Nicole Cambridge Global Operations

Sustainability at Tetra Pak: Recycling Post- Consumer Cartons

Introduction:
Tetra Pak is one of the largest producers of aseptic carton packaging. The company primarily
operates within the B2B segment. However, they pay a special emphasis on CSR specifically
green sourcing. This paper will focus on the issues the company faces as they try to be an
environmentally friendly company in India. A SWOT analysis will be done on the company, as
well as some strategies that the company can use to be sustainable in its endeavour.
Main Issue Tetra Pak is facing:
How could Tetra Pak sustain and continue to build on its success in order to benefit from its
environmental agenda in India?
Tetra Pak has been recycling waste generated during the manufacturing process at its factory for
many years. The wastes generated by its factory are called factory waste. Those generated
during the manufacturing process at the customer plant are called filler waste and Post Consumer
Cartons was the waste generated after consuming the cartons made my Tetra Pak. (Collecting
PCC’s was one of the company’s latest project).
The company ensured that being environmentally friendly; the wood fibre they used in
packaging came from responsible managed forest that is certified to the highest standard. The
company use the power of technology, so that they can reduce the kilowatts of electricity
required to produce 1000 cartons. In addition, the company also carry out several awareness
campaigns that focused on recycling and keeping the environment clean.
In 2009, despite a turndown in the global economy, the company experienced a positive growth
of 15%, their sales were projected to grow at a fast pace. There was a high need to recycle in
India. One of Tetra’s goals is to reach a recycling index of 40% by 2020. In 2010, the company
was close to the 20% figure.
As the company focuses on their new initiative in recycling post consumer cartons, they were
faced by many unique challenges. The company now has to figure a way on how they can
continue to build success in order to benefit from this project.
Other Problems:
Segregation of the waste- if dry waste was mixed with wet waste the value of the dry waste
would drop significantly. As a result of this, consumers were not motivated to separate dry waste
from wet waste; this then made it difficult for other key players in the value chain to collect those
cartons. Due to the fact that most of these cartons contained something sweet in them, it attracted
plenty flies and rats; which also made it unattractive for household and institutional consumers to
segregate it and store it until it is collected by a dealer. Most of the time the cartons made by
tetra pak is burnt along with garbage’s.
Collection and recycling chain- there were plenty difficulty in trying to get people/organisations
to collect Tetra Pak cartons and also to form a solid recycling supply chain. People in India on a
whole, including small scrap dealers do not care about their environment. All these small scrap
dealers cared about was the price they are being paid for their efforts in the collection process. In
addition, recyclers who bought road sweeps were not interested in Tetra Pak cartons because they
 Nicole Cambridge Global Operations
Sustainability at Tetra Pak: Recycling Post- Consumer Cartons

did not know what to do with them other than to burn it and sell the ash. The machines that were
used by most recyclers could not crush Tetra’s cartons. All these factors make the cartons
unattractive for collecting.
Sorting- when rag pickers sort waste, they look for products that have value. Tetras cartons were
on low demand since they are only needed by tetra and the price paid for them is next to nothing.
Rag pickers do not see the need to sort tetras cartons because of the low price being offered.
Sorting waste is tedious and is done by hand.
Whether or not relying on one recycler was too risky?- relying on one recycler was definitely too
risky. If that recycler machine break down and would have to wait for several weeks to be fixed,
this would interrupt Tetras’s process. It is also costly to rely on one recycler in one area. Due to
the fact that transporting waste from other parts of India was not cheap.
Cartons were not reaching the landfill- Tetra Pak realised that most of their cartons were not
reaching the landfill. The company wanted to find out what was the reason and as a result they
hired an external waste management consultant who traced the life of the cartons produced by
Tetra Pak. The results of the consultant findings were that; 42% of Tetra’s cartons were mixed
with other wastes that were sold to recyclers. 13% of the waste went to the landfill and the
remainder was burned or unaccounted for. As Tetra Pak knew of this, it gave them a drive to be
very active in the collection and recycling process.

