i bus 490 - p&g team packaging case

http://www.pg.com/translations/history_pdf/english_history.pdf

P&G

Packaging

Presentation Topics• History• Background

– Environmental • Impacts

– Social • Stakeholders involved• Government policy

– Economic• Corporate overview• Industry analysis

• Solution– Environmental– Social – Economic

• Challenges

History of P&G • October 31, 1837, Procter & Gamble was born– William Proctor, a candle maker from England, and

James Gamble, a soap maker from Ireland• 1859 sales reached $1million• 1862 supplied Union Army with soap and candles• 1879 Ivory• 1919 P&G sells directly to retailers • 1920-1930 sponsor radio programs – “soap operas”


History of P&G

• 1930 acquire Thomas Hedley in England• 1931 Brand management is born• 1933 Synthetic detergent• 1946 Tide• 1947 Prell shampoo• 1955 Crest with fluoride• 1957 purchase Charmin• 1960 “Downy” fabric softener• 1972 “Bounce” fabric softener sheets• 1987 Celebrates 150th Year Anniversary


P&G 1987:Repositioning Lenor Fabric Softener

Lenor Fabric

Softener

Promised to reduce

packaging on Lenor fabric softener by

85%

West Germany is the largest

fabric softener market in

Europe

Lenor refill package

Regulations

• Environmentally friendly• 75% if West German

households line-dried their laundry

• Lenor’s sales volume decline 7.5% annually and was predicted to continue

• Tight guidelines on packaging and promotion

• Retailers “10 commandments”• Government• Environmental

• 4-from-one concentrate• Laminated cardboard carton (similar

to milk carton)• Stan-alone soft plastic package

“doypack pouch”• Waste reductio

• Less packaging• Reusable

Why?

Environmental• Shift from defensive

thinking towards proactive and successful approaches

Social• Understanding their

customer’s needs• Taking all stakeholders

into consideration

Economical• Stem eroding sales

volume and market share

Once upon a time…

Environmental concerns spiked due to…..

Chernobyl

Limited lands

Scarce natural resources

Increasing waste outputs

Dense population sizes

Lenors’s contribution to the problem

• 5% Softening ingredients and 95% water

• Packaging in hard, high density polyethylene plastic containers

• Focus more on Price/Scent vs Environmental

Then the European Nation Took Action…

1986 survey of 11,8000 Western, 72% where concerned about problems such as acid, rain,

landfill capacity, and the greenhouse effect

Implemented Waste Avoidance Utilization, Avoidance, Utilization, and Disposal Act

By 1985, West Germans recycled more than ⅓ of waste...

The Blue Angel Program was implemented

Lenor in Response

• Lenor applies refill pack• Receives great responses, however questions

the popularity if implemented nationally….• Concentrate Exist Today

25 years later…What Happened?

Scent Oriented Highly dense plastic packaging

What happens to all the plastic?

Great Pacific Garbage Patch• 90% of the patch is Plastic• Around 95% originated from land

Government/ Environmental

Customer Demand

Strongly desires scent

Need of durable packing

Price Sensitivity

Plastics non degradable

Economics: Lenor Packaging CaseProctor and Gamble

ECONOMIC PROBLEM

Between 1984 and 1986 Lenor’s sales volume fell 7.5% annually due to:

1) Aggressive competitive pricing 2) Eroding Brand Image3) Shrinking Market due to Environmental concerns.

