Contract Manufacturing and Packaging May-June 2011

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them into the Is your packaging innovative? Eye catching? Then enter in contract inaugural CM&P Design Awards. Celebrating the very best ers packaging design each product will be judged with the winn announced in CM&P’s September issue. , wraps, misc. Categories include: glass, metal, cardb oard, plastic, pouches, bags ing. There will also be a special award going to the best in eco-packag $175 for up to three packages, $50 for each additional package

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Contents

May/June 2011

Features 18

Honor Roll

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Roundtable: Sustainability

CM&P honors the top manufacturers, retailers and consumer goods companies in the business.

CM&P talks to the experts about what challenges and trends companies face when becoming sustainable in the marketplace.

Departments 5 6

Point of View

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Trend Watch: Baby Care The baby care segment offers some sweet spots, but will require ample nurturing to make the crawl a walk.

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Food Focus: Brand Extensions The key components in brand extension are research, knowing your market and having an established brand.

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Special Report: National Brand Report Card A summary of national brand trends since 2010.

Raising the Bar: Calling for a Responsible Shift Into 2011

CONTRACT MANUFACTURING & PACKAGING is a supplement to PLBUYER and other BNP Media publications. CONTRACT MANUFACTURING & PACKAGING is published by BNP Media II, L.L.C., 2401 W. Big Beaver Rd., suite 700, Troy, MI 48084-333. Telephone: (248)362-3700, Fax: (248)362-0317. Printed in the U.S.A. Copyright 2011, by BNP Media II, L.L.C. All rights reserved. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations. Change of address: Send old address label along with new address to PLBUYER, P.O. Box 1080, Skokie, IL 60076. Canada Post: Publications Mail Agreement #40612608. GST account: 131263923. Send returns (Canada) to Pitney Bowes, P.O. Box 25542, London, ON, N6C 6B2. For single copies or back issues: Ann Kalb at (248) 244-6499 or [email protected].

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May/June 2011

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POINT OF VIEW A SUPPLEMENT TO BNP MEDIA PUBLICATIONS

Editorial John N. Frank Editorial Director [email protected] Jordan Brandes Managing Editor [email protected] Josh Majka Art Director

Editor’s Note

EDITORIAL ADVISORY BOARD Raymond Baribeau Confab Laboratories Inc. Bill Biedenharn Trillium Health Care Products Peter Cokinos Little Lady Foods Ryan Gladieux Plastipak Italia Kevin Meyer Century Foods International Tanja Mordeson RC International Tina Mori NexGen Pharma Technologies Lisa Shambro Foundation for Strategic Sourcing Brian W. Wassall L’Oreal USA

Advertising Brion Palmer Group Publisher [email protected] (847) 405-4072 Don Beal Associate Publisher [email protected] (908) 889-4506 Todd Tamcsin Regional Sales Manager [email protected] (623) 825-5414 Rose Weiss Advertising/Production Manager [email protected] Jill DeVries Corporate Reprint Manager [email protected]

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Corporate Directors Timothy A. Fausch Publishing John R. Schrei Publishing Rita M. Foumia Corporate Strategy Ariane Claire Marketing Vincent M. Miconi Production Lisa L. Paulus Finance Michael T. Powell Creative Nikki Smith Directories Marlene J. Witthoft Human Resources Emily Patten Conferences & Events Beth A. Surowiec Clear Seas Research For subscription information or service, please contact Customer Service at: Tel. (847) 763-9534 or Fax (847) 763-9538 or e-mail [email protected]

ast month I was lucky enough to attend the 15th annual FUSE symposia held this year in Chicago. The three-day event brought attention to the world of branding and packaging as it relates to the culture and psychology of the consumer. The conference was an eye opener for me, as both a journalist and a member of the industry. What I took away most from the conference was this: we are what we buy. The products we make and use help define our cultural identity. This is something that goes beyond just normal marketplace statistics to the core of what it means to be a consumer. What we buy reflects who we are and where we are as a society. Good packaging reflects that as well. A slim package made of recycled materials tells the customer that your company is eco-friendly and making a conscious effort to help the environment. A package made from a unique material tells the customer that your company is willing to take risks and risk alienating people in order to make a statement. Never underestimate the power of packaging. It is with that in mind that I would like to introduce CM&P’s Inaugural Design Awards. If you have a product design that you think would be great to showcase please contact me or follow the instructions on the house ad in this isue on page 2 for more details. We want to highlight your exemplary work and present it to the community. Categories include: glass, metal, cardboard, plastic, pouches, bags, wraps and miscellaneous packages. A special eco-packaging award also will be presented for those that make exceptional use of materials, quality control and a minimal carbon footprint. For more information, please check the Web site and page 2. As always, I invite you, the reader, to reach out to me if there is anything you would like to see in the publication that can help you and your business run more smoothly. Feel free to contact me by phone or via email. This publication is for you and we want to make sure every issue is focused to your needs. ||

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List Rental Postal contact: Kevin Collopy at 800-223-2194 x684 [email protected] Email contact: Michael Costantino at 800-223-2194 x748 [email protected]

Sincerely,

BNP Custom Media Group Christopher Wilson (248) 244-8264 [email protected]

Jordan Brandes Managing Editor CM&P Magazine

BNP MEDIA HELPS PEOPLE SUCCEED IN BUSINESS WITH SUPERIOR INFORMATION

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RAISING THE BAR

Calling for a Responsible Shift into 2011 By Karen Kortendick

he packaging and manufacturing industry has seen a major shift in demand for sustainable solutions. Despite the notable emergence of this trend among CPGs, many manufacturing and packaging companies are not yet prepared to respond to the increasing demand for sustainable solutions. Even Walmart, the world’s largest retailer, is launching a cooperative effort with its suppliers to identify, measure and eliminate 20 million tons of greenhouse gas emissions from the life cycle of all products they sell by 2015. This is because when the term sustainability comes to mind, most people think solely of environmental issues. However, as the space continues to evolve and becomes more ingrained in business, sustainability will encompass not only environmentally-sound best practices, but also implementing best practices that improve one’s corporate operations across the board. Why should the customers of manufacturing and packaging corporations suddenly care about incorporating sustainability best practices into their operations rather than just their services? The customers of these corporations, major consumer packaged goods brands, are doing a lot in terms of building their own sustainability platforms. In fact, the world’s largest CPG brand, Procter & Gamble, publicly announced its sustainability goals that will be incorporated into all aspects of its operations within the next 10 years. Manufacturing and packaging companies that have begun embracing sustainable best practices are early adopters to the “responsible shift,” and will experience a significant competitive advantage as a result.

