Packing Together Sustainability and Innovation

Vagish Dixit, Managing Director and Partner, ALPLA Group, India

Packaging can make all the difference in a product; it dictates whether we choose the product, how we recognise it, how easy a product is to use and travel with, its resilience in transit, and also how sustainable it is. In the new world order, as sustainability and efficiency take precedence for consumers and companies alike, Vagish Dixit, Managing Director and Partner of ALPLA Group, India, elaborates how the packaging industry takes on the responsibility of innovating and addressing these expectations and challenges.


00:00 – 01:08
Have you ever chosen a product based alone on how attractive or durable the packaging looks and feels?

Or liked using a product because it had a more ergonomic packaging?
Is sustainable packaging what comes to mind when you think of sustainable products?

Hi, I’m Madhuleen, representing ISB’s Management ReThink—an online management practice journal, published quarterly by the Centre for Learning and Management Practice. In today’s session we will explore the role of the packaging industry in the manufacturing ecosystem to address the need for resilient and sustainable supply chains. To help us understand how the industry is adapting and evolving to these needs, here with us today is Mr. Vagish Dixit, Managing Director & Partner, ALPLA Group in India. He is also the Chairman of Indian Institute of Packaging and the President of PET Packaging Association for Clean Environment.

Welcome to the podcast, Mr. Vagish.

01:09 – 01:15
Madhuleen .
So, to begin with, could you shed some light on the role played by packaging in a product’s life cycle?

01:16 – 04:48
Vagish Dixit.
Thank you.
Well, any product whether it is grain from the fields or medicines from a pharma plant require packaging to ensure that the product reaches the user in a safe and secure manner—every time, all the time. A product and its packaging have a Ying Yang relationship, one cannot survive without the other. Having said this, with so many products vying for the attention of the consumer, packaging serves as the first key attribute towards attracting consumers. Mr. A.G. Lafley, the erstwhile chairman of Procter & Gamble, demystified this complex journey by calling it the first moment of truth. The first moment of truth is when a consumer walks down the aisle or to a kirana (grocery) shop, has choices, and points out to what he thinks or she thinks, is his or her choice. And this is determined primarily by the packaging—does it give a sense of attractiveness, safety, integrity, and the promise that the product conveys through that pack.

Secondly, of course, is the second moment of truth—the trial. Umm, sometimes you have a great product, but the pump doesn't work and so the product doesn't come out, or you have flip-top breaks, or you have leakage on the cap. Apart from that being a problem in usage, sometimes it also impacts the safety, especially for food products or medicines. So, in both these cases, packaging plays a critical role in the entire life of that product. Also, avoiding duplication, counterfeiting, keeping products safe, these are key missions of packaging. I want to give an example of Zandu balm which is noteworthy. In 2007-08, this was a brand that was growing at 4-5% only, a very matured brand is how people describe something that doesn't grow well. And we found that the reason was primarily because glass containers in which it was being produced were available and people would duplicate Zandu balm. And counterfeit Zandu balm was sold almost in the same volume as the original. This is just a guess work. Because subsequently when we had an opportunity to bring cube technology, the first application of such technology in the world, and that also in India, we were able to convert from glass to this double walled plastic with multicolor, with so many elements that duplication was impossible, not only in India, but also in any other country. The product volume jumped nearly 15X over the next 10 to 12 years. This gave us a huge amount of belief that actually, packaging can also increase sales dramatically if it addresses these elements of duplication avoidance and counterfeiting in India, in China, in you know, especially in Asia, where these issues are quite rampant. Also, product sustainability is the new mantra, which heavily relies on packaging and packaging is considered in every phase of a product lifecycle right from inception, stability, product range expansion, sustainability, and of course innovation.

04:49 – 05:03
You mentioned that packaging sits at the center of sustainability, innovation, and efficiency. How do you see the packaging industry innovate its business models to address the urgent calls for resilient supply chains?

