DSU - MBA

Strategic Management
Ready-to-drink Beverage habits and Ecology
Case Study Oct.2020
Compiled by Prof. Dr. Krishna Kumar V Rao
Important Note to Students:

The Cases are only for study purposes, limited to the Current Assignment: The Case
Analysis, attempting to apply your learning in the Classes, on the subject of Business
Strategy.

Do not distribute copies or forward these Cases in full or part to anyone else, at any
time, now or in future and also –

Do not quote or use selectively out of this case or any portion of it anywhere
or anytime.

By attempting to study and answer the case questions the student is deemed to have
accepted these requirements in full and act accordingly.
Instructions to answer Case Questions have been given below the Case
Read carefully all the instructions and accordingly send in your answers

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.

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
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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

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
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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.

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.
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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 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.

“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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DSU – MBA – Semester 3
Strategic Management - Assignment – Oct. 2020
Suggestions & Instructions to Students – Prof.Dr. Krishna Kumar V Rao

 A Case Study represents, a situation, at a given point in time or period of an

Organisation, requiring study, analysis and possible solutions, within the material given
in the case. Even if the organisation exists today, Do Not bring in your current
knowledge about the Organisation, to analyse the earlier period case situation.
 When you do a Case Study Exercise, restrict yourself to only the details given in the
Case itself. Do not go and search in the internet for any additional material and try
to cut and paste for the Questions you are required to answer.
 If any external material is used – cut and paste -the evaluation marks will be ZERO
 Do not copy and paste any paragraphs from the Case itself
 Answers to Case Questions have to be in your own words/sentences
 The Answers have to be short (maximum up-to 20 sentences for each Question or
its sub-section)
 It has been found, that many participants/ groups, sometimes, send identical answers to
questions. In such cases, even if answers are reasonably correct, all of them may be
marked ZERO.
 Read below as to How the File should be uploaded with the Right File Name
While uploading your File, please do it in MS WORD Only – No PDF or No PPT
Use Only One WORD File, for answering the Case
If your Group Name is Group 1, Keep the File Name, for example, as
“Group 1 - SM Assign – Oct..2020”
On the first page inside, on top right-hand side, please write Group No. & Full Names
of All the Group Members with Regn. Numbers (Only those Names who have
actually worked and contributed in Group Answers) (Write separately, the Names
of such Group Members, who did not participate in all your discussions – Do not
carry ’idle passengers’)
 The Cases are only for study purposes, limited to the Current Assignment - The Case
Analysis, attempting to apply your learning in the Classes, on the subject of Business
Strategy.
 Do not quote or use selectively out of this case or any portion of it anywhere or
anytime. Do not distribute copies or forward these Cases to anyone else, at any time,
now or in future
 By attempting to study and answer the case questions the student is deemed to have accepted
these requirements in full and act accordingly

For Case: Ready-to-drink Beverage Habits and Ecology

Questions to be answered by the Students (Group Submission)

1) What is the importance of the issues in handling huge quantity of waste generation from
beverages, at least in all Metros, Mini Metros, Big and Medium Towns in India, as a part
of ecology macro environment responsibilities on an organisation? (Hint: PESTEL
Factor)
2) Can a “Refill model whereby selected important stores in various localities is taking care
of refilling” in beverages products work? What kind of Retail Vendor Incentives may be
needed to be given to administer this model? What are the practical difficulties in this
distribution strategy?
3) Can a “IoT-connected refill vending machines dispensing “a part of business model work
well, particularly in middle- and upper-class localities? What could be the difficulties?

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