Making sustainability work

In order for the companies to successfully implement sustainability best practices into their operations, the establishment of a universal sustainability standard to provide a set of guidelines is critical. Because sustainability has, overall, not yet taken off on an industry-wide level, companies will be in need of a standard that provides direction in the specific areas such as reducing costs through economic efficiency, acting as a socially responsible corporation/employer, and maintaining a mission to act as an environmentallyfriendly, efficient member of the global community. Also, there needs to be a shift in thinking to include economic, social, environmental, and governance values. So, while packaging (including the raw materials and facilities included in the production) as well as transportation must be held to the highest standards, commitments to valuing employees as well as maintaining pride in the conditions in which employees work, are also crucial. This ensures that manufacturing and packaging companies not only attract top-notch employees, but also maintain the highest rate of retaining employees. It’s evident that the benefits of creating a sustainability strategy vastly outweigh any detractors. By implementing sustainability best practices, increased production efficiency through improved employee performance, higher quality machinery, and lack of waste through using recycled materials deliver joint-value for the organization and its clients. Overall, establishing responsible practies act to build a regenerative business cycle which is driven by consumer demand, customer demand, and cost. In doing so, the manufacturing and packaging company that employs sustainability best practice into all elements of their culture will beat competitors to the punch and deliver the greatest competitive advantage. ||

So, what should manufacturing firms do to stay in lockstep with their clients’ new demands? Here are some recommendations that companies can use to make sustainability work for them.

Karen Kortendick is currently the director of corporate quality and business integration for The Strive Group, a one-stop integrated provider of merchandising display solutions.

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TREND WATCH

Sugar and Spice The baby care segment offers some sweet spots, but will require ample nurturing to make the crawl a walk. By Jill Rivkin nitially, babies may not do much other than look cute, eat, sleep and need diaper changes, but the little bundles often cost parents quite a bundle given the long list of supplies these little humans need. From formula, milk and special food to diapers, wipes, creams and lotions and all of the pampering products in between, parents often are inundated with options in the baby care aisles at retail outlets. Like all segments, the recession has affected how these aisles are presented and thus the choices parents make – both major decisions like family planning and minor ones regarding which brand of diaper to purchase, or whether to try private label. But according to Rockville, Md.-based Packaged Facts, the market for baby care in the U.S. trended upward between 2005 and 2009 to reach $7.1 billion at retail, through all channels. As far as the future, the firm is somewhat optimistic, estimating that by 2015, baby care will reach $8.5 billion, representing 20 percent growth over the six-year period. Packaged Facts’ baby market definition includes: disposable diapers/training pants, baby wipes/ moist towelettes, baby body care, feeding accessories, play and discovery infant toys and pacifiers/teethers. The market is “tepid,” according to Packaged Facts senior analyst Timothy Dowd, mostly because it trends upward in “fits and starts,” he says, depending on the category. “A lot of the products really have to buck the whole idea of baby care supplies as commodities – that’s what holds back this market,” he says.

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Births Dictate Demand The correlation is clear – demand for baby care products depends on the number of babies born each year. And economic woes have made people somewhat less frisky, shall we say, as the number of live births in recent years has been in decline. However, Dowd argues that, depending on the perspective, the birth rate figures can tell different stories. The actual count of live births in the United States is an “evergreen pool,” he argues, pointing to about the four million mark year after year. Because of this, he says, marketers of baby care products are working in a relatively mature market. “It’s pressing marketers to come up with new features or new positions for the same old products,” he says. However, Virginia Lee, senior research analyst at Euromonitor International, London, points to the declining birthrate as more of a factor – U.S. live births were down 0.7 percent in 2009 and down 2.2 percent in 2010, she says. These declining figures, coupled with a weak economy and retail consolidation, in particular with drugstores, are the biggest challenges for the baby care segment today, she says.

The Diaper Dilemma Though an increasing interest in making an environmentally friendly choice with cloth diapers has been present in recent years, many consumers still rely on the ease and function of disposable diapers, although demand is in-

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TREND WATCH

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creasing for purer, more natural and even organic options. Despite what Packaged Facts terms a lackluster performance, disposable diapers continue to be the dominate baby care segment, accounting for a 61 percent share of the baby supplies’ retail dollars in all outlets in 2005 and slipping to 59 percent share by 2009. The leading brands, Procter & Gamble’s Pampers and Kimberly-Clark’s Huggies regularly duke it out on price and features, and typically share the aisle with attractive economy/value brands like Luvs and store brand options. Dowd asserts there is some brand loyalty in disposable diapers, given that the leading brands claim innovations, and often are “fighting over features.” But price wars, he adds, will continue to hold back further growth in disposable diaper dollar sales. From 2005-09, he points to nine percent growth, but because there is such a large dollar base, despite more than $500 million in additional sales, “it’s probably behind the inflation rate,” he says. Online sales have significantly impacted this market

as well. In particular, Dowd points to the development of Web site diapers.com. The site has figured out how to ship large quantities of all sorts of baby care supplies with variety and value-oriented prices consumers can’t resist, he notes. Sell-through online, he says, certainly has affected sales sold through mass merchandise and specialty retailers. “A lot of business is moving online,” he asserts. The wipes segment really cleaned up with 21 percent growth from 2005 through 2009, thanks to expanded usage. The growing popularity of wipes across many household uses helped take baby wipes to new occasions and marketers were quick and savvy to develop toddler-specific products to aid in potty training and help parents teach toddlers and young children about personal hygiene. But for branded marketers, the competition in wipes from private label was substantial – during the recession, consumers turned to lower-priced wipes, Dowd says, and private label share went from 28 percent to almost 34 percent from 2004 through 2009, Packaged Facts reports.

