Thursday, September 11th, 2014

A Crazy, Upside-Down World: Brand Owners, the Plastics Supply Chain and History’s Most Informed, and Most Fickle, Consumers

In the broadest terms, the challenges facing brand owners hinge on the fact that today’s market operates in a world wherein information is more available than ever before, but in a way that continues to defy logic. Consumers now make decisions about the products they buy based on information that could be correct, exaggerated, patently false or a modern combination of all three, and rely more on emotional appeal than traditional market functions such as quality, price, value or convenience.

Additionally, consumer behavior now more easily shapes the general public’s perception of a product. A liter of water could be packaged in the most recyclable container that science and progress can create, but the consumer that buys it is still required to deposit it in another container and put it out on their curb on the correct day, or, in some cases, make the effort to actually travel to a local recycling facility, with the container in tow.bottles_shutterstock_12202219

But when a consumer doesn’t do that, and the water bottle lands in the gutter or in the ocean or in the landfill, other consumers don’t blame the person that didn’t recycle that bottle. They blame brand owners.

Demands for high-quality, lightweight, convenient, recyclable packaging essentially gave birth to the modern plastics economy, and resulted in amazing innovations in materials, design and manufacturing. But the consumer’s list of demands never shrinks, only getting longer and longer until arriving at a point like today’s market where brand owners are being pulled in too many different directions. Today, having the best product, in every sense of the term, isn’t enough anymore.

“It’s a crazy upside down world where you could have a great product and be a great environmental steward and very conscious of those environmental takeouts and those assessments and lightweight your packaging and all of those other things, even including using post-consumer recycled material (PCR),” observed Neil Gloger, CEO of Intergroup International. “But you can still lose because you’re not winning the social market-share, as it were.”

This social market-share, as Gloger put it, operates in a supply chain that starts and ends with consumers, but swallows up businesses and even governments on the way, and as it runs its course each party takes steps to place increasingly complicated and frequently counterintuitive demands on brand owners. “A mom in the middle of the Midwest can’t find a place to recycle her kids’ juice boxes,” Gloger offered as an example. “Now everybody who makes juice boxes hears from a retailer, ‘if you ship us another truck of that type of packaging, we will reject it because it doesn’t conform to our packaging standards’ and that was $300 million in business you were doing that just went down the drain.”

This phenomenon of consumers creating and shaping demand happens more quickly today than it has at any other point in history, and to understand why it’s such a heavy burden for the plastics industry to accommodate the new normal, it helps to look at how packaging developed over time. “You have the old normal which was you packaged stuff because it started as a public health issue, and then it became a marketing tool and then it became ease of logistics and creating a lower carbon footprint,” Gloger said. “And we’ve progressed from that to a point where the product that you’re buying is not environmentally responsible because it’s packaged.”

The plastics supply chain developed to account for all of those desires among consumers—public health, marketing, logistics, a lower carbon footprint—but now it must be more environmentally-focused than might’ve previously seemed possible, a shift that brand owners have led admirably, though that’s not how they’re often portrayed by the media, consumers and environmental groups.

brandowners-logo-final-4c“Over the past 5-8 years the brand owners have really taken a leadership role in being responsible stewards,” Gloger said. “The organizations will say ‘they haven’t done anything,’ or ‘too little, too late,’ or ‘they’re only doing this because if they do that they won’t have to do the real work,’” he noted, adding that in many ways this has always been the case. “Say you have a modeling company that’s lightweighting packaging,” he said. “Their motivation wasn’t really to save the environment; their motivation was they wanted to save 40 percent on shipping.”

The point, however, is that the plastics supply chain, driven by consumers and led by brand owners, can operate with a profit interest in a way that satisfies consumer needs. “These things can work in synergy,” Gloger said. “I think the biggest challenge is being able to touch humanities at the same level as the other side does, with their messaging that packaging, everything that the company does, is not coming from an evil empire.”

It used to be that perception was only reality in marketing, but now perception is reality in most corners of the business world. Anthropologists could chalk this up to the advent of social media or other cultural forces, but in the meantime, operating in a way that suits the idiosyncrasies of today’s market isn’t a choice; it’s an imperative. Brand owners need to not only be environmental stewards, but they have to be storytellers as well. “If you have a mom in Iowa saying don’t buy this because the packaging just goes to the landfill, you have to be able to have somebody at the same level understand that there’s another story here, or a bigger story or a better story,” Gloger said. “The story just has to get out. It’s not about companies. It’s about people.”2014_AMFC

Gloger will discuss these issues and provide brand owner-specific solutions at SPI’s upcoming Annual Meeting and Fall Conference in Chicago from Sept. 17-19. Join us! Attendees can register on-site at the conference hotel.

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