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BW Businessworld

Race For The 'Greenest' Bottle

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Last month Pepsi unveiled a 'green' bottle that is entirely made up of plant based material. It is a 100 per cent renewable bottle, made up of plant based materials like switch grass, pine barks and corn husk. Pepsi further aims to develop the technology to also use orange peels, potato peels, oat hulls and other agricultural byproducts from within its agriculture supply chain to produce bottles.

Interestingly In mid 2009, Coca-Cola had also unveiled its 'green' bottle which was made up of 30 per cent plant material, using cane and molasses as its constituents. Coca-Cola named its green bottle 'PlantBottle' and registered the term as a trademark, possibly with an aim of using the term strategically in future. Coca-Cola has plans to take the renewable component up from 30 per cent to 100 per cent.

In what looks like a race for producing the greenest bottle, Pepsi has reached the goal of 100 per cent renewable bottle first. However in terms of bringing this technology to market, Coca-cola seems to have outsmarted Pepsi. Dasani, a mineral water brand has been using Coca-Cola's 'PlantBottles' for its mineral water bottles since 2009. Coca-Cola had planned to produce 2 billion such 'PlantBottles' by the end of 2010. In contrast Pepsi has no plans to mass produce its green bottle before 2012.

Yet in this seemingly, war to go green, it is the underlying potential to improve profitability and revenues that is leading the cola giants to keep pushing on sustainability. Using renewable and environmental friendly bottle will allow Pepsi to achieve greater environmental sustainability and create more synergies in its supply chain. There is a growing trend of consumer preference for environmentally sustainable products around the world. A 2009 GMA-Deloitte study found that 54 per cent of the shoppers consider sustainability as a key decision factor while buying. Another TNS survey found that as many as 53 per cent of Americans and 83 per cent Brazilians would be willing to pay more for more environmentally sustainable products. Sustainability is emerging as a very important component of the brand architecture and it will play a key role in retaining the customers going forward. Given the central role that 'brand' plays in the FMCG sector, the sustainability agenda of cola giants seems a natural progression.

Pepsi's internal goals on environmental sustainability also reflect the same which includes 'absolute carbon reduction' goals, elimination of solid waste from Pepsi's manufacturing and reduction of packaging weight by 350 million pounds by 2012. The introduction of green bottles seems to be a part of the continuum to reduce waste.

However another strategic advantage of using waste (agricultural wastes) within your supply chain as an input for your bottles is the creation of greater value within the supply chain. By using the wastes generated within their supply chain, Pepsi would be able to provide more business to stakeholders within its own agricultural supply chain rather than providing that business to PET bottle manufacturers (petroleum based supply chain). This will allow Pepsi to share more value in the supply chains more strategic to their business - which in this case will be the agricultural produce supply chain. This would improve Pepsi's relationship with its most strategic suppliers which happen to be farmers and plantation owners. Infact sharing the value with agricultural producers will also make it socially more beneficial. It will contribute towards creating more wealth in the agricultural sector.

Additionally reducing the dependence on petroleum supply chain for its PET bottles, Pepsi can reduce the price volatility and rising costs associated with the petroleum products. This should give Pepsi a steadier pricing for its inputs.

The benefits of retaining consumer preference, improvements in supply chain and de-risking of input prices from volatile crude prices- represent some strong business reasons that are expected to keep this race for 'going green', red hot in the times to come.

The author is  a sustainability consultant with Emergent Ventures, a climate change mitigating consultancy. He also works on innovation evangelism with Techpedia