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Nestlé in the U.S.—strategically consumer-centric

Nestlé S.A. marked its 150th anniversary this year, so what packaged goods company could possibly be more suitable for this year’s VIEW FROM THE TOP discussion?

From left to right: Ya-Wen Lee, Director of Prepared Foods/Pizza & Snacking/Baking Packaging; David Strauss, Head of Packaging Nestlé USA; Larry Baner, Packaging Research Scientist Nestlé Purina; Chastity Prince McLeod, Packaging Group Manager; and Robert Champion, Group Packaging Engineering Manager Nestlé USA. Photo by Carrillo Photo.
From left to right: Ya-Wen Lee, Director of Prepared Foods/Pizza & Snacking/Baking Packaging;  David Strauss, Head of Packaging Nestlé USA; Larry Baner, Packaging Research Scientist Nestlé Purina; Chastity Prince McLeod, Packaging Group Manager; and Robert Champion, Group Packaging Engineering Manager Nestlé USA. Photo by Carrillo Photo.

Nestlé in the U.S. has a diverse portfolio of food and beverage products providing nutritious options for every member of the family, including not only infants, toddlers, teens, adults, and mature adults but also dogs and cats. There are eight main businesses: Nestlé USA, Nestlé Purina PetCare Co., Nestlé Waters North America, Nestlé Nutrition, Nestlé Professional, Nespresso, Nestlé Skin Health, and Nestlé Health Science. Together, these companies operate in more than 120 locations in 47 states and employ over 51,000 people. The U.S. is Vevey, Switzerland-based Nestlé S.A.’s largest market with combined product sales in the U.S. totaling more than $26 billion in 2015.

Conversations we’ve been having with David Strauss, Head of Packaging at Nestlé USA, led us to select Nestlé in the U.S. as the subject of our annual VIEW FROM THE TOP profile. Picking the brains of all eight businesses is hardly practical, so we focused primarily on two: Nestlé USA and Nestlé Purina PetCare.

Strategic framework
In his role as Nestlé USA’s Head of Packaging, Strauss describes himself as driver of the overall strategic alignment where packaging is concerned. Flying under the Nestlé USA flag are such iconic brands as DiGiorno®, Stouffer’s®, Coffee-mate®, Lean Cuisine®, Carnation®, Libby’s®, Edy’s®, and Haagen-Dazs®. Across all of them, says Strauss, optimizing the cost of packaging is a high priority. But he emphasizes that “optimizing” is a balancing act and is definitely not synonymous with “cost cutting.”

“We are in an environment of high competitive intensity, so we must be competitive when it comes to packaging. Where cost is concerned, this means being neither too high nor too low. The minute your packaging spend gets too low, you risk losing operational efficiency, and what once looked like a cost advantage can quickly become a disadvantage.”

When asked about technologies that are relatively new kids on the packaging block, like printed electronics and digital printing, Strauss says printed electronics is probably better suited at this point to non-food areas where price points are higher. Electronics, pharmaceuticals, and cosmetics, he says, will probably adopt it sooner than mainstream food. As for digital printing, he says, it’s squarely on his radar screen, though it, too, is still at the start of its development curve where Nestlé USA brands are concerned. “Right now where it is useful is primarily in short runs for customization,” he observes. “But as it evolves, it will expand past that, and I expect it to present some real opportunities in streamlining workflow and serving as a tool for manufacturers like us to lean out their packaging supply chains.”

Another bedrock philosophy at Nestlé USA, just as it is throughout Nestlé global, is transparency. And an important subset of transparency, Strauss points out, is a commitment to sustainable packaging.

“In years past we’ve been what you might call a silent leader when it comes to the sustainable packaging movement, but lately we’ve gotten more vocal and visible, also in the U.S.,” says Strauss. “Last year, for example, we joined Ameripen and the Sustainable Packaging Coalition (SPC). On some of our brands you’ll now see labels that show our participation in SPC’s How2Recycle program [launched in 2008, it aims to reduce confusion by creating a clear, well-understood, and nationally harmonized label that lets industry help consumers understand how to recycle a package].”