05:04 – 10:01
Vagish Dixit.
It's a great question! So, let's start with the…the most disruptive event in the last 100 years—the Black Swan event of COVID-19. During this time, I have seen our company and many companies do unbelievably heroic work in repurposing equipment, factories, processes, and the whole thinking approach to address the needs, which for us was to produce hundreds and millions of hand sanitizer bottles and so also for many other companies, as also for other companies, and the flexible packaging to find solutions for masks or for various other products. While this was related to this Black Swan event, let's talk about normal, day-to-day situation as we stand today. [There are] many examples of packaging innovations in business models and product innovation to improve supply chain resilience. I’ll give an example of the launch of Colas in very lightweighted glass bottles, which are plasma coated. The earlier bottles in glass were very heavy, prone to breakage, and of course when you fill somewhere, you can't send it more than a few hundred kilometers. And so, uh, a lot of, I would say Tier 3, Tier 4 of India was not getting product supply, and if so, then at a high carbon footprint. By moving to this hardly ten-gram bottle, plasma coated, new technology in the world, it meant that the product could have long shelf life and dramatic resilience in supply chain at significant reduction in carbon footprint. A huge example! And then in this particular case, the product was launched in India first as a global launch and we were proud to be a partner in this. And now it's being expanded to other countries successfully. So, this is a classical example where huge supply chain resilience benefits and also CO2 reduction, so everything wins. In terms of also…now one witnesses sharper lead times and development cycles, including ideation, prototyping, earlier adoption by using virtual reality tools to see how packs look in the market, and these are far more common now than ever before. So, as we know in the automotive field what used to be 5-6 years cycle to launch a new car is now, we talk about two years as the reality and people are even trying to crush it. It was the same in FMCG sector. For an FMCG pack, sometimes it would take 18 months to 24 months to launch something new, and packaging was at the centerpiece of this, along with, of course, the product architecture. Now this can be reduced to 7-8 months, 10 months, because of all these new possibilities.

Then on business model, there are newer models. So, one model which is quite popular in Europe and US and we have been proud to bring this to India, is the in-house model, which means we produce product packaging in the plants or the factories of our consumers.  What does it do? Dramatic reduction in CO2. There's also savings in terms of cost of significant proportion, on shared costs, and resilience and supply chain. Sometimes when four to six weeks lead times are there, this can be brought down to four to six days. You can imagine the plethora of opportunities that come out. And lastly, of course, we have experimented in my company with what we call as integrated manufacturing and we have just done a proof of principle in Silvassa, invested almost €50 million to produce packaging and products in the same factory, whether it's shampoos, body lotions, toothpaste. When we do this, the costs are significantly lower. Carbon footprint is significantly lower. There are thousands of trucks that don't need to be on the road to carry packaging to and off the plant and you don't need months of supply chain. I have seen keen interest by many countries across the world, including US, to adopt this model. So yes, there are huge opportunities in terms of business model innovation itself to drive resilience in supply chain.

10:02 – 10:20

Building on your elaboration on resilience with the rising and resounding calls for sustainability, many companies have enlisted their goals and targets along the same lines. How can the packaging industry help in achieving these targets and how can they innovate to accommodate these?

10:21 – 14:56
Vagish Dixit.

