Most of us are experts in our respective industries, but how do you become an expert in what the consumer wants? Jack Sanders, president and CEO-elect of Sonoco, will discuss Sonoco’s work to satisfy its customers using consumer insight research, and how this was successful in a recent collaboration with Pepperidge Farm on the brand’s popular Baked Naturals® Cracker Chip snack.

1. JACK SANDERS REMARKS
STRUCTURAL PACKAGING SUMMIT
FEBRUARY 27, 2013
TOPIC: EMERGING TRENDS AND USING CONSUMER
INSIGHTS TO MEET THOSE TRENDS/SATISFY THE
CUSTOMER
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2. (SLIDE 1 – INTRO SLIDE)
CLEARLY, THE PACKAGING INDUSTRY CONTINUES TO
FACE CHALLENGES AND CHANGING CONSUMER
PREFERENCES. SO TODAY I WANT TO SHARE WITH YOU
HOW WE ARE USING TRENDS AND CONSUMER INSIGHTS
TO GROW OUR CONSUMER PACKAGING BUSINESSES.
BEFORE I BEGIN, I WOULD LIKE TO TELL YOU A LITTLE
ABOUT SONOCO.
(SLIDE 2 – SONOCO OVERVIEW)
ACTUALLY, SONOCO IS A 113-YEAR OLD GLOBAL
PACKAGING COMPANY HEADQUARTERED IN HARTSVILLE,
SOUTH CAROLINA.
WE JUST REPORTED OUR 2012 RESULTS AND ACHIEVED
RECORD SALES OF $4.8 BILLION. WE HAVE NEARLY 20,000
EMPLOYEES, WORKING IN 347 OPERATIONS IN 34
COUNTRIES AROUND THE WORLD. WE PROVIDE
PACKAGING TO MANY OF THE BEST KNOWN BRANDS IN
OVER 85 DIFFERENT NATIONS.
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3. AS YOU CAN SEE BY THIS SLIDE ABOUT TWO-THIRDS OF
OUR SALES ARE IN THE UNITED STATES. THAT SAID, WE
HAVE A GROWING PRESENCE IN THE EMERGING MARKETS
OF EASTERN EUROPE, SOUTHEAST ASIA AND LATIN
AMERICA.
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4. SONOCO HAS FOUR OPERATING SEGMENTS:
(1) OUR LEGACY BUSINESS IS OUR INDUSTRIAL
PACKAGING SEGMENT WHERE WE ARE THE WORLD’S
LARGEST PRODUCER OF PAPER-BASED TUBES AND
CORES THAT SERVE THE TEXTILE, PAPER, PLASTIC
FILM AND TAPE INDUSTRIES.
(2) OUR NEWEST SEGMENT IS PROTECTIVE SOLUTIONS,
WHERE WE PRODUCE CUSTOM-ENGINEERED
PROTECTIVE PACKAGING FOR CONSUMER
PRODUCTS, MOLDED FOAM COMPONENTS FOR THE
AUTOMOTIVE MARKET; TEMPERATURE-ASSURED
PACKAGING FOR THE LIFE SCIENCE INDUSTRY AND
FINALLY, HIGH VISIBILITY SECURITY PACKAGING FOR
THE RETAIL INDUSTRY.
4

5. (3) CONSUMER PACKAGING, WHICH INCLUDES PAPER-
BASED COMPOSITE CANS (THINK OF PRINGLES),
FLEXIBLE PACKAGING (THINK OF OUR PATENTED
SMARTSEAL OPEN AND RECLOSE FEATURE ON OREO
COOKIES), RIGID PLASTIC CONTAINERS, INCLUDING
BLOW-MOLDED BOTTLES FOR FOOD AND PERSONAL
CARE PRODUCTS; THERMOFORMED TRAYS FOR
FROZEN FOODS; INJECTION MOLDED COMPONENTS
AND EXTRUDED CARTRIDGES FOR ADHESIVES AND
SEALANTS.
(4) ALSO, PART OF OUR CONSUMER PORTFOLIO IS OUR
DISPLAY AND PACKAGING SEGMENT, WHERE WE
PROVIDE POINT-OF-PURCHASE DISPLAYS AND
PACKAGING FULFILLMENT SERVICES FOR LARGE
CPGS. FOR INSTANCE, WE PACKAGE ALL GILLETTE’S
RAZORS AND BLADES IN NORTH AMERICA AND
EUROPE.
5