Natural and Organic Solutions T.H.E.M. Offering Sck Pack R&D Center

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Certainly what parents – especially first-timers – put in and on their babies is of utmost importance to them. And as science and the media work together to inform parents of the risks involved with some chemicals and ingredients, as well as the benefits of others, the market for natural and organic baby care products has flourished, and should continue to do so as parents become more willing to spend again. Dowd asserts that the potential for natural and organic growth in baby care is great. “If [P&G and KimberlyClark] can actually crank out some natural/organic products, It would help these marketers lift their brands above the tendency to commoditization.” Though sales of premium baby products declined in 2009, sales rebounded in 2010, Lee says. Similarly, sales of natural and organic, found in a wider range of retail outlets and at more diverse price points, dipped in 2009 and rebounded in 2010, according to the firm’s data. She points to a growing awareness of what Americans put in and on their bodies thanks to media coverage as a big influence in the natural and organic marketplace. Major brand marketers as well as more niche players have cashed in on this trend in recent years, making natural and organic products available to the masses in mainstream outlets and across the segment, including body care products, hair care and even toys, bedding and mattresses. ||

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ON THE COVER

By: Jordan Brandes

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n this issue, Contract Manufacturing & Packaging brings together experts from a variety of positions in the manufacturing and packaging fields to discuss the future of sustainability and how it affects day-to-day business. Featured here are Drew Merrill, Morgan Wiswall, Dailey Tipton, Arnold Barlow and Mark Ormiston. Ormiston is the director of research and development for the Neward,Ohio-based aluminum packaging company Anomatic Corporation. Currently leading a green dream team, Ormiston has formed a sustainability and environmental operations group focused on creating new innovations in sustainable anodized aluminum packaging. Wiswall is a purchasing manager for Menasha Packaging Company, LLC, a subsidiary of the Menasha Corp. Since 2006, Morgan has provided sustainability leadership to Menasha Packaging and in 2010, when sustainability became one of Menasha Corporation’s four overarching strategies, he was appointed champion of the initiative. Morgan is a member of the board of advisors for the Wisconsin Sustainable Business Council and has delivered presentations on the topic of sustainability to various organizations throughout Wisconsin. Tipton leads FirstCarbon Solutions global sales and marketing efforts. Tipton has more than 20 years experience in the environmental management and technology sector, specializing in sustainability and compliance data management. Merrill is a seasoned manager with 15 years of experience developing, selling and marketing complex technology solutions. He is responsible for all of CAPS’ sales and marketing activities and has been an officer of the company since 2004. Merrill is also a member of the Reusable Packaging

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Association’s (RPA) Board of Directors and currently holds the position of RPA Chairman. Barlow is manager of sustainability solutions for UPS’s Customer Solutions group. In this role, he is responsible for product development and client relationships, and was the lead developer of UPS’ Eco Responsible Packaging Program. Although they come from different backgrounds, the challenge of sustainability is one they all face. On maintaining sustainability Ormiston believes “one of Anomatic’s largest challenges in sustainable packaging has been on an educational level, in using good science and sustainability, and being practical in application. It’s important to balance sustainability with client needs.” More recently, laws related to extended producer responsibility (EPR) or product stewardship that hold the producer responsible for the end of life management of products and packaging. “Increasingly, the need for data-driven evaluation is being recognized. Packaging manufacturers making sustainability claims need to back those claims up with credible, third-party verified data. Self-declarations are viewed with suspicion, and rightly so,” explains Barlow. The forum also took time to look to the future. “The interest and activity around sustainable packaging will continue to expand in the next 10 years. Full life-cycle thinking will dominate the decision making process with companies fully understanding the environmental impacts of their packaging options prior to making a packaging decision,” predicts Wiswall. Together this diverse group tackles the challenges of sustainable packaging on both a macroscopic and day-to-day level. To learn more about what the forum had to say on sus | tainability, see the complete roundtable discussion.

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ON THE COVER

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CM&P> What role does sustainability play in your company? Barlow: At UPS, we recognize corporate social responsibility or sustainability as the business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting and enhancing the human and natural resources that will be needed in the future. From implementing electric vehicles in our operations in New York City in the 1930s to establishing the UPS Foundation – our charitable arm – in 1951, UPS has operated in a responsible manner throughout its 103-year history. For UPS, sustainability is not just a corporate program. It’s personal. Responsible business practices require everyone to diligently seek new ways to provide excellent service while also providing a positive impact on the world. All of our activities build on the long-held belief that our success is dependent on the balance of social, economic and environmental aspects of our business, and time has proven that our efforts in these areas give us improved efficiencies, employee pride, customer loyalty, and brand equity. In our philanthropic efforts, UPS focuses specifically on economic and global literacy, environmental sustainability, nonprofit effectiveness, diversity and community safety. Ormiston: As a global organization with facilities in North America and Asia, Anomatic views sustainability as an all-encompassing global responsibility. Manufacturing consumer packaged goods for some of the world’s most well known brands; we have to have the consumers, the corporate community and the government all working toward the same goal. In 2010, we created the sustainability operations group, a cross-functional team that is implementing our company-wide sustainability plan. The group, with backgrounds in chemistry, geochemistry, chemical engineering, environmental engineering and environmental sciences is committed to promote innovation and green manufacturing through conservation, optimization, reduction and recycling efforts. Tipton: For FirstCarbon Solutions, sustainability plays the starring role. FirstCarbon Solutions’ goal is to make

