Alliance University – EPGDM

Business Strategy
Ready-to-drink Beverage habits and Ecology
Case Study Nov.2020
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Sustainability, respecting the ecology and their impact on the society – local, national
and international, is becoming more important for all companies, across all industries.
Corporate Management should make sure that the strategy of the company and the
sustainability efforts are aligned at every stage of strategic management.

Apart from legal compliance, which is mandatory, every organisation should go one
step ahead in setting up right ethical standards, for the organisation and their
employees at all levels, so that collectively and at individual level everybody will be
striving towards a better tomorrow, ecologically sustainable and beneficial for many
generations to live in peace and comfort.

Consumers—particularly Millennials—increasingly say they want brands that embrace

purpose and sustainability. Indeed, one recent report revealed that certain categories of
products with sustainability claims showed twice the growth of their traditional
counterparts. Yet a frustrating paradox remains at the heart of green business: Most
consumers who report positive attitudes toward eco-friendly products and services do
not follow through their actions with intentions expressed.

In one recent survey over 65% said they want to buy purpose-driven brands that
advocate sustainability, yet only less than about 20% actually do so. What may be the
reasons? – laziness, will do what is required, or relative higher cost of brands that
advocate and practice sustainability in comparison to cheaper alternatives, or lack of
facilities in the immediate vicinity to collect re-cyclable items for quick disposal –
Requires research and further study among today’s youngsters and working class
fathers and mothers, particularly in fast developing countries with large population

Narrowing this “intention-action gap” is important not just for meeting corporate
sustainability goals but also for the planet.

It is observed through various studies, that people are generally influenced to do

environmentally friendly and preferred actions by being influenced by near neighbours
who have done so, and by those whose word-of-mouth opinion they value

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A study conducted few years back and published in Harvard Business Review talks
about few methods as to how to align consumers’ behaviours with their stated
preferences.

Using Social Influence - to change local residents’ behaviour using “social norms”—
informal understandings within a social group about what constitutes acceptable
behaviour. Harnessing the power of social influence is one of the most effective ways to
elicit pro-environmental behaviours in consumption as well. the most dramatic
finding, telling university students that other commuters were ditching their cars in favour
of more-sustainable modes of transportation (such as cycling) led them to use
sustainable transport five times as often as did those who were simply given information
about alternatives.

Many consumers often have negative associations with sustainable product options,
viewing them as being of lower quality, less aesthetically pleasing, and more expensive.
One way to offset such negative associations is to highlight the product’s positively
viewed attributes—such as innovativeness, novelty, and safety. For example, Tesla
focuses on the innovative design and functional performance of its cars more than on
their green credentials—a message that resonates with its target market. This also helps
overcome the concern of some men that green products are feminine.

Humans are creatures of habit. Many behaviours, such as how we commute to work,
what we buy, what we eat, and how we dispose of products and packaging, are part of
our regular routines. Often the key to spreading sustainable consumer behaviours is to
first break bad habits and then encourage good ones.

Habits are triggered by cues found in familiar contexts. For example, using disposable
coffee cups (a habit repeated a staggering 500 billion times a year across the globe)
may be a response to cues, such as the default cup provided by the barista and a trash
bin illustrated with a picture of a cup, both common in coffee shops.

Companies can use design features to eliminate negative habits and substitute positive
ones. The simplest and probably most effective approach is to make sustainable
behaviour the default option.

Three subtle techniques can help shape positive habits: using prompts, providing
feedback, and offering incentives.

Incentives can take any number of forms. In the UK, Coca-Cola has partnered with Merlin
Entertainments to offer “reverse vending machines” from which consumers receive half-
price entry tickets to theme parks when they recycle their plastic drink bottles. Incentives
should be used with care, because if they are removed, the desired behaviour may
disappear too.

Another concern is that they may undermine consumers’ intrinsic desire to adopt a
behaviour. In a study in the Journal of Consumer Psychology, “Are Two Reasons Better
Than One?” researchers found that combining external incentives (“Save money!”) with
intrinsic motives (“Save the environment!”) resulted in less preference for a sustainable
product than did intrinsic appeals alone. The authors hypothesized that this occurred
because an external motivation can “crowd out” an intrinsic desire.

