The Italian Milk Market is divided between three milk companies: Pontero, Filo, and Andina. Tetra Pack sells their products to all three of these companies, but while Filo and Andina buy from Tetra Pack and their competitors. However, Pontero buys 100% of their liquid foods packages from Tetra Pack. This is why Pontero is considered to be a model for other Tetra Pack customers in order to see the relationship that Tetra Pack wants to achieve with other customers. Tetra Pack has always given advice to Pontero to do research.
For example, giving advice to Pontero regarding the introduction of a new juice line, which now forms a large sum of their total revenue. Over the last few years Pontero has decreased its sales in families with children. In contrast, Andina has increased their sales in this sector. This is due to the fact that Filo and Andina have introduced an enriched milk element in their newer products. But on the other hand Pontero has been against this new enriched milk, claiming it is artificial.
Consequently, Pontero launched a publicity attack in order to damage the reputation of enriched milk products due to their artificial nature. Pontero did this by showing numerous advertisements. The relationship between Pontero and Tetra Pack has been profitable for both parties since they started working together. Having Tetra Pack as its partner in doing market analysis and research in order to increase Montero’s net sales. Pontero has always trusted Tetra Pack, thus establishing a mutually beneficial alliance. Pontero has looked at Tetra Pack as its mentor in re-establishing its market share.
This could have negative consequences for Tetra Pack because the more sales Pontero losses, the more losses Tetra Pack attributes to itself. Usually Tetra Pack benefits from Pontero and vice-versa. This could also have a counter productive effect, in which both parties lose. Tetra Pack is interested in helping Pontero get out of the continuous downward spiral in terms of market share. Tetra Pack also has to be ready for the intervention of competitors such as Combibloc. These competitors could also see the opportunity to sell their packages (milk, juice, etc. ) for a lower price than Tetra Pack’s packages.
Now that Pontero is experiencing losses of 56 million euros it could reduce its costs by buying cheaper packages. I think Tetra Pack? s idea is successful because it involves launching an enriched milk product, which all his competitors are also doing. It is one of the causes why Tetra Pack is losing its market share. Enriched milk products in 1999 had 7% of the market share. Having a growth rate of 8% between 1995 and 1999. This makes it the milk type with the highest growth rate in this period. Enriched milk has the highest revenue in the overall ? milk? market.
I would personally choose to introduce a new kind of enriched milk. An enriched milk with a touch that none of my competitors have which would allow Pontero to gain a new part of the market (imagine there is currently not yet a market for this variety for enriched milk. For example, enriched milk for ages 18 to 24). “World wide milk consumption has grown from 230 billion liters in 1995 to 236 billion liters in 1999, representing 2% annual growth. ” Pontero has to keep-up more in its research and development (R&D) sector in order to maintain its leadership status within the market.