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sustainability challenges and carbon reporting as simple and transparent as possible for customers. Our focus is to help our clients connect sustainability activities to direct cost savings by implementing energy management programs. For our customers in the manufacturing and packaging industries, sustainability is the key to business success and cost savings. Due to supply chain mandates, many suppliers report carbon emissions and have other sustainability programs in place. FirstCarbon Solutions helps manufacturing and packaging companies meet environmental compliance mandates while realizing a bottom-line business advantage. Wiswall: Sustainability is playing an increasing role in our daily activities as we implement triple bottom line thinking across the organization. Merrill: Sustainability is the foundation for every service/product offered by CAPS (container and pooling solutions). As a fully outsourced returnable container management company, we strive everyday to minimize our customers’ environmental impact by: reducing greenhouse gas emissions through reduced backhaul transportation costs, innovating eco-friendly processes for container reconditioning between uses, extending the life of our pooled container platforms via maintenance and the implementation of best handling practices, capturing the base materials at the end of our product’s lifecycle through regrind and providing inventory management technology to assure the use of the smallest possible container fleet to meet our customers’ requirements

CM&P> What are the challenges of sustainable packaging? Barlow: Truly sustainable packaging requires a comprehensive approach that balances the full array of sustainability goals. For UPS, this approach includes evaluating customer’s transport packaging systems on three interrelated criteria: damage prevention; right-sizing (cube utilization); and materials content. “Green” packaging materials won’t be sustainable overall if they don’t protect package contents, resulting in the need for additional manufacturing and shipping. And voluminous packaging can be very protective, but bring inefficiencies for both materials and transportation costs. So, it is important to balance each of these lifecycle considerations to make the best packaging decisions.

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Ormiston: Currently, one of Anomatic’s largest challenges in sustainable packaging challenge has been on an educational level, in using good science and sustainability, and being practical in application. It’s important to balance sustainability with client needs. Another challenge is the company’s ability to implement the infrastructure and systems and compete against other manufacturers who may not embrace Sustainability or their impact on the environment. Anomatic has taken the long-term approach of sustainability and in order to maintain market position, adaptation is required to reduce and conserve our dependence on natural resources. Tipton: We help our customers in the sustainable packaging industry measure and report emissions. So, we view environmental data management as a critical challenge in sustainable packaging. Often, manufacturing and packaging organizations lack internal resources to identify and report emissions. It’s impossible to effectively report emissions data that you cannot comprehensively measure. Mastering this first step is often one of the biggest challenges companies face. Once companies have an environmental data management program in place the next challenge lies in connecting sustainability initiatives to the bottom line. Many companies still have difficulty justifying ROI from various sustainability programs. Wiswall: We are very focused on bringing solutions to our customers that minimize the amount of fiber in our product. The challenge is maintaining the structural integrity of the product while minimizing the material. Our product is the most commonly recycled packaging material available and is produced from trees, a renewable resource, so that is a significant advantage to us in helping our customers achieve their sustainable packaging goals. Merrill: The biggest challenge for CAPS is to provide innovative sustainable packaging solutions that can combine the economic benefits of reusable packaging with the convenience of expendable packaging. One way packaging is simple… you can ship it and forget about it. One way packaging is pay-per-use… you buy just-in-time to support your immediate needs only. Reusable packaging requires multiple cost implications (capital costs, tracking, repositioning, cleaning, storage, and maintenance) and you need to buy for your peak requirements. CAPS success hinges on our ability to wrap all those services into a fixed per-use or trip cost that is below the cost of the use of a one-way package.

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CM&P> What big trends do you see in the sustainable packaging industry? Barlow: Increasingly, the need for data-driven evaluation is being recognized. Packaging manufacturers making sustainability claims need to back those claims up with credible, third-party verified data. Selfdeclarations are viewed with suspicion, and rightly so. Another important trend is the spread of laws related to Extended Producer Responsibility. Already common in Europe and in certain niches in the U.S., EPR laws will hold producers financially responsible for the endof-life scenarios of their packaging. Manufacturers who design for sustainability now will reap the benefit as these regulations are phased in. Ormiston: The primary opportunities we see are in energy reduction and fossil fuel reduction, such as transferring one type of fossil fuel with a higher environmental impact to a lower impacting fossil fuel. Additionally, raw material reduction continues to be a huge trend. Movements in this sustainable trend are being achieved through conservation, recycling and direct re-usage. Tipton: As retailers put more pressure on the supply chain and manufacturers to capture carbon emissions data, the plastics and manufacturing industry has begun to adopt advanced measurement tools to satisfy those demands. Current trends such as reducing packaging material, manufacturing more reusable and refillable packaging and producing more light weight, biodegradable plastics, will continue to gain momentum. As these programs increase, we believe companies will seek an advanced form of environmental business intelligence designed to both track and measure sustainability programs while also proving its return on investment. Wiswall: We see an increased focus on material optimization - using the least amount of material possible to effectively protect and promote the product. We also see an increase in bio-based packaging materials that are readily recyclable to minimize the amount of packaging being sent to a landfill.

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ON THE COVER

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Merrill: We see four trends over the next five to 10 years: Because B-to-C packaging is most visible to consumers, the majority of green packaging innovation has been within this arena. The demand for conversion to sustainable packaging will move further up the supply chain (i.e. B-to-B) as consumers become further educated and look for more of a life-cycle analysis approach. Big retailers like Walmart are already driving this trend and the RPA is instrumental in developing programs to educate companies and consumers. “Green washing” will evolve into industry approved standardized statistics for determining true sustainable packaging metrics with approved third party entities in charge of inspection and listing compliant companies. Further regulation typical to the Food Safety Modernization Act will drive tougher standards for sanitization, certification, and supply chain visibility of reusable packaging. In the intermediate bulk container sector, within the manufacturing supply chain, we see a greater role for tracking technology to assist with visibility and reporting. As the supply chain and infrastructure evolve in emerging countries, there will be large opportunities to introduce globally pooled returnable packaging solutions.