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One of the benefits of encouraging consumers to form desirable habits is that it can
create positive spill over: People like to be consistent, so if they adopt one sustainable
behaviour, they are often apt to make other positive changes in the future.

After IKEA launched a sustainability initiative called Live Lagom (lagom means “the right
amount” in Swedish), it studied the sustainability journey in depth among a core group of
its customers. The company found that although people may begin with a single step—
such as reducing household food waste—they often move on to act in other domains,
such as energy conservation. IKEA observed a snowball effect as well: People would
begin with small actions and build to more meaningful ones. For example, buying LED
light bulbs might lead to wearing warmer clothing and turning down the thermostat,
changing curtains and blinds to decrease heat loss, insulating doors and windows,
buying energy-efficient appliances, installing a programmable thermostat, and so on.

How companies communicate with consumers has an enormous influence on the

adoption of sustainable behaviours. When getting ready to launch or promote a product
or a campaign, marketers often have a choice between emotional levers and rational
arguments

People are more likely to engage in a behaviour when they derive positive feelings from
doing so. This core precept is often overlooked when it comes to sustainability, for which
ad campaigns are likely to emphasize disturbing warnings. Research has found that
hope and pride are particularly useful in driving sustainable consumption. Bacardi and
Lonely Whale cultivate hope in their collaboration to eliminate one billion single-use
plastic straws, and they use the hashtag #thefuturedoesntsuck to promote events and
call for consumer action. And when people in were publicly praised each week for their
energy-efficiency efforts, thus engendering pride, they saved more energy than a group
that was given small (up to €5) weekly financial rewards.

In 2010 Unilever launched a campaign to draw attention to the fact that although some
palm oil harvesting leads to rain forest destruction, its palm oil is all sustainably farmed.
Printed on a photo of a rain forest was the tagline “What you buy at the supermarket can
change the world…. Small actions, big difference.” The company was leveraging
decades-old research findings that people are unlikely to undertake a behaviour unless
they have a sense of what researchers call self-efficacy—confidence that their actions
will have a meaningful impact. Thus, one key to marketing a sustainable product is
communicating what effect its use will have on the environment.

Some companies have won customers over by offering to recycle products after use.
Thus, one way to encourage eco-friendly consumer behaviour is to build elements of
sustainability into how products are used and ultimately disposed of.

Despite the growing momentum behind sustainable business practices, companies still
strive to communicate their brands’ sustainability to consumers in ways that heighten
brand relevance, increase market share, and fuel a shift toward a culture of sustainable
living

In order to work towards an environmentally conscious society, the need of the hour
is to empower the youth with sufficient knowledge, skills, and values to help them

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understand their relationship with the environment and encourage them to make
concerted efforts to improve standards of living with a pro-environment focus.

The world is talking of sustainable development goals (SDGs) and the 2030 agenda.
Education is a part of these global developments and has been enshrined as SDG4 -
Quality education. SDG 4 states: Ensure inclusive and equitable quality education and
promote lifelong learning opportunities for all. Targets under this goal cover aspects
of effective learning outcomes, quality early childhood development, access to
technical, vocational and higher education, youth education and adult literacy,
imparting skills to learners to promote sustainable development through a culture of
peace and global citizenship, provision of inclusive education, increase in
opportunities for education – especially for marginalised sections

Education increases the level of understanding so that citizens can move collectively
towards sustainability. Through raising awareness, building knowledge and fostering
competencies, education can contribute to achieving most of the SDGs. However, for
individuals to be in a position to engage with sustainability-related issues, a
reorientation towards Education for Sustainable Development (ESD) is essential

India is set to become the world’s youngest country with around 70 per cent of its
population in the working age group by 2030. There are many challenges that the
world is facing today, such as climate change, lack of access to clean water and
sanitation, energy crisis, food insecurity and other environmental and societal
challenges.

