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Marketing Matters: Packaging and the Brand Experience—New Frontiers
By: Liz Grubow
Posted: December 10, 2007, from the December 2007 issue of GCI Magazine.
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The need to go green isn’t simply a culturally based lifestyle trend—the Wal-Mart effect is a key factor that affects the bottom line for all CPGs that do business with them. Sustainability received a great boost when Wal-Mart introduced its sustainable packaging initiative last year, a move that will have a ripple effect on the entire packaging industry. The retail giant’s packaging scorecard, designed to measure its 60,000 suppliers on their ability to develop packaging that is good for the environment, will be implemented in February 2008, with the goal to globally reduce packaging by 5% by 2013, a move that could save Wal-Mart $3.4 billion.
The world’s largest retailer is instituting the packaging reduction program to both promote the use of recycled materials for packaging and to reduce the amount of material used in packaging, which is where the cost savings is realized. With a smaller package, more product fits in shipping containers and on trucks, which lowers the amount of energy and fuel used in transportation. More product also fits on store shelves, which cuts human resources used to stock them. The less-is-more philosophy is spreading as other major retailers are introducing similar initiatives globally, including U.K.-based Tesco. Over time, traditional excess packaging commonly used in the U.S. will become impractical, decreasing the on-shelf footprint and requiring the need to reinvent an impactful, competitive appearance at shelf.
While U.S. retailers are now moving rapidly in the world of sustainable packaging, U.S. exporters have been aware of the role Europe and Japan have taken as leaders in this arena. Many countries, particularly the members of the European Union (EU), have passed packaging and recycling laws in the past 10 years. Needing to comply with European packaging regulations, U.S. exporters must follow the EU’s Packaging and Packaging Waste Directive, which took effect in 1994 to reduce the overall impact of packaging waste on the environment. The EU’s eco-label is required by member countries to demonstrate that a product is environmentally friendly.
Specifically, Germany established legislation with certain rules for the disposal of packaging materials. A cooperative effort for the collection and recycling of packaging materials was initiated in response to the legislation. The group uses the “green dot,” a recycling symbol that is found on packaging of virtually all products in Germany. While packaging material for products sold in Germany is not legally required to carry the green dot, it is almost impossible to market a product in Germany without it, and other European countries have initiated similar programs.
In 2000, Japan’s government began full implementation of a packaging recycling law that requires manufacturers to pay the associated collecting, sorting, transportation and recycling costs for all paper and plastic containers and packaging. Beauty brands that have been marketing globally have been managing packaging requirements of individual countries for years. However, laws and requirements for sustainable packaging will continue to change as scientific information continually redefines what materials and processes yield the most favorable, least harmful results.