6. (SLIDE 3 – CONSUMER TRENDS)
AS MENTIONED EARLIER, THE PACKAGING INDUSTRY
CONTINUES TO FACE CHALLENGES AND CHANGE.
SOME OF THESE CHALLENGES ARE LISTED HERE AS
CONSUMER TRENDS ARE FORCING CHANGES IN
PACKAGING.
HOWEVER, I DO BELIEVE WE FACE ONE OF THE MOST
UNIQUE AND OPPORTUNISTIC TIMES OUR WORLD HAS
EVER EXPERIENCED. I WANT TO SPEAK WITH YOU TODAY
ABOUT MANY OF THE POSITIVE TRENDS WE SEE WHEN WE
LOOK INTO THE FUTURE AND HOW WE ARE WORKING TO
TAKE ADVANTAGE OF THESE OPPORTUNITIES.
6

7. (SLIDE 4 – WHAT IS THE ECONOMY TELLING US?)
BUT, BEFORE I GET INTO THE HEART OF MY
PRESENTATION, IT IS IMPORTANT TO UNDERSTAND
WHERE WE ARE IN THE CURRENT ECONOMIC CYCLE AND
THE IMPACT IT HAS ON PACKAGING.
ALTHOUGH WE HAVE HAD SOME RESOLUTION TO THE
“FISCAL CLIFF,” THERE ARE MANY OPEN ISSUES AND I
BELIEVE WE ARE STILL IN FOR ANOTHER YEAR OF SLOW
GROWTH.
OVERALL, WE BELIEVE U.S. GDP WILL GROW AT LESS
THAN 2% IN 2013 AS CONSUMER CONFIDENCE IS SHAKY,
AND THE DATA IS A BIT CONTRADICTORY.
FOR INSTANCE, ON THE NEGATIVE SIDE, U.S. GDP
DECLINED IN THE FOURTH QUARTER OF 2012 AND MOST
OF EUROPE REMAINS IN RECESSION.
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8. ON THE POSITIVE SIDE, U.S. HOUSING STARTS HAVE
GROWN SIGNIFICANTLY AND ARE AVERAGING ABOUT
950,000 UNITS ANNUALLY. THIS IS ABOUT ONE-THIRD OF
THE PEAK VOLUME IN 2005, BUT, UP SIGNIFICANTLY FROM
THE DEPTHS OF THE GREAT RECESSION.
ANOTHER POSITIVE ECONOMIC INDICATOR IS U.S. AUTO
PRODUCTION, WHICH HAS SHOWN CONSISTENT GROWTH
SINCE THE GREAT RECESSION TO ABOUT 15 MILLION
UNITS ANNUALLY.
CLEARLY, FURTHER IMPROVEMENT IN HOME
CONSTRUCTION AND AUTO PRODUCTION WILL INCREASE
JOBS, IMPROVE CONSUMER SPENDING AND INCREASE
DEMAND FOR CONSUMER PRODUCTS AND THEIR
PACKAGING.
8

9. (SLIDE 5 – MEGA TRENDS IMPACTING FUTURE GROWTH)
BUT THAT’S 2013. LET’S TALK ABOUT 2020.
RECENTLY, WE ASKED BAIN CONSULTING TO CONDUCT A
DETAILED ASSESSMENT OF THE GLOBAL ECONOMY AND
WHAT IMPACT CERTAIN TRENDS WOULD HAVE ON OUR
BUSINESS THROUGH THE CURRENT DECADE.
AS PART OF THIS WORK, THEY UNCOVERED EIGHT
“MEGATRENDS” THEY BELIEVE WILL ADD $27 TRILLION
DOLLARS TO GLOBAL GDP BY 2020.
FOUR OF THESE MEGATRENDS DIRECTLY AFFECT
SONOCO AND WE HAVE WORKED VERY HARD TO ALIGN
OUR LONG-TERM STRATEGY TO TAKE ADVANTAGE OF
THESE TRENDS.
9

