Part IV: Packaging

Part IV: Packaging

Packaging is a high-profile sustainability issue for any consumer goods company simply by dint of its closeness to the consumer. The complexities of industrial production and the degree to which companies can mitigate the environmental impacts in production sites may be lost on many consumers but how heavy a pack is and what it is made from is readily apparent.

A sustainable packaging initiative may well be an opportunity for a company to drive down the carbon footprint of a product or reduce the potential for waste creation within the total value chain, but it also offers the chance to make a very public statement about its environmental commitment.

Lightweighting and recycled content

Diageo has set a target of reducing average packaging weight of our products by 10% by 2015 against a 2009 baseline. So far, it has recorded a cumulative reduction of 4.8%. Diageo is also committed to making all packaging 100% recyclable by 2015 and that figure now stands at 98.3%.

Diageo's third target around sustainable packaging is to increase the average recycled content across all packaging by 20% to 42% by 2015. The average recycled content across all packaging currently stands at 35%, unchanged for two years. This is in fact the only metric that Diageo has declared as "off track" for 2012.

While 80% of its cardboard packaging and 52% of the aluminium cans it uses are made from recycled material, Diageo faces a greater challenge with recycled glass, explains head of environment communications & policy Michael Alexander. Owing to the lack of availability of 'cullet', recycled glass which has been crushed and is ready for re-melting, in certain countries, notably the US, Diageo's glass suppliers are simply not able to meet its demands for bottles made with recycled glass.

"We can't suddenly create an availability of cullet for suppliers," Alexander says, adding that the company's aim has been to work with suppliers to increase the supply of cullet, which in turn means engaging in the task of encouraging more consumers to recycle used glass. Lower recycling rates are the primary reason for the short supply of cullet in North America, for example. "It's not an issue particular to Diageo. It's an issue that all beverage companies that use a lot of glass are working on; it's a much wider issue in terms of consumer trends and recycling globally."

Bacardi also places considerable emphasis on its sustainability strategy on working with suppliers to increase the content of recycled glass used in the production of its bottles. "Recycled content of glass is vital," says Bacardi global technical director Stuart Lowthian. "If we can increase the recycled content of glass by 10%, then working with our suppliers tells us that that reduces their energy input by 3% and the GHG impact by 5%."

Meanwhile, Bacardi has set itself a target to reduce the weight of its packaging by 12% by 2017 from a 2008 baseline. "To date we've reduced the weight by 7% so we're well on track for meeting that target," Lowthian adds.

Pernod Ricard has also made significant progress on lightweighting, stating in its last annual report that its use of glass had fallen to 563g per litre of finished product in 2010/2011 from 591g per litre the previous year.

Notable lightweighting achievements in its spirits operations include a 25% weight reduction in the Pernod Café de Paris bottle, a 10% reduction in the weight of the bottle for the Kahlúa liqueur brand, and an 11% reduction in the weight of the bottle for its Orloff vodka brand. Meanwhile, it has replaced the glass bottle for its Malibu brand with recyclable PET.

Eco design

Eco design considerations now figure prominently in the packaging design process of major spirits producers. Pernod began to do this in a systematic way in 2006 when it undertook additional training for marketing and purchasing teams. It continued this process with the introduction of an internal manual for all brand companies in 2007/2008, and last year the process was further developed with the introduction in 11 subsidiaries of a software package to assess the environmental impact of packaging over the product life cycle, which is to be used as a decision-making tool in the design of packaging.

Bacardi has recently developed a Sustainable Packaging Manual to provide guidance to its marketing and innovation and packaging development teams around the world on sustainable packaging issues.

Similarly, Diageo has incorporated environmental criteria into its packaging design process, introducing its Sustainable Packaging Guidelines this year. "Within brand redesign there is a stage [in] which we will call out what are the environmental implications and what are the environmental opportunities associated with this redesign," says Michael Alexander. "So, it's a defined stage within our redesign process that we implement as a mandatory requirement."

Consumer perceptions around bottle weight

Packaging designers face a particularly tough challenge with spirits brands, given the strong associations spirits drinkers have traditionally made between bottle weight and quality. Lightweighting represents less of a challenge with products such as RTDs and standard offerings where, owing to the volumes involved, substantial aggregate weight reductions can still be achieved. But, as Alexander points out, with premium offerings "the consumer does expect something of substance and with that often comes the perception that weight is valuable, is premium".

Tim Nall, Brown-Forman's director of environmental performance & governmental compliance, echoes this view. "That's the problem we face right now. As long as the consumer keeps viewing that as a cue of premiumisation it's a challenge not to give them that cue, especially with all our competitors in the same boat."

Nevertheless, Alexander maintains there are opportunities to reduce packaging weight in global spirits brands. Moreover, he believes the process represents "a great opportunity" to work with big retail customers on a key sustainability issue. "They have environmental agendas and want their suppliers and supply chains to reduce their environmental impacts so it opens up conversations with them."

He continues: "It is perhaps, for the spirits industry, a bigger challenge in terms of consumer preferences but we've seen beer brands slightly lightweight and make a consumer engagement of that, and who's to say that might happen in spirits going forward."

Bacardi's Stuart Lowthian is also relatively sanguine about the lightweighting challenge, even suggesting that the risks of consumer alienation might be overstated. "What we find is that consumers quite often don't notice a small change in the packaging weight, and also bartenders are really important for us. What we find when we talk to them is actually some of them prefer to have a lighter weight bottle." 

However, Tod Christenson, director of the Beverage Industry Environmental Roundtable (BIER), which has carried out carbon footprinting research on the spirits sector, sees the challenge around bottle weight as an environmental "hotspot" for the spirits industry. However, because packaging design cannot be viewed as a pre-competitive area, the scope for collective action is far more limited than in areas such as water, energy and waste. "For us at BIER eco design is not a subject we're going into and really because we view it as a competitive space versus water carbon or energy consumption."

For the same reason, Michael Alexander stresses the important role NGOs working in the packaging sector, such as WRAP in the UK, have to play in fostering dialogue on sustainable packaging issues between all stakeholders.

For the table of contents for this briefing, click here.