A recent article I read highlighted the perils of assuming change will never impact your business. In the article, the author noted 88 per cent of the Fortune 500 companies that existed in 1955 do not exist in the Fortune 500 today. They either went bankrupt, got absorbed or slipped down the rankings. This 88 per cent represents 440 companies out of 500 – hard to believe when you consider the calibre of companies on the list includes Walmart, Apple, Exxon and Ford.
This same article went onto describe ten formerly successful companies who failed and the reasons for their failure. This makes for interesting reading.
Take Blockbuster Video, which existed from 1985 to 2010. At its peak in 2004, it employed 84,300 people globally and had 9,000 stores. The article notes Blockbuster was a classic case of a business unable to transition to the new, digital future.
What’s even more interesting is Netflix offered to buy Blockbuster in 2000 for US$50m. Blockbuster refused to sell, as the story goes, deeming Netflix a ‘niche’ business only. Have you checked out recent revenue stats for Netflix today, 18 years later? In a recent 2017 fourth quarter earnings statement, Netflix reported US$11bn in revenue, 117.5m members and a service offering in 190 countries.
There is a phrase bantered around when big companies fail. Called the ‘success trap’, it’s when a company has tunnel vision, seeing future success in historical business activities and failing to explore new ideas or technology with an eye towards future viability.
As technology moves faster, as consumers evolve more quickly, adapting to rapid change becomes harder. There is no doubt businesses today are facing fast and unprecedented changes. But rather than running away from them as obstacles, maybe the strategy is to run towards them as opportunities.
With this as a background, I think it sets the scene quite nicely to have a chat about packaging.
When I was at the SXSW Conference in Austin earlier in the year, one of the speakers pronounced “plastic is dead.” A bold statement, but I don’t think any of us would argue that plastic or plastic packaging is doing Mother Earth any good.
One only has to Google the words ‘sea of plastic’ to watch horrendous footage of kilometres of plastic waste bobbing in the sea. I was in Bali in January 2017 and experienced this first hand. A turn of the wind saw many of Bali’s popular tourist beaches filled with plastic waste as far as the eye could see. Dipping my toes in the water, the sea itself was teeming with plastic rubbish – mainly plastic bags. I’d be lying if I didn’t say it was both upsetting and confronting.
Add to this horrible visual images that get passed around on social media channels of turtles, dolphins and other marine animals strangled or killed by plastic waste. There is no doubt the status quo is unsustainable. The good news is that the under the breath murmuring of ‘something must be done’, is becoming more vocal and visible.
Take the recent Plastic Attack protest at a Tesco store as an example. Twenty-five protestors bought their groceries as per normal, then in front of the store proceeded to empty everything out of the plastic it was wrapped in. They placed said goods into their re-usable fabric bags and left the plastic filled trolleys out front of the store as a form of protest. Between the 25 protestors, they left behind three trolleys full of plastic waste.
Closer to home, New World Bishopdale in New Zealand’s South Island has launched the Food in the Nude initiative. New shelving has enabled the store to merchandise more and more produce without plastic packaging – an initiative that customers are loving. The article didn’t talk about the challenges of staff identifying unlabelled produce at checkouts, but that’s a separate story.
With moves afoot and the catch phrase ‘plastic is dead’ – here is where the rub lies. At the moment, there is no doubt the produce industry is being singled out globally as packaging waste culprits. Seriously, how many people blame Coke or Coke’s bottled water subsidiaries for the plastic problem?
For fresh produce, never mind it was our products that had the least amount of packaging ever up until recently. Never mind that for the first time, we are seeing branding on the rise in the produce department thanks to packaging enabling us to brand and tell stories. Never mind that packaging ensures multiple varieties of pears, apples, broccoli and salads can be differentiated and scanned accurately at checkout. Never mind new, clever packaging prevents food waste and keeps produce fresher longer. Yes, there are many reasons packaging is good, but to be honest folks, those points are mute.
The reality is the packaging debate is an inequitable argument. No consumer thinks about the fact that a week’s supply of apples can be held in one bag. Instead, consumers will moan about that one bag, seemingly ignorant of their own total weekly plastic consumption. Consider one average person, in a week, might typically consume: 7-14 plastic water bottles, five plastic/paper takeaway coffee cups, lids and stirrers, four straws, one or two plastic takeaway containers and five to ten single use plastic bags - all without batting an eye. But it is the apple bag that remains the culprit.
It’s not fair, I know, but it is reality. So how will you respond to the plastic debate in your business: do you see it as an obstacle or opportunity?
I strongly discourage seeing it as an obstacle. To me, this feels like the phrase above – a ‘success trap’ – where the status quo reflects how things will always be. Instead, why not view it as an opportunity. Like most trends, taking an early ride on the innovation train just might give you a first mover advantage as consumers get closer and closer to the plastics is dead tipping point.
Consider Ceres New Zealand. No, they are not fresh produce, but they are a 100 per cent packaged range of organic, wholesome products. They are moving to 100 per cent home compostable packaging – a project that has taken three years to complete and implement. They are leading from the front and recent news stories talk about how it is paying dividends for their business. If you know of other companies leading in this space, I’d love to hear from you.
It is not an easy conversion. At PMA Fresh Summit in New Orleans in October 2017, I met the woman who developed a form of compostable punnet. I was quite excited and asked, “how strong has the uptake been?” She replied, “it’s been a hard sell to date,” not surprising given producers haven’t found a way to pass on costs. But once the tipping point tips, I can imagine companies who pack their products in millions of plastic punnets each year will be clambering at her door.
As someone who makes part of their living creating brands and telling stories for produce companies, there is no doubt packaging is critical to a produce company’s ability to differentiate. Differentiation moves you out of the commodity trap and into the territory of premiumisation – which delivers sales growth, value growth and new customers. If you truly want to innovate, if you truly want to ensure you are viable in the future, then don’t fall into the success trap. A move away from plastic packaging is coming – this is an opportunity you need to be ready for.