10. (SLIDE 6 – MEGA TRENDS IMPACTING FUTURE GROWTH –
FOCUSED FOUR)
THE FOUR RELEVANT MEGATRENDS ARE EXPECTED TO
IMPACT GLOBAL GDP BY AN ESTIMATED $22 TRILLION BY
2020. THEY INCLUDE:
• THE NEXT BILLION CONSUMERS – THIS IS A $10
TRILLION MEGATREND THAT SHOWS HOW THE
RISING WEALTH OF EMERGING ECONOMIES WILL
LIKELY INCREASE THE DEMAND FOR CONSUMER
PRODUCTS (AND THUS PACKAGING).
• GROWING OUTPUT OF PRIMARY INPUTS – CLEARLY,
AN INCREASE IN GLOBAL CONSUMER DEMAND WILL
FUEL AN INCREASE IN DEMAND FOR COMMODITIES,
RANGING FROM ENERGY TO BASIC RAW MATERIALS.
AS A RESULT, THE COMMODITY COST VOLATILITY
WE’VE SEEN IN RECENT YEARS IS LIKELY TO
CONTINUE.
10

11. • KEEPING THE WEALTHY HEALTHY – THIS IS A $4
TRILLION-DOLLAR MEGATREND PRIMARILY
IMPACTING DEVELOPED ECONOMIES AS THEY
ADJUST TO THE DEMANDS OF AN AGING
POPULATION.
• FINALLY, EVERYTHING THE SAME BUT NICER – THIS
$5 TRILLION-DOLLAR MEGATREND IS ALSO FOCUSED
ON DEVELOPED ECONOMIES AS MORE AFFLUENT
CONSUMERS DRIVE PREMIUM PRODUCTS AND
SERVICES.
IN THE NEXT PART OF OUR ASSESSMENT, WE SOUGHT TO
UNDERSTAND WHAT LEVEL OF IMPACT (EITHER POSITIVE
OR NEGATIVE) THESE FOUR MEGATRENDS WOULD HAVE
ON OUR BUSINESSES.
WE BELIEVE THAT EMERGING ECONOMIES CAN DRIVE
POSITIVE GROWTH FOR MANY OF OUR BUSINESSES,
INCLUDING OUR MORE MATURE INDUSTRIAL-FOCUSED
BUSINESSES.
11

12. HOWEVER, EACH OF OUR BUSINESSES COULD BE
NEGATIVELY IMPACTED BY COMMODITY COST
VOLATILITY DUE TO INCREASED GLOBAL CONSUMER
DEMAND.
IN ADDITION, OUR ASSESSMENT INDICATES WE SHOULD
HAVE GROWTH OPPORTUNITIES IN DEVELOPED
COUNTRIES CATERING TO THE NEEDS OF AN AGING,
MORE AFFLUENT CONSUMER.
OVERALL, WE ARE BULLISH.
THE NEXT BILLION CONSUMERS REPRESENT ONE OF
“THE BIGGEST GROWTH OPPORTUNITIES IN THE HISTORY
OF CAPITALISM.”
AND HEALTH AND LIFESTYLE TRENDS PROVIDE A $9
TRILLION OPPORTUNITY IN ADVANCED ECONOMIES.
THAT IS A LOT OF GROWTH POTENTIAL.
12

13. (SLIDE 7 – TRANSFORMING ECONOMY REQUIRES A
DIFFERENT APPROACH)
ONE CLEAR TREND IS A MOVE FROM A SUPPLY-BASED
ECONOMY TO A DEMAND-BASED ECONOMY.
CUSTOMERS ARE TENDING TO ORDER BASED SOLEY ON
KNOWN DEMAND AND WE BELIEVE THIS TREND WILL
CONTINUE.
THIS DEMAND DRIVEN ECONOMY REQUIRES THAT WE
TAKE A DIFFERENT APPROACH. WE CAN NO LONGER
WAIT FOR OUR CUSTOMERS TO PLACE THE NEXT ORDER.
WE MUST PROACTIVELY DEVELOP SOLUTIONS AND
TARGETED INNOVATIONS THAT ANTICIPATE CUSTOMER
NEEDS.
SAID ANOTHER WAY, IF YOU HAVE TO ASK YOUR
CUSTOMER WHAT THEY WANT, IT IS PROBABLY TOO
LATE AS THEY HAVE ALREADY TOLD YOUR
COMPETITORS AS WELL.
13

