commoditization thesis, though differentiated,

innovation-intensive applications continue to command premium positioning outside

the emerging commodity bracket.

Switching costs are substantial and some categories remain protected for the

traditional players. The switching process is costly and complex, involving proprietary

system lock-in, long-term contracts, potential machine revaluations, expensive

downtime and 13-14 approvals across five-to-six functions. In some segments, the costs

are justified to increase NSS adoption to try to reduce costs. However, certain

applications remain protected: infant formula, at 18-19% of portfolio, is a no-go for

NSS, while advanced sterilized solutions and cap technology steer volumes toward SIG or

Tetra Pak.

NSS penetration is deepest in cost-sensitive emerging markets, with pricing the

primary lever. Acceptance is higher in Southeast Asia and Africa than in Europe, mostly

as regulation is looser and costs are the primary driver. NSS prices are roughly 13%

below SIG and 22% below Tetra Pak - with an 8-9% delta between SIG and Tetra Pak

pricing. Globally, Mr.