CM&P> What predictions do you have for the state of sustainable packaging in the next five to 10 years? Barlow: “Sustainability” will over time become less of a focus area; more and more, it will simply be how business is done. Ormiston: In the next five to 10 years, I envision packaging being 100 perecent recyclable. Currently, a lot of municipalities are very strict on what type of recycling they are willing to do or accept. I think the government has a big opportunity to significantly increase sustainability and decrease environmental impact, if they could fund some of these programs. As long as we all work together to do our part and be responsible, as Anomatic is committed to doing, completely “green” packaging is a realistic goal to achieve in the next decade. Tipton: We expect this industry to continue to pave the way when it comes to carbon emissions reduction and en-

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vironmental transparency, especially due to consumer and supply chain demands. A great example of this consumer push is in Europe where products are labeled with carbon footprint details so that consumers can see the total impact products have on the environment. We predict that sustainability reporting will continue to become more granular over the next decade. This will result in increased demand for help from providers who can both organize raw emissions data and drive cost-savings at the same time. Wiswall: The interest and activity around sustainable packaging will continue to expand in the next 10 years. Full life cycle thinking will dominate the decision-making process with companies fully understanding the environmental impacts of their packaging options prior to making a packaging decision.

CM&P> What innovations has your company made in the sustainable packaging industry? Barlow: UPS has provided packaging expertise to our customers since at least the 1960s, when we adopted testing procedures developed by the organization that is now known as the International Safe Transit Association (ISTA). Our state-of-the-art package design and test lab is staffed by degreed packaging engineers, is certified by ISTA, and is approved by the National Motor Freight Traffic Association. Our experts share their knowledge at industry conferences and with a large variety of our customers through package testing and design consultation. UPS transports about three billion packages a year, so we have good reason to devote ourselves to determining best practices in packaging. UPS is the only company to offer its customers an assessment of their shipment packaged based on environmental standards, called Eco Responsible Packaging. Because UPS cares about improving the sustainability of business practices, we have focused our efforts on determining how sustainability and packaging fit together. Our Eco Responsible Packaging Program is verified by SGS and praised by BSR (Business for Social Responsibility) and the Sustainable Packaging Coalition. Ormiston: Last year, vapor degreasing was one of the largest projects that we implemented with sustainability in mind. This latest innovation is capable of using a new generation of solvents. Through advanced filtration, the system is capable of

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Increasingly, the need for data data-driven driven eva evaluation alua ation iis b being i recognized. Packaging manufacturers making sustainability claims need to back those claims up with credible, third-party verified data. – Arnold Barlow, manager, sustainable solutions, UPS recovering more than 90 percent of the petrochemical lubricant used in the preceding process of metal fabrication. The system was also designed as closed cycle where it is constantly being regenerated and requires nearly 92 percent less energy for equivalent cleaning. Most notably, the reduction of natural gas from our next generation vapor degreaser system and the direct reuse of oil have made the largest impact on our organization. Longer term initiatives for the Sustainability Operations Group include chemical and potable water reduction in our anodizing process in addition to engaging the packaging industry and striving for 100 percent package recycling. Tipton: FirstCarbon Solutions is an industry leader in environmental business intelligence, and one of a few vendors that can accurately measure the return on investment of various sustainability programs. We offer a full suite of services from carbon footprint reporting to life cycle assessments to sustainability consulting and strategies. We have helped customers in the packaging industry understand the detailed data behind carbon reporting with offerings such as our FirstCarbon Solutions ghgTrack Software which tracks emissions on the most granular level. FirstCarbon Solutions recently worked with Associated Packaging Technologies (APT) to create a greenhouse gas (GHG) emissions inventory, produce auditable GHG footprint reports, align reporting to the international standards of the Carbon Disclosure Project (CDP), and ultimately help APT reduce emissions across its global supply chain. As the world’s largest manufacturer of Crystallized Polyethylene Terephthalate (CPET) dual-ovenable containers for the food industry, APT produces 2.5 billion containers per year. Working with FirstCarbon Solutions, APT was able to establish a baseline GHG inventory analysis. Wiswall: Menasha has upgraded the equipment in its plants to be able to produce product using lighter weight paper that has the performance characteristics of heavier paper. We have also invested in tools like our environmental sustainability calculator which allows us to determine for our customers the environmental impact of various design options. The tool is used to help minimize the material used in our packaging designs.

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CM&P> How, specifically, has your company benefited from sustainable packaging? Give examples. Barlow: UPS is involved in sustainable packaging as a way to better serve our customers and support the overall sustainability of transportation. Specifically, UPS Eco Responsible Packaging Program complements UPS’s other actions to reduce our climate impact. This offering provides customers with a way to demonstrate to their customers (end consumers) that they are committed to sustainable packaging solutions and by extension overall sustainability. In UPS’s business, sustainable packaging helps decrease the overall environmental impact of the packages that go through our logistics network improving efficiency and decreasing damages. Tipton: FirstCarbon Solutions helped Associated Packaging Technologies to meet the sustainability requirements of one of its brand-owners and submit the requested data for the Carbon Disclosure Project (CDP). Since then, APT has won an environmental stewardship award from the Plastics Environmental Division of the Society of Plastics Engineers. This is a great example of how APT benefited from implementing a sustainable strategy. Wiswall: Menasha is in the business of manufacturing sustainable packaging. Our product is the most commonly recycled packaging material available and is produced from trees, a renewable resource. The sustainable packaging movement has helped position our product as one of the products of choice in the marketplace. Merrill: Our compound annual growth rate has seen 14 percent growth over the last six years and has been solely driven by our customers’ need for sustainable packaging solutions that reduce cost without adding supply chain complexity. ||

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FOOD FOCUS

Is it time? The key components in brand extension are research, knowing your market and having an established brand. By: Jordan Brandes

t is two days before Passover and you just found out that you will be hosting the dinner. That doesn’t leave you a lot of time. Rushing through the store you suddenly catch sight of a new section made entirely of Kosher products. These new products weren’t here before but seem to cater to your unique niche. Welcome to the world of brand extensions. With growing globalization in the marketplace demand for new products is a constant. Brand extensions allow companies to increase sales by catering to new interests of consumers and even reaching into new markets. Before you decide to extend one of your established brands with a new product, however, ask yourself several important questions: • Why am I extending my brand? • What is the purpose of this extension? • Who is the targeted audience? • How will this differ from my existing products? • Where will I sell this product? Will this get me into new retail channels?