14. (SLIDE 8 – TRANSFORMING PACKAGING REALITY)
THE GLOBAL PACKAGING MARKET IS EXPECTED TO
GROW AT A COMPOUND RATE OF JUST OVER 3 PERCENT.
HOWEVER, AS THIS CHART SHOWS, FLEXIBLE
PACKAGING IS EXPECTED TO GROW AT 3.5 PERCENT AND
RIGID PLASTIC PACKAGING WILL GROW AT 5.6 PERCENT
ANNUALLY.
BASED ON THESE TRENDS, SONOCO HAS BEEN
FOLLOWING A STRATEGY OF PROVIDING OUR CONSUMER
CUSTOMERS WITH MULTI-STRUCTURAL PACKAGING
CHOICES BASED ON THEIR NEEDS – WHETHER IT IS A
COMPOSITE CAN, A FLEXIBLE PACKAGE OR A RIGID
PLASTIC CONTAINER.
14

15. (SLIDE 9 – GROWTH IN PACKAGING DRIVEN BY EMERGING
MARKETS)
ONE OF THE LARGEST DRIVERS OF NEW CONSUMER
PRODUCTS WILL COME FROM THE ESTIMATED ONE
BILLION NEW CONSUMERS THAT WILL ARRIVE OVER THE
NEXT DECADE, ESPECIALLY IN EMERGING MARKETS
SUCH AS ASIA AND SOUTH AMERICA.
15

16. (SLIDE 10 – A NEW MIDDLE CLASS VISUAL)
THE NEW MIDDLE CLASS GROWING IN EMERGING
MARKETS WILL CONTRIBUTE $10 TRILLION IN GROWTH BY
2020.
(SLIDE 11 – MAP)
THEY LIVE IN A DOZEN EMERGING MARKET COUNTRIES;
NOT JUST IN THE SO CALLED BRIC NATIONS.
(SLIDE 12 – PACKED STREET SLIDE)
AND WESTERN MULTINATIONALS EXPECT 70% OF FUTURE
GROWTH TO COME FROM THESE EMERGING ECONOMIES.
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17. (SLIDE 13 – CHANGING OUR MARKETING FOCUS)
SO WHAT DOES ALL OF THIS MEAN? HOW DO THESE
MEGA TRENDS IMPACT US?
ONE OF THE BIGGEST CHANGES WE HAVE MADE IS IN
THE AREA OF MARKETING “INSIGHTS”.
AS I MENTIONED EARLIER, IF WE HAVE TO ASK OUR
CUSTOMERS WHAT THEY WANT, IT IS PROBABLY TOO
LATE.
OVER THE PAST FEW YEARS, WE HAVE DEVELOPED A
PROPRIETARY SUITE OF CONSUMER RESEARCH
CAPABILITIES TO DRIVE NEW PRODUCT DEVELOPMENT.
FOR INSTANCE, BY USING RAPID CONSUMER FEEDBACK
WE CAN TELL OUR CUSTOMERS WHAT CONSUMERS ARE
SAYING ABOUT THEIR PRODUCT PACKAGING AND
SPECIFICALLY ABOUT THEIR PREFERENCES.
17

18. (SLIDE 14 – PEPPERIDGE FARM CASE STUDY INTRO SLIDE)
A KEY SUCCESS OF THIS STRATEGY CAN BE SEEN IN OUR
INSIGHTS-DRIVEN APPROACH TO PEPPERIDGE FARM’S
NATURALS-BAKED CHIPS.
(SLIDE 15 – IN THE BEGINNING)
MOST OF US ARE FAMILIAR WITH THIS TYPE OF PACKAGE.
THIS IS A TYPICAL QUAD-SEAL BAG THAT MOST PEOPLE
SEE ON THEIR GROCERY SHELF.
18

19. YOU WOULD PURCHASE THESE, GO HOME, OPEN THEM,
AND THEN, IF YOU ARE LIKE MOST FAMILIES, YOU WOULD
USE A DEVICE OR METHOD TO RECLOSE THEM, LIKE
THESE.
(SLIDE 20 – INTO BAG)
OR -- EVERY CPG’S NIGHTMARE. A COMPLETE LOSS OF
ON-SHELF IDENTITY
19

