Going Green Can Boost Sales And Profits, But Targets Elusive Consumers

Going green can lower overhead and increase production, profit margins and sales by streamlining operations, but environmentally conscious consumers can be tough to please.

"Most 'environmental actions' are common sense business practices that will help any manufacturer make and package their product more efficiently and distribute it more cost effectively," said Jim Chrzan, publisher of Healthcare Packaging Magazine, at the Consumer Healthcare Products Association's Regulatory & Scientific Conference May 8 in National Harbor, Md.

He explained that looking through a "lens of sustainability" can help identify production and transportation inefficiencies and help develop greener approaches that are more cost effective.

Procter & Gamble, a recognized environmental leader in the industry, already is reaping financial benefits from green changes.

The firm committed to reducing energy consumption, carbon monoxide, solid waste and water consumption 20 percent by 2012 to improve sustainability and reduce its energy footprint.

The Cincinnati-based firm already met its waste reduction goal and saved more energy than site consumption at 80 percent of its facilities by installing a heat recovery process that saves and reuses heat to operate its facilities, Annie Weisbrod, a senior scientist with P&G's Product Safety & Regulatory Affairs-Sustainability division, said at the conference.

The company also installed translucent roof panels to let more natural light into manufacturing facilities, which accounts for 30 percent of energy savings, and switched to energy-efficient fluorescent lighting, accounting for 70 percent of savings, she said at the conference. P&G also installed motion detectors to switch off computers and lights when not in use.

In another example, the Ghirardelli Chocolate Co.'s environmentally motivated decision to replace cardboard boxes with plastic totes to move product around its facility saved the San Leandro, Calif.-based company $500,000 annually, Chrzan said. The switch reduced waste and cut $2,700 in annual costs for disposing of soiled boxes.

Making packaging greener also can improve production, reduce overhead, lower transportation costs and create a value proposition that ultimately drives sales growth.

For example, P&G changed the geometry of its blister cavity for Prilosec OTC to yield straighter sidewalls without pinholes or cracks while retaining a moisture barrier, Chrzan said.

The change enabled P&G to include 14 tablets per foil card instead of seven. This increased machine throughput while saving the firm 800,000 pounds of foil and paper backing on lidded material, which reduced its overhead and transportation costs, and saved energy at mills producing aluminum materials for P&G, Chrzan said.

P&G further increased the consumer value by making the new packages push cards, which are easier to open than peel-and-push cards.

Weisbrod said the company also increased the consumer value of Crest toothpaste with an "environmental decision" to make the tubes with a thinner laminate, creating room for more paste.

The change enabled consumers to get more for their money while adding fewer Crest tubes to the trash cycle, and cut P&G's transportation costs because it moves more toothpaste in each vehicle, she added.

P&G also reduced waste and overhead costs by reconfiguring Crest White Strips for upper and lower teeth on one sheet instead of two, she said.

Reduced packaging means retailers can stock more product in the same shelf space, which appeals both to manufacturers and stores, said Kevin Smith, president of Sustainable Supply Chain Consulting and former CVS Caremark executive.

The Elusive Green Consumer

A growing number of consumers consider sustainability and environmental impact when shopping, but catering to green shoppers is difficult.

"When you talk to consumers today many will tell you they are green or concerned about the environment, although we saw in recent surveys as the economy soured they became less concerned about being green and more about the money they were spending," Smith explained.

However, he expects their views "will bounce back very strongly" when the economy improves.

Chrzan disagreed, and cautioned that "consumers are not always interested in environment sustainability or green. They are interested in being economical, effective and resourceful. Those are the emotion points that today's package designers are cluing into when they design packages."

He added, the "environment takes a backseat" to package appearance and function, because "if a package looks cheap or inadequate it is a deal-breaker that no environmental claim can rescue."

That said, he acknowledged the "green mainstream" is increasing and as much as 20 percent of consumers "will pony up the dollars to be green."

As time passes though, he expects fewer consumers willingly to pay extra for green products; rather they will consider being green "the cost of entry to the marketplace" that manufacturers should cover, Chrzan said.

The Risk Of "Greenwashing"

"Greenwashing" - making misleading environmental claims - adds risk to appealing to green shoppers, who likely will be turned away from a product if they believe the seller's green intentions are insincere.

Roughly 75 percent of consumers think some companies exploit environmentally friendly claims for marketing purposes, Chrzan said.

Manufacturers also should comply with guidelines by regulators in Canada, the U.K. and the U.S. on misleading environmental claims, said Weisbrod.

With this in mind, Smith reminds firms to ground environmental changes on solid financial results, such as process and package improvements, rather than on the elusive green consumer's whims.

"Profitability is the cornerstone of everything we do and, therefore, everything we do that is environmentally sound also needs to be profitable."

- Elizabeth Crawford ([email protected])