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• How long will it take me to go from prototype to shelf? • What size investments will I need to make and when will I realize a return? What level of return will constitute succes for the launch and ober what time period? The answers will be keys to developing a successful brand extension strategy. Without such a strategy in place, you run the risk of hurting your original brand and possibly losing customers. “Don’t mess with your brand if you are still hitting your product’s targeted sales goal,” says Matt Modelski, vice president of Stovall Grainger & Modelski an Indianapolis, Ind.- based consulting firm. Some companies make the mistake of trying to extend brands when their current products are doing well in the market, Modelski says. Not every brand needs to be extended. Many times, businesses are so focused on short- term goals they lose sight of long-term business strategy, explains Modelski. When extending a brand, a company should focus on what makes its products unique. For instance, Pleasanton, Calif.-based grocer Safeway introduced its better-for-you bread in March under its Eating Right Brand. The new bread moves Safeway beyond the basic bread market into a niche that will appeal to a different segment of its shopping audience. “A company must know why it is expanding before it starts expanding. Once you decide why and know you absolutely have to extend your brand, you need to determine if you are going to create a new product or remarket an old one as an extension,” says Modelski.

Good Design Design is a crucial part to any brand strategy, experts agree. How your product looks can also tell shoppers what it does , says Kate Bradford, managing director of the Bradford, UK-based brand implementation company Sun Branding Solutions. “Any brand must be unmistakably recognizable

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FOOD FOCUS

Brand Extension: The addition of a new product to an already established line of products under the same brand name. Brand extension allows the new product the benefit from the older product's established reputation.

wherever it appears on shelf in store or at home. It needs a consistent and relevant brand signature that is immediately identifiable amidst its other branded competition. Equally, it needs to be simple and clear in delivering the brand promise. Good design makes a brand easy to find and choose,” says Bradford. The most successful brand extensions have a very strong brand at the core, explains Bradford. The objective may be to expand within the existing category or to stretch into another; it may be to encourage an existing target audience to increase purchase within the brand or it may be to gain new buyers. In all cases, a good understanding of the new product area, the target audience and the relevance to the brand is critical to creating a successful launch. A brand extension does not have to be complicated, explains David Fields, managing director of Ascendant Marketing, a Ridgefield, Conn.-based consulting firm. “Consumers want benefits, and focusing on any single benefit of your product can be considered a brand extension,” he says. So long as you change the focus of a product line a variety of different extensions can be created.

Decisions, Decisions One must keep in mind that too many product choices can work against a company as well. If you are extending your brand in order to gain more territory on the shelves, it’s a possibility that you won’t increase revenue, says Fields. By trying to extend your brand because of shelf space, you run the risk of possibly splitting your customers over more stocking keeping units (SKUs); Meaning you won’t increase overall sales, just spread them cross a broadwer portfolio that costs you more to produce. This can be seen in numerous case studies, says Fields. For example, if a company sets up a booth in a supermarket with three kinds of jelly, two of which are extensions of the original product, sales should go up for the new extensions. But if the booth offers a dozen new choices, consumers tends to shut down and not buy any products, he explains. “If you split users purchases between two items you now have two at- risk items on the shelf,” he says “companies underestimate the danger and rate of cannibalism in brand extensions.”

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Take Your Time Creating a brand extension involves a great many moving parts for a company. “You need to look at your current business performance and, if you aren’t meeting your objectives, something has to change,” says Moldeski. A proper product launch involves not only sufficient time but money as well. Given that each launch is different there is no magic investment number to guide a company toward a successful product, agree experts. Just as experts can’t point to one investment level to make a brand extension a successful, they also note that product development timelines will vary from product to product and company to company. “It can be as little as a few months from beginning to end. Often times, it can be several years because companies want to test consumer acceptance of the idea, or the timing of the launch may be intended to coincide with a larger brand strategy or product roadmap,” says Kord Brashear, senior brand strategist at the Los Angeles-based consulting firm Continuum Innovation. “Making a brand extension a success takes investment, organizational commitment, money and patience. The most successful companies understand that they will need to invest in a new brand extension for a while before they start to see returns on that investment,” says Brashear. ||

Five Keys to Brand Extension Success • Know your customer- A brand extension will fail unless you market to the right consumer niche. Make sure your product is relevant and needed. • If it isn’t broke don’t fix it- Not every brand needs to be extended. Creating a brand extension for the sake of making a new product can create an at- risk product on the shelves. • Refocus an existing product- Sometimes a brand extension is as easy as finding a unique aspect of your original brand and marketing it as a new product. • Don’t overextend the brand- Too many choices can confuse the consumer and turn them away from all brands in the line, not just the extension. Keep it simple. • Have Patience- Creating a successful brand extension takes time. It could be years between prototype and supermarket shelf.