20. (SLIDE 21 – BAG EVOLUTION/SEALTAB)
• THIS STORY DID NOT START WITH DEVELOPING A
PRODUCT FOR PEPPERIDGE FARM.
• WE CONDUCTED ETHNOGRAPHY AND INSIGHT
GROUP STUDIES ON EXISTING COFFEE FLEXIBLE TIN-
TIE PACKAGING VS. A NEW PACKAGE WITH A
RECLOSABLE FEATURE.
• OUR RESEARCH FOUND THAT ONLY ONE-THIRD OF
STUDY PARTICIPANTS KEPT COFFEE IN THE
ORIGINAL TIN-TIE PACKAGE, WHILE 50 PERCENT
EMPTIED THE PACKAGE AND STORED THE COFFEE IN
AIR-TIGHT RIGID CONTAINERS. (LIKE A COMPOSITE
CAN)
• AS A RESULT, CONSUMERS SAID THE RECLOSE
FEATURE WAS NOT THAT IMPORTANT TO THEM.
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21. • WE TOOK THE RECLOSE FEATURE TO PEPPERIDGE
FARM AND CONDUCTED MORE CONSUMER
RESEARCH. THE RESEARCH SHOWED THAT
CONSUMERS “VALUED” THE PACKAGE WITH THE
RECLOSE FEATURE.
• WORKING WITH PEPPERIDGE FARM, WE CAME UP
WITH THIS RECLOSABLE BAG, THE FIRST EVER USING
OUR PATENTED SEALTAB TECHNOLOGY FOR THEIR
NATURAL’S CRACKER CHIPS.
• WITH THE SEALTAB FEATURE, CONSUMERS CAN
OPEN THE BAG AS NORMAL, BUT RECLOSE IT WHEN
THEY FINISH SNACKING THROUGH MULTIPLE USES.
• NO MORE DUCK TAPE OR DUMPING THE PRODUCT
INTO AN UNBRANDED PLASTIC BAG AS SHOWN
EARLIER.
21

22. THIS INNOVATION SOLVED THREE ISSUES:
• 1) IT PROVIDED CONSUMERS WITH WHAT THEY
WANTED – A RECLOSABLE PACKAGE THAT WOULD
KEEP CHIPS FRESH.
• 2) IT SUPPORTED PEPPERIDGE FARM’S DESIRE TO
KEEP THEIR BRAND IN FRONT OF THE CONSUMER
LONGER,
• AND IT 3) REQUIRED NO ADDITIONAL CAPITAL
INVESTMENT FOR THE CUSTOMER.
THE PRODUCT WAS LAUNCHED IN SEPTEMBER OF 2012
AND WAS A TOP INNOVATION AT PACK EXPO
INTERNATIONAL.
THE SEALTAB RECLOSE FEATURE WILL BE USED IN
OTHER SNACK PRODUCTS VERY SOON AND WE’VE
RECEIVED ADDITIONAL SKUS FROM PEPPERIDGE
FARM.
22

23. (SLIDE 22 – WIN/WIN SOLUTION)
THIS SUCCESS STORY MARRIES CONSUMER NEEDS WITH
PACKAGING KNOWLEDGE AND MANUFACTURING
CAPABILITIES.
WE WERE ABLE TO DELIVER PACKAGING BENEFITS THAT
CONSUMERS VALUE WITHOUT OUR CUSTOMER HAVING
TO INVEST SIGNIFICANT CAPITAL.
THIS PACKAGE IS INNOVATIVE AND FORWARD-THINKING.
IT DIFFERENTIATED OUR CUSTOMERS’ PRODUCTS AND
SATISFIED THEIR CONSUMERS.
23

