Consumer Product’s Green Diet: Slimmer Packaging Looks Good On You

March 23, 2008

Lora Cecere and John Davies
AMR Research

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What a difference a year makes. At the start of 2007, few consumer products companies had a focus on sustainability in packaging. However, 54 percent of the consumer goods companies that AMR Research recently surveyed are targeting improvements. The numbers are highest in food and beverage, with 65 percent seeing it as an important objective for 2008.Sustainability matters to major customers

Why the change? The biggest factor is the scramble to meet customer requirements. Wal-Mart, the largest customer for most CP companies, is pushing a program to reduce packaging five percent by 2013.

By February 29, 2008, all Wal-Mart suppliers were to enter packaging information into a Retail Link scorecard, with many having already complied. It’s been an eye-opening experience for those that have.

Sustainability will soon be on the agenda for the Monday morning sales call. What a difference a year makes indeed.

Sustainability making a difference to shoppers

The second driver is the changing customer attitude on sustainable products. IRI panel data supports that, for the first time, consumers are seeing green, and they’ll be voting for sustainable practices with their dollars. In 2008, expect more companies to not only be selling products, but their social and ecological practices as well.

In 2007, the pendulum had not yet swung. Consider the example of Energy-Star-rated compact fluorescent light bulbs. They use up to 75 percent less energy and last up to 10 times longer than standard bulbs. While Philips and GE both marketed these hard, it is taking the Wal-Mart endorsement to help customers understand the greater value.

Sustainability on government agendas

The third driver is regulation. By December 2008, Europeans must recover 60 percent of all packaging waste and reach a recycling level of 55 percent. In the UK, any company involved in the packaging supply chain that has annual revenue greater than 3.46M pounds or handling more than 50 tons of packaging each year is bound by the directive.

For companies that distribute products globally, expect to see Europe and European shoppers shape this agenda.

What does this mean for your organization?

Sustainability is an emerging area for most corporations. A CP company can attack it on lots of fronts, but based on recent studies, it is clear that the biggest focus for most companies is packaging.

Companies have the opportunity to embrace this change to drive parallel and often synergistic efforts. Here are a few thoughts to help your organization capitalize on this opportunity:

Lean does not equal green-Through the reduction of waste, lean clearly helps sustainability efforts, but it is not the total answer. While sustainability may help us to better market lean initiatives, there is a need to redesign what we do especially in the area of packaging.
It takes a community-Do you reward your packaging suppliers when they help you leapfrog on sustainable packaging initiatives? If not, now is a good time to revisit supplier scorecards, supplier development programs, and the management of design networks to encourage this type of behavior.

Fear not-help is on its way!

Technology providers are embracing this as an opportunity to reinvent their categories. SAS recently announced the launch of sustainability modeling on carbon footprints in its cost-to-serve technology. We expect more vendors in this space to follow its lead. Terra Technology is connecting improvements in demand planning to reduce waste.

For more on this subject, or to access the article this piece was excerpted from, visit www.amrresearch.com.

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