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HONOR ROLL

Head of the Class: The First CM&P Honor Roll By: Jordan Brandes

C

ontract Manufacturing & Packaging would like to introduce you to our inaugural Honor Roll. While we write about best practices in contract manufacturing and packaging, we also want to honor companies that embody those best practices. That is why we have created the Honor Roll. Each year, we will profile top contract manufacturing companies as well as top retailers and consumer goods companies. A good relationship with retailers and consumer good companies is crucial to the success of any contract manufacturer so we felt it only right to include them on our list. The Honor Roll was determined using a variety of cri-

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i iincluding l di how long a company has been in business, teria its number of clients and whether it maintains good ethical standards and quality control. CM&P asked industry experts to nominate those they felt met our selection criteria. You will notice a list of Honorable Mentions below the Honor Roll itself. These were selected via a survey of members of the Solon, Ohio-based Efficient Retail Marketing (ECRM) database of manufacturers and a number of industry analysts. Any company can be considered for this achievement, whether big or small, so next year you may see your company here. Until then, we hope you can learn valuable lessons from this year’s companies.

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HONOR ROLL

CM&P Honor Roll Manufacturers Creative Werks Years in business: 10 No. employees: 50 (temp staff of 300) Headquarters: Bensenville, Ill. Office in Hong Kong Key Staff: Steve Schroeder, president Website: www.cwerksglobal.com The Bensenville, Ill.-based creative werks, llc designs, manufactures and co-packs for numerous high-profile clients in the contract manufacturing industry. The company maintains SQF 2000 III food-grade clean rooms that allow for both automated and manned labor.

Creative Werks, LLC displays a variety of its products. The company provides its employees with language training and other classes so that each member of the staff develops a global business perspective and the ability to communicate effectively. “The best part of this job is finding great people to work with,” says president, Steve Schroeder. “What makes going to work fun is knowing that you are surrounded by a good set of people.”

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Food safety remains the company’s number one priority as the entire operation maintains strict quality control procedures. Upon entering the manufacturing section all employees must put on laboratory coats, wash their hands and then walk on to a mounted camera that photographs each person as they enter the facility. A camera is also mounted inside the production area so that clients can watch their product’s progress in real-time. This helps to ensure trust between both the client and creative werks. P.J. Noyes Company, Inc. No. of employees: 95 Years in Business: 143 Key Staff: David Hill, president, Dennis Wogamen, CEO Locations: Lancaster, N.H. Website: www.pjnoyes.com The Lancaster, N.H.-based pharmaceutical company manufactures nutraceuticals, over-the-counter pharmaceuticals, homeopathics, dietary supplements, personal care products, and veterinary products. Though the company specializes in chewing tablets Noyes is also well known for its multi-phase liquid batch processing. The company’s facility is equipped to handle numerous client orders from prototype to shelf. “While many manufacturers have seen a decline in business, or have had to move operations overseas, Noyes’ sales have consistently grown year to year over the last five years, with some years showing double digit growth,” says David Simpson, business development manager. This has allowed PJN to provide steady, full-time employment to more than 90 employees, many of whom have been with the company for more than 10 years, explains David Simpson, business development manager. The company works with about 30 steady customers, and manages more than 400 SKUs for these companies. On average, five to eight new customers, from start-ups to established Fortune 500 companies, start projects with PJN every year. PJN has been providing turn-key, contract manufacturing and packaging services to customers in an FDA registered, cGMP compliant (21CFR 110, 111, 210, 211) HUBZone certified facility - in Northern New Hampshire. Our focus has been in OTCs, Dietary Supplements, Health/Beauty Care, and Vet/Pet products in liquids, lotions, creams, gels, compressed tablets and more recently – capsules, according to Simpson. When asked for the secret of Noyes’ long-term success Simpson passed along these key points that every contract manufacturer should follow: Communication- Always keep communication open  |

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HONOR ROLL

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Continued from page 19

between manufacturer and customer, even for bad news, it shows trust. Hassle free- A contract manufacturer should always try to keep the business process as smooth as possible for the client. Experience-The more experience a company has, the better equipped it is to handle a client’s problems. Attention to Quality- Cost is important but should never outweigh quality as a priority. Punctual- A contract manufacturer should have a commitment to a customer’s time frame and make sure a project is finished on time. Carl Buddig & Company No. of employees: NR Years in Business: 125 Key Staff: Robert J. Buddig, chief executive officer; Dan Wynn, chief operating officer; Location: Homewood, Ill. Website: www.buddig.com Brands: Buddig Original, Deli Cuts, Fix Quix, Old Wisconsin. Illinois-based Carl Buddig & Company manufacturers and distributes deli meats to retailers all over the country. With four brands of meats and cheeses, Carl Buddig’s products are available in the United States, Puerto Rico, and Canada, and are sold at such retail food outlets as Kroger, Albertson’s, Safeway, Food Lion, Giant, Roundy’s and others. The company has philanthropic division as well. This summer Carl Buddig & Company partnered with the Reading is Fundamental (RIF) for the “Be a Reader” campaign dedicated to raising over $100,000 for donation to children’s literacy programs. Like Aldi this is not the first award that the company has received. In 2004 the company received the “Supplier of the Year” award from Eden Prairie, Minn.-based grocer Supervalu. The supplier earned the award after the successful launch of Supervalu’s Farm Fresh store brand supplied by Carl Buddig & Company.

Retailers ALDI USA No. of employees: 20,000 Years in Business: 98 Key Staff: Jason Hart, co-president; Charles Youngstrom, co-president Locations: 9,500 stores worldwide Website: www.aldi.com

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Though based in Germany the U.S. branch of this private label grocer can be found in Batavia, Ill. The grocer partners with some of the top name contract manufacturers and suppliers in the country to bring customers high quality private label products. The chain carries almost exclusively private label with 95 percent of premium products sold under the Aldi brand name. By keeping most items private label, the company is able to lower the price of merchandise for customers and still maintain a high level of quality. Aldi emerged as the affordable price leader beating out its competitors, a recent survey by MarketForce Information, a Louisville, Colo.-based market research firm states The ranking came as a result of the company’s ability to deliver on consumer expectations. Aldi also manages to meet the consumer’s need for convenience of location, which 57 percent of consumers cited as a key factor. Fast service at the register also helped the grocer score higher with consumers than nine other competitors, the study found. This is not the first time that the company has been awarded such an honor. In 2009, CM&P’s sister publication PL Buyer named Aldi its Retailer of the Year for its no-frills approach to giving consumers high-quality store brands. “Each product represents the best in its category,” Joan Kavanaugh, Aldi’s former vice president of corporate purchasing, told PL Buyer. The chain currently carries more than 118 store brand products nationwide.