Strauss says that biopolymers are a part of the sustainable packaging conversation, but applications by Nestlé thus far have been limited. Aside from cost and performance issues, part of the problem with some of them, he says, is that they don’t necessarily deliver the lowest overall environmental footprint when viewed from a true Life Cycle Assessment (LCA) perspective. But that doesn’t mean Nestlé isn’t interested in biopolymers. “In our research centers we’re exploring a number of options, though mostly in what’s called Generation 3 biopolymers,” says Strauss. In other words, biopolymers derived not from corn or beets or potatoes but rather from non-food sources such as wood, agricultural waste, drought-resistant plants, and algae.

Larry Baner, Packaging Research Scientist at Nestlé Purina, is among those who are involved in the research Strauss mentions. “Nestlé’s road map for packaging sustainability includes finding appropriate uses of biopolymers in packaging, which is why we are a member of the World Wildlife Fund Bioplastic Feedstock Alliance,” says Baner. “That membership demonstrates our long-term commitment to be involved in finding ways to use non-food sources to make packaging out of renewable resources. Nestlé also has its own global sustainable packaging network. We meet regularly and offer webinars on biopolymers where we talk about which ones are available, which ones meet our LCA requirements, and which ones are or aren’t appropriate for use.”

Three platforms
Diane Herndon, Senior Manager, Sustainability, Nestlé Purina PetCare Company, summarizes the company’s view of sustainable packaging this way. “We’re active on three platforms. First is what we do in-house, which revolves around light weighting and finding new materials or configurations. Second is raising consumer awareness around recyclability, which is why we adopted the How2Recycle label. Consumers want to know how they can recycle our packages, so we think this is a step in the right direction. And third is a matter of trying to push the evolution of the recycling infrastructure at the Materials Recovery Facility, or MRF. Are these facilities optimally organized to handle flexible packaging materials, for instance? PET water bottles and HDPE milk jugs they know how to handle. But too many pet food bags that make it to the MRF get pulled off at the front of the material flow into the MRF and are sent to the landfill. There is a lot of resin in those bags that could be recycled and reused.”

Nestlé Purina and Nestlé USA are both members of a collaborative called Materials Recovery for the Future (MRFF), which recently announced the findings of research showing that automated sorting technologies in use today can be optimized to capture flexible plastic packaging material. The group contends that with adequate screening and optical sorting capacity, flexible plastic packaging can be efficiently captured in a single-stream MRF. The American Chemistry Council, also a MRFF member, issued a press release September 22 announcing the survey results, and in it research scientist Baner had this to say: “We now know how flexibles flow through a MRF and that the technology already exists for separating flexibles out of the materials streams. Although there is still a lot of work to be done to define the best way to separate flexibles from single-stream recyclables, this research moves us closer to solutions.”

New usage occasions
Using the power of packaging to break into new usage occasions is a strategy that smart CPG companies use whenever the opportunity presents itself. Nestlé USA pulled it off recently when it introduced Stouffer’s Cups: single-serve 6-oz portions of classic macaroni and cheese sold two per paperboard sleeve in the freezer case.

“Historically when people think Stouffer’s mac and cheese it’s been in terms of a lunch or dinner type setting,” says Packaging Group Manager Chastity Prince McLeod, who works out of a Nestlé Development Center in Solon, OH. Nestlé S.A. has the largest R&D network of any food company in the world, including 39 R&D locations globally. “That package format enabled us to get into more of a snack setting, and along the way it opened a lot of eyes internally and externally for how we might be able to leverage our products in a new way.”

Robert Champion, Group Packaging Engineering Manager at Nestlé USA, was project manager as the cup and its brand new packaging line was developed for the Jonesboro, AR, frozen-food plant where Stouffer’s and Lean Cuisine brands are produced. He describes it as a very cross-functional initiative involving R&D, the Stouffer’s business unit, supply chain, operations, corporate engineering, and strategic suppliers. Material development centered on the design of the pre-made thermoformed PP cup, consumer handling of the container from a safety standpoint, and optimized microwave ability.

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