SWOT Analysis:

Strengths Weaknesses

 Increased sales from since inception  Challenges in establishing a collection

and recycling chain
 Corporate Social Responsibility
 Lack of interest from rag pickers, scrap
 Strong brand recognition dealers and municipalities in collecting
tetra pak cartons
 Tax benefits
 Most of the company cartons did not
 Technological advancements
reach the landfill
 Governmental support
 Low collection of cartons
 Offered a variety of services
 Poor supply chain management
 First mover advantage
 Transportation cost
 Nicole Cambridge Global Operations
Sustainability at Tetra Pak: Recycling Post- Consumer Cartons

Opportunity Threats

 To increase waste collection  Competitors

 Strengthen their supply chain
 Form partnerships with other recyclers
 Come up with innovative ways to raise
the awareness on keeping a clean
environment
 Consumers Ignoring government
regulations
 misappropriation of the rightful use of
the Tetra Pak by manufacturers of other
products and other contents
 environmental consciousness and
considerations aren’t priorities

Summary of SWOT:
 Tetra pak has been experiencing increase sales from since its inception in India. The
company places high emphasis on CSR which has many benefits such as; saving money
on operating cost and energy, improve business value and reputation, competitive
advantage over competitors and it can also develop great relationships with suppliers and
customers. Because of Tetra’s early focus on the environment in India they were able to
capitalise on tax benefits. Despite the much strength, the company faces many challenges
in India. Rag pickers, scrap dealers, household consumers and institutional consumers
were not interested in segregating, sorting and collecting Tetra’s cartons; they complained
that the price paid for the waste was too little. Only 55% of tetra’s waste was accounted
for, which means that 45% of waste could be burnt by users. It was expensive for the
company to transport waste from different parts of India to one recycler. Tetra will have
to focus on its opportunities in India and see how best they can achieve them.
Opportunities facing the company are: increase in waste collection by paying higher price
to scrap dealers, strengthen supply chain and manage it better, form partnerships with
other recyclers and also to use to technology to come up with innovative ways to raise the
awareness on keeping a clean environment. Some of the threats facing the company
come, from its competitors; their waste had more value to the rag pickers than that of
Tetras. Lastly, even though there were government regulations in place to have a cleaner
environment, consumers and the rest of the population ignore these regulations making it
difficult for Tetra to receive waste from dealers. Tetra will now have to maintain their
strength, turn their weaknesses into strength, capitalise on their opportunities and
minimize their threats.
 Nicole Cambridge Global Operations
Sustainability at Tetra Pak: Recycling Post- Consumer Cartons

Strategies:

STRATEGIES PROS CONS

Strategy 1  Increase collection  Scrap dealers may

not increase rag
Increase the price paid to  Create jobs pickers pay.
scrap dealers and encourage
scrap dealers to increase the  Establish better  Scrap dealers may
price paid to the rag pickers standard of living scheme rag pickers.
etc
 Assisting in
maintaining a clean
environment
 Increase revenue

Strategy 2  Create business  Difficult to break

opportunities grounds in new areas
Hire recyclers in the different
geographical areas in India-  Reduce  Increase advertising
northern, southern, eastern, transportation and expense
western overhead cost
 Increase brand
recognition
 Increase employment

Strategy 3  Increase collection  Additional capital

needed
Own and operate their  Might be cheaper
collection and recycling plant  Increase overhead
 Direct employment- cost
rule out scrap dealers
 Health insurance for
workers
 Reduce
transportation cost
 Forge stronger
partnership with
NGO’s
 Nicole Cambridge Global Operations
Sustainability at Tetra Pak: Recycling Post- Consumer Cartons

Recommendations:
I will suggest to Tetra Pak that before implementing any of the above strategies that they should
first carry out the six-step strategic green sourcing process.
Step 1- Assess opportunity
Step 2- Assess internal supply chain
Step 3- Assess supply market
Step 4- Develop sourcing strategy
Step 5- Implement strategy
Step 6- Institutionalise strategy
After completing the step 4 process, the company will decide which one of the 3 strategies they
should choose. If it makes more sense to operate their own collection and recycling plant they
should choose strategy 3 and if not, then they should choose strategy 1 and incorporate it with
strategy 2. After a strategy is chosen, the company can then continue step 5 and step 6 in the
green sourcing process.

On a personal note, I will recommend STRATEGY 3 for Tetra Pak (Own and operate their
collection and recycling plant). I believe if Tetra Pak own and operates their own collection and
recycling plant, operations will be smoother and cost will be minimized. They will be able to
create direct employment for rag pickers and thus enhance the price paid to them for picking up
waste. I will suggest that they provide them with a health package since that they have to deal
with the trash on a daily basis. All these little incentives will definitely encourage the rag pickers
to pick up Tetra pak’s cartons. By having this plant, the company will have a reduction in their
transportation cost; they will no longer have to go to scrap dealers for the waste or pay the scrap
dealers to drop the waste them. They will also experience economies of scale.
With their own recycling and collection plant, companies or people/consumers will view Tetra
pak as a company who seriously cares about the environment. Tetra pak can then forge
relationships with their direct and indirect consumers and can partner with them on their
awareness campaigns to help send out the message about being environmentally friendly.