Honorable Mentions Fair Oaks Farms, LLC The Pleasant Prairie, Wis.-based company manufacturers

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HONOR ROLL

custom meat products for a variety of companies around the world. The company produces ready-to-cook, or fully cooked beef, pork, and poultry products. Fair Oaks offers sausage patties, links and crumbles, bacon strips and bits, hot dogs and smoked sausages, ready-to-cook beef patties, fully-cooked beef patties, pork ribbettes and chopettes, Salisbury steaks, and meat loafs, as well as chicken breasts, strips and nuggets. It exports its products to Canada, Germany, Hong Kong, Japan, Mexico, South Korea, Singapore, Taiwan and Thailand. Jel Sert For more than two decades, the West Chicago, Ill.-based company has provided manufacturing, warehousing, quality assurance and management to a variety of clients around the world. It works specifically with powder blending, powder filling, bulk liquid processing, blow fill seal, flexible tubes and stand-up pouches. All department managers have extensive experience in food–processing and pharmaceutical manufacturing environments. The company has built an infrastructure of personnel and expertise that supports complicated processes and requirements for food and pharmaceutical customers, private label and consumer healthcare.

Target Corporation The Minneapolis, Minn.-based discount chain operates more than 1,750 stores around the country and since the recession ended, the company has been expanding into grocery services. It offers household essentials, including electronics, music, computer software, and toys; apparel and accessories, jewelry, and shoes; home furnishings and decor consisting of furniture, lighting, and kitchenware, as well as seasonal merchandise; and food and pet supplies primarily under Target and SuperTarget trademarks. It also sells its merchandise under private-label brands, including Archer Farms, Archer Farms Simply Balanced, Boots & Barkley, Choxie, Circo, Durabuilt, Embark, Gilligan & O’Malley, itso, Kaori, Market Pantry, Merona, Play Wonder, Room Essentials, Smith & Hawken, Sutton and Dodge, Target Home, Vroom, up & up, Wine Cube, and Xhilaration.

Richelieu Foods, Inc. The Randolph, Mass.-based Richelieu Foods, Inc. provides contract manufacturing for private label foods nationally. With manufacturing warehouses in Wisconsin, Iowa, Ohio and Illinois, the company is one of the country’s leading manufacturers of retail frozen pizza and retail/foodservice dressings and sauces. Clement Pappas The Carney’s Point, N.J.-based juice manufacturer makes canned and bottled apple, cranberry, and other fruit juices, as well as cocktail mixers and canned cranberry sauce. Released under its Ruby Krist and Grown Right brand names Clement Pappas products can be found throughout the United States and Canada. Ahold USA The Quincy, Mass.-based grocer oversees 730 supermarkets around the country. The company operates in four divisions: Stop & Shop New England, Stop & Shop Metro New York, Giant-Landover, and Giant-Carlisle, each with its own support business. Its online grocery delivery service Peapod serves Giant Food and Stop & Shop customers in select markets.

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Publix Years in Business: 81 (Sept. 6, 1930) Retail Banners: Publix Super Markets, Publix GreenWise Markets and Publix Sabor No. of Employees: 147,500 Location(s): Operates in five states, Florida, Georgia, South Carolina, Alabama and Tennessee. Headquartered in Lakeland, Fla. Key personnel: Todd Jones, president; Ed Crenshaw, CEO. Store Brands: Publix, Publix Premium, and Publix GreenWise, along with Publix Deli and Publix Bakery. ||

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SPECIAL REPORT

A National Brand Report Card By: John N. Frank

a new Hydralicious line of shampoos. • Old Spice introduces the Swagger body wash.

National brands are trying to win back market share from private label by introducing new products, new packaging and new ways of reaching consumers. Below is CM&P’s sister publication PL Buyer’s first national brand report card, a summary of trends in categories PLBuyer has written about since late 2010. PL Buyer provides retail executives compelling information on merchandising and marketing private label products through in-depth features on leading retail chains, up-close category analysis and a focus on industry trends, all designed to help maximize quality and profitability in private label programs.

Appetizers • Convenient to eat and easy-to-make are in • Tyson Foods, for example has expanded its Any’tizers line of quick-prep frozen chicken snacks. • Sara Lee rolls out a new line of State Fair brand mini corn dogs that come in a family-size 38-count packs and are microwaveable.

Bath & Body Products

Batteries • Greener products are in • Duracell has a new mercury-free hearing aid battery, EasyTab. • Energizer has a mercury-free hearing aid battery, EZ Turn & Lock, uses 100 percent recyclable packaging.

Beverages • Eco-friendly packaging is in • Tropicana plans to sell its Pure Premium Orange Juice in clear bottles. • Coca-Cola’s Odwalla brand transitions single-serve bottles to 100 percent plant-based material that is recyclable.

Breakfast Foods • Better-for-you is in • Jimmy Dean D-lights introduces its line of breakfast sandwiches and bowls.

Cereal

• Adding new ingredients to existing products is in • Herbal Essences adds a moisturizing element to create

• New products are in • Ocean Spray rolls out new line of instant oatmeal. ||

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Bloomfield Bakers

www.bloomfieldbakers.com

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ECRM - Efficient Collaborative Retail Marketing

www.ecrm.marketgate.com

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T.H.E.M.

www.them.net

Tower Laboratories Ltd.

www.towerlabs.com

U.S. Nonwovens Corp.

www.usnonwovens.com

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