I BUS 490 Procter and Gamble Lenor Packaging Case for Elizabeth Stearns 2012

1. P&G
Packaging
http://www.pg.com/translations/history_p
df/english_history.pdf

2. Presentation Topics
• History
• Background
– Environmental
• Impacts
– Social
• Stakeholders involved
• Government policy
– Economic
• Corporate overview
• Industry analysis
• Solution
– Environmental
– Social
– Economic
• Challenges

3. 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”
http://www.pg.com/translations/history_pdf/english_history.pdf

4. 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
http://www.pg.com/translations/history_pdf/english_history.pdf

5. P&G 1987:
Repositioning Lenor Fabric Softener
Promised to
reduce
packaging on
Lenor fabric
softener by
85%
• Tight guidelines on packaging Lenor West Germany• Environmentally friendly
is the largest • 75% if West German
and promotion
• Retailers “10 commandments”
Regulations Fabric fabric softener
market in
households line-dried
their laundry
• Government
• Environmental Softener Europe • Lenor’s sales volume decline
7.5% annually and was
predicted to continue
• 4-from-one concentrate
Lenor refill • Laminated cardboard carton (similar
package to milk carton)
• Stan-alone soft plastic package
“doypack pouch”
• Waste reductio
• Less packaging
• Reusable

6. Why?
Environmental Social Economical
• Shift from defensive • Understanding their • Stem eroding sales
thinking towards customer’s needs volume and market
proactive and successful • Taking all stakeholders share
approaches into consideration

7. Once upon a time…
Increasing waste outputs
Chernobyl
Environmental concerns spiked due to…..
Dense population sizes
Scarce natural resources
Limited lands

8. 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

9. 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

10. Lenor in Response
• Lenor applies refill pack
• Receives great responses, however questions
the popularity if implemented nationally….
• Concentrate Exist Today

11. 25 years later…What Happened?

12. Scent Oriented
Highly dense plastic packaging
What happens to all the plastic?

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

14. Government/ Customer
Environmental Demand

15. Economics: Lenor Packaging Case
Proctor and Gamble

16. ECONOMIC PROBLEM
Between 1984 and 1986 Lenor’s sales volume fell 7.5% annually due to:
1) Aggressive competitive pricing
2) Eroding Brand Image
3) Shrinking Market due to Environmental concerns.

17. 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

18. Volatile Elements: Packaging/Shipping Fuel

19. 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

20. Economics: Beyond Stockholders

21. A solution for P&G’s packaging
Bioplastic

22. 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

23. Manufacturing Plastics
Environment
• 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
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf

24. Manufacturing Plastics
Environment
• 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.
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf

25. Manufacturing Plastics
Economic
• 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
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf

26. Manufacturing Plastics
Social
• Health risks associated with plastics do not
come from plastics themselves but from
additives like plasticizers
– Certain plasticizers have found to be both
carcinogenic
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf

27. Bioplastics

28. 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
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf

29. 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.
http://www.wpi.edu/Pubs/E-project/Available/E-project-031609-205515/unrestricted/bioplastics.pdf

30. Environmental Implication of
Bioplastic
Strengths Weakness
• Cheaper than plastic productions • P&G products are not well known for
• Emits less carbon dioxide. having green laundry products. Rusty
• Easily recycled since the 90s
Bioplastics
Opportunities Threats
• New green perception from customers • Gets contaminated when petro plastic mix
• Will becoming a major well known in
pioneer for using biodegradables • Has potential to effect food supply

31. Can a Packaging shift appease the economic
segment of the Triple bottom line?
THE ECONOMICS OF BIOPLASTICS

32. 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.

33. 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.

34. • How will bioplastics impact dependence on
and consumption of fossil fuels?
• How will a switch to bio plastics negatively
effect primary commodity markets?

35. • 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.

36. Bioplastics: Scorecard

37. P&G Corporate Goals

38. P&G’s Lifecycle Assessment