Globally, young people are being sought after as the best changemakers for
implementation. Our engagement with students and youth essentially should focus on
going beyond the confines of text-based and linear training process into versatile
grounds of education, and integrating the Internet and social media to channelise the
potential of the youth.

Disposable paper cups first appeared in the U.S. in the early 1900s with the invention
of the paper cup that came to be known as the Dixie cup. These cups began to replace
shared drinking cups that were used at water fountains as public health concerns
began to grow. Hospitals and schools rapidly adopted paper cups for sanitary reasons.
Early research showed that paper cup cost per use was lower than that of washing
and sanitizing reusable glasses, and the era of the single-use cup began.

Paper cups used for hot and cold beverages are made of solid bleached sulphate
(SBS) paperboard with a poly coating added for waterproofing. The actual composition
of paper cups varies considerably, but the majority are at least 90 percent paper fibre.
Originally, clay or wax lining was used for waterproofing; however, with the
development of polyethylene (PE), plastic linings and coatings were almost universally
adopted. Use of PE and related materials for lining provides better performance and
overcomes the undesirable smells and tastes associated with clay and wax.

Most cups today are coated with PE, which is not biodegradable. While some use
polylactic acid (PLA), a biodegradable bioplastic, other concerns with PLA prevent it
from becoming a clear winner over PE.

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Three types of questions generally are asked when evaluating the sustainability of
paper cups:

1. Do we really need single-use cups? Could reusable cups help to reduce the
use of single-use cups overall?
2. What percentage of the fibre in the cup is recycled, and is the virgin fibre from
sustainably managed forests?
3. Is the cup itself recoverable after use? Can it be recycled or composted?

What are our chances of returning to the pre paper-cup era and significantly reducing
the volume of single-use paper cups? Starbucks’ experience provides a good example
of the challenge.

Starbucks has provided financial incentives for customers to bring their own reusable
cups since 1985, but no more than a few percent have ever done so. In 2008, a new
initiative hoped to encourage 25 percent of customers to bring their own cups, but that
number has never budged past 2 percent.

When Starbucks introduced a $1 reusable plastic cup and lid in 2012, the initial
response was strong. But well over half of American adults surveyed in early 2013 by
a major polling firm said they “probably or definitely would not buy one.” Many of us
would find it difficult to remember to bring the reusable cup to the purchase occasion.

When plastic straws became a symbol of environmental destruction, Starbucks swiftly

came up with a plan: Get rid of them. The company redesigned its cold cup lids so
they won’t require a straw at all. By 2020, Starbucks said, it will eliminate single-use
plastic straws at its more than 29,800 locations around the world.

It was a remarkably quick fix, considering the company has spent 30 years trying to
come up with a greener alternative to another object: its iconic paper cup. Over the
past three decades, Starbucks has come at the cup problem from every angle. Now,
it’s hoping for a breakthrough.

Last year, Starbucks committed to the NextGen Cup Challenge, teaming up with other
food companies for help. McDonald’s, Coca-Cola, Wendy’s, Nestlé and Yum! Brands
(which owns KFC, Taco Bell and Pizza Hut) all came on board. Together, the
competitors and Closed Loop Partners, a recycling-focused investor group,
crowdsourced solutions from the public

Recycling cups involves at least three stages: collection, sorting/baling at the MRF
(material recovery facility) and pulping the recovered cups. A benefit of recycling over
composting is that the high-quality, long, white fibre used to make cups is captured

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and reused, usually in a paper product that requires lower quality fibre than the cups
require.

One of the most challenging aspects of cup recycling might be getting enough cups
together in one place to make processing them worthwhile. Given that 80 percent of
paper cups are taken out of the stores in which they are purchased, where cups end
up at the end of their lives is largely unknown. Consumers have a confusing array of
correct decisions to make to get a cup on track to the MRF, which varies depending
on where they are when they are finished with the cups. Consumers need to be at a
public location that has a recycling program that accepts cups, has signage that
ensures the cups get into the right bin and they need to put their cups in the right bins.
The right bin may change from one public location to another, and the right bin may
be different again at home depending on the residential recycling program.

