As companies scour production systems for ways to cut costs during a period of rising inputs and a tight economy, it’s also increasingly important for them to consider corporate responsibility, as well as consumer environmental awareness. For dairy manufacturers, solutions that offer cost savings, plus sustainability, are in the spotlight as environmentally friendly milk jugs begin to replace standard packaging. Though, as manufacturers in Europe have realized, it may be necessary to look beyond packaging for truly sustainable innovations.
A study released Sept. 29 by the Food Marketing Institute (F.M.I.) found 41% of retailers have corporate sustainability plans in place. Sustainability also is increasingly important to consumers. The report found 62% of shoppers value their grocery store’s recycling and sustainability efforts.
"In an economic environment where shoppers are more willing than ever to switch stores to save money, intangible benefits from efforts in sustainability can go a long way in building loyalty beyond price alone," said Anne-Marie Roerink, director of research at the F.M.I.
The same could be said of brand awareness. Approximately 50% of consumers consider at least one sustainability factor when selecting packaged goods, according to a survey from Information Resources, Inc. released earlier this year. About 30% of those surveyed look for eco-friendly products and packaging when choosing brands.
Good for the planet, business
Not only does sustainability affect consumer choice, it also may be profitable for the corporate bottom line.
"What we’ve seen recently is the influence of increasing energy and commodities costs," said Anne Johnson, director of the Sustainable Packaging Coalition, a project of the non-profit GreenBlue. "Companies are trying to figure out how to reduce costs, and sustainability is a way to cut costs."
The square milk jugs introduced at Sam’s Clubs, Bentonville, Ark., are an example of sustainable design that also saves money. The self-stacking square jugs do not require crates or racks for shipping and storage. Sam’s Club estimates its shipping trucks carry 9% more milk — 4,704 gallons per truck or approximately 384 more jugs. Not only is energy saved in transporting the new jugs, but water also is saved by removing the step of washing reusable dairy crates.
An F.M.I. transportation benchmark study released Oct. 5 found transportation costs rose to 1.8% of sales for wholesalers in 2007, up from 1.6% in 2004.
"Distributors can’t control the price of fuel, but they are conserving it in virtually every way imaginable," said Jeff Rumachik, vice-president of wholesaler and member services at the F.M.I.
The square milk jugs were created by Superior Dairy of Canton, Ohio, as a way for the medium-size, regional dairy to compete with larger dairy processors in operating efficiency.
Education is key
Since shoppers voiced mixed approval for the square milk jugs, saying they were harder to pour from without spilling, it’s important to highlight environmental benefits for consumers, Ms. Johnson noted.
"If environmental benefits are not obvious to consumers, they don’t understand why things have changed," she said. "When we do make these innovations, we need to be sure and explain how it impacts consumers, and how we’re keeping rising energy costs down."
Energy concerns, as well as sustainability, fuel package design innovations at Tetra Pak, Lausanne, Sweden, a company that specializes in aseptic, shelf-stable beverage packaging.
"First and foremost, Tetra Pak packaging on average is made from 70% renewable resources, for sources we use responsibly sourced, well-managed forests," said Laurens van de Vijver, vice-president of marketing and product management for the U.S. and Canada at Tetra Pak. "Obviously these days energy savings are crucial. Tetra Pak has a very low carbon footprint. And our packaging is lightweight to transport."
The company’s aseptic packaging allows milk to be stored at room temperature for months when combined with ultra high temperature (U.H.T.) treatment — a thermal process for preserving milk by exposing it to high temperatures for a short time. The milk may be shipped at ambient temperatures, then sold chilled.
"The carbon footprint levels are higher among food category products, and dairy is very high on that list," Mr. van de Vijver said. "Dairy manufacturers need to take a proactive look into solutions to their carbon footprint throughout the entire lifecycle. It goes beyond packaging — it’s important throughout the whole supply chain process."
Consumer perception may turn out to be the driving force behind large-scale changes in the dairy aisle, he noted.
"One could challenge the paradigm that we really need that massive infrastructure for cool chains, and this will be increasingly ‘food for thought,’" he said. "The dairy and beverage industry has to be aware that consumers are better informed than ever. The bottled water industry couldn’t have foreseen three years ago how their business and image would have been affected by bans on plastic bottles. What has happened today can happen as well to the cool-chain infrastructure. People will start to challenge why do we have these cool chains if there are non-refrigerated packaging alternatives available?"
Shoppers’ concerns about the freshness of room-temperature dairy products may warrant education to explain the new technology, Ms. Johnson said.
"The shelf stable issue is one that Europe has dealt with," she said. "That would be a huge cultural shift in the U.S. It will be interesting to see what happens since the refrigerated format is the most widely used. We’d probably need a lot of consumer education."
New technology is not only important for consumers to understand, but it’s also crucial for manufacturers to understand, especially in how it relates to their own supply chain.
"For manufacturers, that’s why it’s important to understand what are your major impact areas, and what do you control," Ms. Johnson said.
Ben & Jerry’s, Burlington, Vt., currently is testing a hydrocarbon-based green freezer system for use in the United States. The company hopes to gain approval for the technology’s long-term use in this country.
"This is an important step for our business, which we hope will clearly demonstrate that a more environmentally friendly refrigeration technology can work in the U.S. market," said Walt Freese, chief executive officer at Ben & Jerry’s, in a Sept. 29 announcement. "The technology is commonplace in Europe with literally millions of home and commercial units in place."
Mr. van de Vijver noted manufacturers and retailers often are on the cutting edge of sustainability, especially in the United States.
"Over the past two years, the interest in our packaging has significantly increased as people realize the need for energy savings," he said. "That’s been driven by retailers in the U.S. that are putting a high priority on it."
Wal-Mart Stores, Inc., Bentonville, Ark., implemented a packaging scorecard in February to allow its suppliers to rate their progress on sustainable packaging initiatives. Wal-Mart also is working to develop a consistent system of sustainability monitoring.
Earlier this year, ASDA, a U.K. retailer owned by Wal-Mart, introduced a new milk bottle made with recycled cardboard. The company plans to achieve zero waste lost to landfills by 2010.
"We must focus on sustainability, ensuring our products are produced in an efficient and environmentally-conscious manner," said Connie Tipton, president and chief executive officer of the International Dairy Foods Association at its 2008 Dairy Forum. "This is an issue that looms large on the horizon with major retailers such as Wal-Mart demanding not only awareness but change. You have to look at what it means for society and the environment, but you also have to focus on what it brings to your company’s bottom line."
I.D.F.A. to hold sustainability workshop
The International Dairy Foods Association will sponsor a sustainability workshop March 11 -12, 2009, in Dallas. The workshop will focus on the challenges of monitoring and reducing the energy, water and chemicals used throughout each product’s lifecycle. Attendees also will hear highlights from successful case studies and review initiatives under way in other food industries.
For more information, contact Lauren Ledermann, I.D.F.A. coordinator of meetings and educational sessions, at firstname.lastname@example.org.
This article can also be found in the digital edition of Dairy Business News, October 2008, starting on page 9. Click