Tetra Pak Bahrain Entry

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The government’s long-term plan, known as Economic Vision 2030, includes the target of doubling household income by 2030. Bahrain plans to introduce a valued added tax of about 5% by 2018 to help cover its fiscal deficit. There is no tax on individual income and most businesses are exempt from taxation. However, oil companies must pay a 46% income tax. Immigration is driving much of the population explosion. The number of foreigners living in Bahrain already exceeds the local population. Expatriates reportedly make up nearly two-thirds of the labor force. Bahrain has been judged to be one of the freest economies in the Middle East. Bahrain witnessed a marked fall overall for the ‘Getting Credit’ category ranking in the 2011-2017 period. While low lending rates make the country more attractive, poor judicial independence and prevalence of corruption continue to hamper its regulatory environment. Bahrain continues to face terrorist threats. In October 2017, five security force members were killed in an explosion at Daih village.

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Source : Euromonitor Research

2.4 Competitor Analysis

Tetra Pak is a market leader in its industry and there have been issues related to monopoly in a few markets in China and Europe. Hence, the threat from competitors is minimal. Few of their competitors globally are – SIG Combibloc, Accredo Packaging, Unicorn Industries, Sidel, Krones, Alfa Laval, KHS, IDMC, Andritz and SPX. Top Packaging companies in Bahrain, include Manama Packaging and Mira Packaging Currently the senior management of the company is focusing on reducing the carbon footprint of their products and investing actively in opportunities that help them achieve “Science-based” targets like reducing Scope 1 and Scope 2 emissions 42% by 2030 and 58% by 2040.

Tetra Pak has been successful in many foreign markets (China, South East Asia) primarily due to rising income levels and growth in food industry. As per BMI Research reports - Within the MENA region Bahrain is among the leading markets for growth opportunities in the food sector with forecasted compound annual growth (CAGR) of 4.2% by 2019. The MENA region CAGR will reach 4.3% by 2019, therefore; regionally, Bahrain is viewed as a more attractive investment in the food industry. Mondelez International is also expanding its operations in Bahrain with its second manufacturing facility, as popularity of snack consumption in the region continues to grow at double-digit rates. According to World Bank Bahrain's Economic Outlook - October 2017, demand remains weak and Bahrain remains the most vulnerable GCC country in the face of low oil and bauxite prices due to its limited savings and high debt levels, leaving it exposed to financing risks.

3.0 SWOT ANALYSIS

Figure 1 - The SWOT Analysis (See Appendix 8.3)

Strengths (Company)

- Strong R&D – 5500 technology patents

- Niche – specializes in liquids that are not refrigerated

- Makes profit for every unit of product sold with its packaging

Weaknesses (Company)

- Tetra Pak are NOT GREEN i.e. Tetra Pak may turn into different post-consumer products but fresh supply of virgin wood is required

- Higher Price

- Depends on dairy product

Opportunities (Market)

- Government’s Economic Vision 2030 i.e. doubling household income

- Low lending rates

- Individual income is not taxed & most businesses are exempt from taxation (except oil companies – 46%)

Threats (Market)

- Bahrain government plans to introduce Vat of 5% by 2018

- Poor judicial independence

- Corruption

- Continues to face terrorist threats

- High migrant labor force

4.0 OBJECTIVES

4.1 International Objectives

- Enormous Growth Opportunity

- Tetra Pak’s foray in Bahrain will be supported with the Bahrain governments push for doubling household consumption by 2030. As the products of Tetra Pak company are dependent on the sale of juices, dairy products, therefore there is a significant growth opportunity (i.e. not a stagnant market)

- Tax subsidy

- Although the government plans to focus on fiscal consolidation through indirect taxes by levying VAT of 5 %, it still does not have direct taxes on most businesses

- This supports the bottom line in trying circumstances of spike in RM prices, wage rates etc.

- Market diversification

- If Tetra Pak can replicate the success that it received in China and other parts of South East Asia in Bahrain, then the Asian business of Bahrain will be a good hedge against its European business

4.2 Market Objectives

Tetra Pak is a B2B company.

Therefore, the traditional approach of segmenting that we use for B2C companies will not be applicable in this case i.e. Social, Demographic, Psychographic, Geographic and Behavioral.

Tetra Pak needs to segment its customers in accordance with their product offering i.e. juices, dairy etc.

This targeting is crucial because the company cannot satisfy the needs and wants of each customer in the market. Therefore, Tetra Pak can look internally and recognize its strengths and resources. They should first target the dairy customers, and that too because of their deep pockets and global presence, they can leverage their strategic tie ups globally.

Tetra Pak faces competition in Bahrain from Manama Packaging, and Mira Packaging. But Tetra Pak will be developing its niche because it can operate in a space where Manama and Mira are not dominant.

5.0 RECOMMENDED MARKETING STRATEGY

The usual establishment choices of Greenfield