Lenor in East Germany

• Dominated East Germany with 37% Market Share

• Selling Lenor’s Iconic Blue 4 liter Bottle• Consumers Differentiate product on

Price/Scent• Price Wars drove average profit margin from

12.7% in 1984 to just 2.5% in 1986• 98% store penetration by 1987

Volatile Elements: Packaging/Shipping Fuel

Rethinking a Titan

• New Packaging vital for P&G’s Bottom line

• Must become more environmentally sensitive in order to appeal to the East German Market

• Implications for their 5 Billion Consumers worldwide

Economics: Beyond Stockholders

A solution for P&G’s packaging

Bioplastic

Plastics

• Moldable type of organic polymer• Petroleum based• Two types: – Thermoplastics

• Become a liquid when heated• Can be molded & cooled many times with no degradation• Softer than thermo-set• Easier to recycle than thermo-set

– Thermo-set plastics• Can only be molded once• Bulky short molecules• Decomposes after being re-heated

http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf

Manufacturing PlasticsEnvironment

• In 2007:– 92,835 million pounds - thermoplastic – 4,838 million pounds – thermoset

• Energy:– Oil used to make plastics is 4% of total oil

consumption (87.2 million barrels a day)– 4% only accounts for plastic feedstock selling

plastics


Manufacturing PlasticsEnvironment

• Energy:– Plastics industry in the United States consumes

about 6% of all the energy used by American industries

– In 1998, rubber and plastics product manufacturers used 320 trillion Btu

– 320 trillion Btu is approximately $3.5 billion• Co2 Emissions:– In 1994, U.S. plastics industry was responsible for

4.7 million metric tons of carbon dioxide emissions.


Manufacturing PlasticsEconomic

• Plastics facilities in the U.S. 18,585• Employees of the plastics industry 1,130,300– Worker wages of the plastics industry

$28,356,100,000• U.S. plastic sales $378,830,000,000• Exports from the U.S. $43,040,000,000• Imports to the U.S. $37,580,000,000


Manufacturing PlasticsSocial

• Health risks associated with plastics do not come from plastics themselves but from additives like plasticizers– Certain plasticizers have found to be both

carcinogenic


Bioplastics

What are they made of?

• Bioplastics are plastics made out of biopolymers– biopolymers are polymers that come from a

biological source.• Bioplastics can be made using plant, animal, or

bacterial sources:– wheat, corn, rice, potatoes, barley, and sorghum.– Natural oils from soy and palm – Bacteria– Genetically engineered organisms


Starch Based Bioplastics

• Account for 80% of the bioplastics market– Pure starch can absorb water from the air and degrade. – Organisms can also metabolize pure starch, as it is a

carbohydrate. – The fact that starch disintegrates in liquids makes it ideal for

drug capsules. – Used to make:

• plant pots• drinking cups• disposable shopping bags• Cutlery• coated cardboard• diaper foil.


Environmental Implication of Bioplastic

Strengths• Cheaper than plastic productions• Emits less carbon dioxide.• Easily recycled

Weakness• P&G products are not well known for

having green laundry products. Rusty since the 90s

Opportunities• New green perception from customers• Will becoming a major well known

pioneer for using biodegradables

Threats• Gets contaminated when petro plastic

mix in• Has potential to effect food supply

Bioplastics

THE ECONOMICS OF BIOPLASTICS

Can a Packaging shift appease the economic segment of the Triple bottom line?

Current Realities

• 3.49 million barrels of oil a day are converted into plastics.

• 99% of plastics come petroleum. Ethylene, propylene and Styrene are extracted directly from crude oil.

• Current rigid plastic containers such as the Lenor 4 li. and 1 li. Concentrate will take millions of years to biodegrade.

Economic Uncertainty

• Yet the environmental and social benefits are meaningless if bio plastics are economically unfeasible.

• PLV is 20% more expensive than current petroleum based plastics.

• How will bioplastics impact dependence on and consumption of fossil fuels?

• How will a switch to bio plastics negatively effect primary commodity markets?

• In 2009 the United States Generated 30 million tons of plastic waste.

• 11 million tons was durable plastic such as that used in the packaging for Lenor’s 4li and 1li. Fabric Softener.

• Only 7% of all plastic waste was recovered for recycling.

Bioplastics: Scorecard

P&G Corporate Goals

P&G’s Lifecycle Assessment

i bus 490 - p&g team packaging case

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