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Strategic partnerships based on packaging

The strategic partnership between Coca Cola and H.J. Heinz hints at more to come. Other CPG companies should ready themselves.
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FILED IN:  Applications  > Food  > Sauce/condiments
     
This summer, the H.J. Heinz Co. will market ketchup in bottles that are of the same formulation as the PlantBottle™ owned by the Coca Cola Co., under a widely-reported strategic partnership between the two CPG giants. Then again, a vast variety of products are in packages that, for all intents and purposes, are identical to one another, for example, PET bottles.  Additionally, strategic partnerships have long been practiced throughout industries. What makes the PlantBottle™ example notable is that it elevates and diversifies packaging's role as a tool for competitive advantage.
 
Coca Cola has a storied history with its use of packaging, dating back to the iconic hourglass-shaped bottle, the corporate colors, and the brand name in signature cursive. Heinz has an impressive résumé of innovations in ketchup packaging, including: the inverted bottle; a bottle designed to efficiently fit in a refrigerator door; and a fast-food pack that accommodates squeezing or dipping. Both companies are accomplished in leveraging packaging to build the brand and to carve out a competitive advantage; nonetheless, in the main, it's been through structure and graphics. The PlantBottle™ takes leveraging to another level, that of proprietary technology.
 
For Coca Cola, the strategic partnership establishes packaging as a profit center, a revolutionary notion within the packaging user industry.  For Heinz, the strategic partnership shows a broadened perspective, departing as it does from reliance on the packaging supplier industry as the source of such technology. In addition to the maverick nature of that partnership, the high profiles of the two participants ensure that other CPG companies will investigate the feasibility of strategic partnerships based on packaging. For packaging professionals in those companies, it represents opportunities to provide information and insights to senior management, not just for feasibility studies but also for any projects that ensue.
   
It's not only about sustainability

Yes, Coca Cola promotes the eco-merits of the PlantBottle™, its label displaying the name underneath a logo consisting of a green silhouette of a bottle inside a triangle of chasing arrows (actually, instead of three arrows, one is replaced by a leaf). But that's subtle, compared to how Heinz will promote: in addition to name and logo, the most prominent feature of the label will be a question, shouted in bold capitals──GUESS WHAT MY BOTTLE IS MADE OF?

Even so, packaging professionals should not be misled into thinking that the future of strategic partnerships based on packaging resides singularly in the realm of sustainability. The sustainability angle should be pursued to the extent warranted; however, any part of the supply-chain (because each is affected to one degree or another by packaging) can be the basis for a strategic partnership.
 
Heretical though it might sound in these green-driven times, the more that a competitive strategy is linked to sustainability, the more the risk.  In contrast, product differentiation, cost-cutting, and operational efficiencies are strategies that are easier to quantify. Furthermore, the consumer's position relative to sustainability vs. convenience remains a difficult determination for CPG companies. Such realities should be borne in mind, against the erroneous belief that a strategic partnership lessens their relevance.

It's not only about plastics

Plastic's versatility in applications and formulations makes it a prime object for technological advances upon which strategic partnerships can be built. And as the PlantBottle™ demonstrates, some of those advances will be directed at reducing the fossil fuel component. If a bioplastic is a polymer derived from a plant, there's still the problem of defining a package comprising less than 100% bioplastic. Currently, the solution has been to trademark a name.

There's no arguing that conventional plastics are subject to price spikes that are tied to the price of crude oil and that any perceived crisis in the world can be used as an excuse to raise prices. That, in itself, is sufficient reason to explore ways to decrease that vulnerability; however, a strategic partnership should honestly acknowledge the vulnerabilities of any chosen alternative, to be able to counter them effectively. For, whether bioplastics result in a net benefit to the environment can make for a lively debate, with both sides having their talking points.

But CPG companies that utilize other materials besides plastics need not consider themselves barred from the strategic partnership sweepstakes. Paper, glass, and metal are not static, not immune to innovation. The challenge is for the stakeholder CPG companies to determine what innovation would be most meaningful and to organize in its pursuit.

It's about focusing on the right factors

The high-level internal analysis and discussions that precede the formation of a strategic partnership should revolve around some fundamental factors. Foremost is agreement as to why (precisely) the partnership is being sought. Although seemingly straightforward, it's a determination that has a number of tentacles. What makes for a good partner for us? Why would another company see us as a good partner?  For a strategic partnership based on packaging, it stands to reason that a company would assess its own capabilities in packaging in order to determine where the possibilities for synergy lie. Is packaging's present position within the corporate hierarchy conducive to a strategic partnership? Personnel-wise, what is the corporation able to lend to the partnership, whether part-time or full-time? With those and other considerations to weigh, a strategic partnership between Pepsi Cola and Hunt's, for example, is anything but a foregone conclusion.  Feasibility is not the only variable in the equation; compatibility is equally important.

And, there will be aspects to be formalized into contractual terms, admittedly more the province of the legal department (for example, licensing fees, exclusive rights, etc.), but the packaging professionals within the company should be willing and able to serve in whatever auxiliary role requested.  For packaging as a discipline, it's been a long, arduous trek from being regarded mostly in tactical terms to being recognized for its strategic prowess.  Now that the discipline has arrived, it's up to packaging professionals to prove equal to the challenge.  

Sterling Anthony is a consultant, specializing in the strategic use of marketing, logistics, and packaging.  His contact information is: 100 Renaissance Center-176, Detroit, MI 48243; 313-531-1875 office; 313-531-1972 fax; [email protected]; www.pkgconsultant.com.

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