To maximize cup collection, more commercial establishments would need to offer cup
recycling, consumers would need to participate and more municipalities, residential
haulers and MRFs would need to get together to ensure recycling programs
specifically include paper cups

It has been said that cups cannot be recycled because of the poly lining. Yet tissue
mills have been using poly-coated SBS scrap from cup converters for decades.
Recycled tissue mills are in a good position to recycle the poly-coated fibre used to
make cups because many of them have deploying and/or deinking systems in place.

Initiatives in India

Tetra Pak says it is consistently being proactive for safeguarding environment and has
been involved in many cities to set up collection centres for Used Beverage Cartons
(UBCs) as well as raising awareness among public through information, education and
capacity building programs

Tetra Pak is consistently being proactive for safeguarding environment and has been
involved in many cities to set up collection centres for Used Beverage Cartons (UBCs)
as well as raising awareness among public through information, education and
capacity building programs

Tetra Pak has been doing voluntary EPR for more than 15 years now and has been
continuously working with recyclers across South Asian region to develop solutions,
technologies and applications. Through constant interactions and tie ups with
recyclers to develop solutions, technologies and applications of UBCs, Tetra Pak has
always tried to bring up the level of active sorting of UBCs and reduce mixed waste
recycling. Thus, making recycling of UBCs more effective, efficient and economical.

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Latest Initiatives proposed by leading MNCs
Behaviour change charity Hubbub has announced the first winners of The Cup Fund
in September 2019, the UK’s largest fund to boost the recycling of disposable paper
cups.

The fund, financed by the proceeds from coffee chain Starbucks’ five pence charge on
disposable cups, will award grants of between £50,000 and £100,000 to 12
programmes to help them develop long-term infrastructure in order to boost coffee cup
recycling by an estimated 35 million cups per year.

Diageo will debut a 100% plastic-free, paper-based spirits bottle for Johnnie Walker in
early 2021; while PepsiCo and Unilever plan to follow suit with their own brands

Diageo has created the ‘world first’ bottle made from sustainably sourced pulp which
meets food grade standards; and will be fully recyclable in standard waste streams.

The spirits giant has now also launched a new partnership with Pilot Lite, a venture
management company, to develop the technology further through Pulpex Limited, a
sustainable packaging technology company. And Pulpex has already established a
partner consortium with companies including PepsiCo and Unilever: with these
companies expecting to launch their own branded paper bottles in 2021.

While most glass bottle alternatives still need to use a plastic inner layer to contain the
liquid, Diageo’s new technology does not. Instead, the bottles are formed by
pressurising pulp into moulds, a curing oven process, and are also sprayed internally
with specialised coatings.

This also means that an inner plastic layer and outer pulp layer don’t need to be
separated for recycling.

The bottle is made from sustainably sourced pulp to meet food-safe standards and will
be recyclable in standard waste streams. The technology will allow brands to create
new packaging designs, or even more existing designs into paper.

The technology can be used across a variety of single mould bottles across consumer
goods.

Ewan Andrew, Chief Sustainability Officer, Diageo, said: “We’re proud to have created
this world first. We are constantly striving to push the boundaries within sustainable
packaging and this bottle has the potential to be truly ground-breaking.”

PepsiCo plans to take the technology across to the non-alcoholic beverage industry in
2021.

“There are a lot of challenges out there [related to sustainability] that all companies
are looking to solve, but which no one company can really solve on its own," said Ron
Khan, VP of beverage packaging at PepsiCo. "So, the beauty of this consortium is that
we can really bring big changes on packaging to the market by working together.

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“Clearly, each industry has its own particular product criteria to resolve. So, the
challenges around alcoholic beverages are different from non-alcoholic beverages
[that PepsiCo must manage], which are different still from home care products [which
Unilever will address]. By expanding the consortium and bringing more partners in, we
may solve those problems and make this universally wide packaging format”

It is still in the early stages of development and has not yet decided which brands will
use the new packaging. However, the company sees potential ‘across most of our
products’, according to Khan.

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