24. (SLIDE 23 – LEGO SOLUTION)
LET ME GIVE YOU ONE LAST EXAMPLE OF USING
INSIGHTS -- AND OUR MULTI-STRUCTURAL CAPABILITY --
TO MEET THE CUSTOMER’S NEEDS BY DELIVERING A
TOTAL SOLUTION.
THIS EXAMPLE INVOLVES LEGO.
SONOCO WAS FIRST ASKED TO PROVIDE PACKAGING
FULFILLMENT SERVICES FOR LEGO’S PRODUCTS IN
EUROPE AND THEN IN NORTH AMERICA.
BUT THE MORE WE GOT TO KNOW LEGO’S BUSINESS AND
CHALLENGES, THE MORE WE INDENTIFIED
OPPORTUNITIES TO IMPROVE THEIR PRODUCTS’
APPEARANCE ON STORE SHELVES.
WE SUGGESTED A NEW PACKAGE IN THE FORM OF A
COLORFUL, RECLOSABLE, STAND-UP POUCH VS. THE
TRADITIONAL CHIPBOARD BOX.
24

25. YOUNG CHILDREN TODAY ARE VERY FAMILIAR WITH
FLEXIBLE POUCHES AND OUR RESEARCH CONFIRMED
THIS.
ONLY SONOCO COULD DELIVER EVERY ASPECT OF THE
NEW PACKAGE, FROM DESIGN, TO ARTWORK
MANAGEMENT, TO COLOR SEPARATIONS AND CYLINDER
ENGRAVING, TO PRECISION PRINTING AND FINALLY
PACKAGING FULFILLMENT.
AS A RESULT, OUR TOTAL SOLUTION WON THE “BEST OF
THE BEST” GOLDEN CYLINDER AWARD FROM THE
GRAVURE ASSOCIATION OF AMERICA. BUT MORE
IMPORTANTLY, IT SATISFIED OUT CUSTOMER AND DROVE
ADDITIONAL LEGO SALES.
25

26. (SLIDE 24 – SATISFY THE CUSTOMER)
THE STARBUCKS COFFEE, PEPPERIDGE FARM AND LEGO
CASE STUDIES ARE JUST A FEW EXAMPLES OF OUR
STRATEGY TO USE INSIGHTS AND MULTI-STRUCTURAL
PACKAGING OPTIONS TO SATISFY OUR CUSTOMERS.
WHAT WE HAVE LEARNED IS ENCAPSULATED IN THIS
LOGO. IT SYMBOLIZES THE KEY ELEMENTS OF OUR
MISSION AND STRATEGIC FOCUS.
THIS LOGO TAKES OUR STRATEGIC FOCUS AREAS AND
SURROUNDS THEM WITH OUR NUMBER ONE PRIORITY –
“SATISFY THE CUSTOMER.”
IN OUR MISSION STATEMENT WE USE THE WORDS:
• INNOVATIVE – MEANING WE LEVERAGE TECHNOLOGY
TO CREATE MARKET-FOCUSED SOLUTIONS;
• VALUE-CREATING – MEANING WE WILL BE THE BEST
COST PRODUCER GIVEN THE CUSTOMER BENEFIT
DESIRED;
26

27. • AND SOLUTIONS – MEANING A MULTI-PRODUCT AND
SERVICE OFFERING THAT DELIVERS THE MOST
COMPLETE VALUE EQUATION
OUR “SATISFY THE CUSTOMER STRATEGY” IS
CUSTOMER-FOCUSED – IT IS CUSTOMER DRIVEN – AND
ULTIMATELY IT WILL BE CUSTOMER JUDGED.
TO TRULY PROVIDE THE LEVEL OF CUSTOMER
SATISFACTION THAT WILL MAKE US BETTER THAN OUR
COMPETITORS, WE MUST DO SOME THINGS DIFFERENTLY.
WE MUST BECOME MORE OUTWARDLY FOCUSED
TOWARD THE CUSTOMER. THIS MEANS WE MUST DO
WHAT THE CUSTOMER WANTS VERSUS WHAT WE THINK
THEY WANT.
WE ARE FOCUSING ON BETTER UNDERSTANDING
CONSUMER BEHAVIORS SO WE CAN CHANGE THE
CONVERSATION WITH OUR CUSTOMERS AND
DEMONSTRATE A BETTER UNDERSTANDING OF THEIR
NEEDS.
27

28. FOCUSING ON CONSUMERS, AND ON END USE MARKETS,
ALLOWS US TO BETTER UNDERSTANDING MARKET
GROWTH, CONSUMER PREFERENCES, CUSTOMER NEEDS
AND GEOGRAPHIC TRENDS.
THE WORLD IS CHANGING AND WE MUST ADAPT OR BE
LEFT BEHIND.
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