Well, packaging companies need to shift their focus from sustainability as a nice to have, to sustainability as a foundational pillar of the organization. The role of sustainability needs to reside at the board level and must be a significant part of the KRA of the CEO. In our company, our group chairman, who's also a principal shareholder of ALPLA, Mr. Günther Lehner, for the last few years have taken up the role of sustainability as his only key role. And so, all activities and innovations are now under one of these four Rs—reduce, recycle, reuse, and replace. These also entail huge investments. So, we've invested almost €300 million in the last few years and are committed to invest 50 or 60 million every year, thereafter. There are many other companies who are walking the talk. And this is the need of the hour—walk the talk. Examples in products which are reflecting this call for sustainability: when I was on a Swiss flight recently, the water bottle was 75% PCR, which is the post-consumer recycle. There are many other bottles I picked up last week in Europe in juice, in water, and in other beverages with 100% post-consumer reused materials. We are very hopeful to see similar traction in India in times to come. Having said this, India is an economy which has been very frugal for the last many, many decades, and that's in our ethos. And so, and in terms of PET [polyethylene terephthalate] materials, India already these recycles 95% of the PET material of India, which is the highest in the world. I believe it's something that we need to applaud and recognize that we are thought leaders in this. I would also like to say companies like us and many other global packaging majors are signatories to Ellen MacArthur Foundation pledge, which requires that by 2025 we need to have 25% post-consumer material…reused our products and 100% recyclable materials in our production by 2025. What does that mean? It means that not only the raw material in our products, but also the inks on a bottle, or a tape, or a label, or anything that goes into our supply chain, must be recyclable. That's a lot of work, but we are committed and as I mentioned earlier, we have already pledged a lot of money on this and so have many other companies. This is no mean promise, and this is how we support our partners to deliver on the sustainability goals. Many companies also publish sustainability reports. Public listed companies are required to. Some of us who are not listed still voluntarily publish reports to share ground realities, targets, and progress in the area of sustainability. A lot of work is also going on in the use of biodegradable materials and unconventional materials, Panara from Slovakia, being an example. It's a small startup and we’ve funded it dramatically in order to help them to come out with solutions. It will take time, but work is in the right direction. On a bigger scale, the paper bottle, which has been a huge success in terms of attracting media attention is a joint venture with…with the...between ALPLA and BillerudKorsnäs of Sweden, which is a huge paper group and ALPLA is a huge plastics group. Imagine both of them entering into a joint venture to make up paper bottle. It will take years for us to come out with large volumes, but the work is already going on and we have proof of principle in the market, so we need to really believe in ourselves and not be dissuaded just because something doesn't look like hitting the market in Q3 or Q4. These are things for the future, and we need to constantly believe that we can make a difference.

14:57 – 15:14

So, you mentioned unconventional materials and them being something that we look forward to in the future. But how economically sustainable is the use of unconventional materials in packaging from both the producer and the consumer perspective?

15:15 – 17:00
Vagish Dixit

On a philosophical note, what is economically unviable today will be viable in times to come. We have seen this in all spectrums of technology, and you know we have recently seen this with electric mobility. How fast what seemed like an impossible dream is becoming almost the norm. And we are already talking about hydrogen being the next walkthrough. So, in that same thought, biodegradable materials or even recyclage are today very expensive. And due to understandable weight of capital…also where we are in the technology spectrum and operating costs. And so, if we were to look at the price differentials of between 30-40% for PCR (post-consumer recycle), going all the way to 300-400% for biodegradable materials, it is easy to be very…pessimistic. But brave and futuristic companies are supporting these activities and I am sure that we'll find an inflection point for such options to become more commercially viable. At the same time, this is not a burden of packaging companies alone. It is a societal burden. And so, not just large companies, but at the end you and me and all the consumers of India, and the world, must be willing to recognize the efforts in sustainable products and sustainable packaging. And if required, pay for that if it is...if it entails being a little bit more, at least for some time.

17:01 – 17:17
You mentioned that this burden being not just for the packaging industry alone, but for the society as a whole. So, what challenges do the packaging companies face in implementing sustainable practices and aligning all stakeholders with their goals?

17:19 – 21:01
Vagish Dixit.
Well, first of all, the biggest challenge is the gap between reality and myth. Sustainability is the need of the hour, and there's no discussion, but people try to find easy villains and plastic is therefore, many times, targeted as a devil. Whereas in my very objective assessment, plastic is fantastic and that's why it has been a material of choice, not only in packaging but in every sphere of any product that you pick up, including computers, laptops, cars, automotive airframes; everywhere it is plastics and plastic composites. So, first of all, this myth needs to go and in Indian context we need to be very proud that we recycle 95% of PET and seventy plus percent of PE [polyethylene] materials. We have issues with flexibles, with sachets, which, 98% of it hits the landfill, but there's a lot of work going on in that respect as well. To find mono materials that will be recyclable or biodegradable.

Having said this, the other big problem is regulatory framework. While the Government of India has...very ambitious targets of launching the EPR [Extended Products Responsibility] framework in 2025 and I think the industry supports it, all of us support it fully. However, it needs to be also steeped in reality checks. So regulatory environment expects that rigid packaging, for example, must be 30% PCR...must be there in products, going up to 40-50-60 in the next four years. I have to tell there is not one single country which has this regulation, including US, Germany, Japan, Nordic countries, which are all very sustainably, very, very advanced. So, these are things which put undue pressure on the ecosystem and also hurt the...the adoption of technologies in a fairway. Also in a federal structure, states go out and make their own regulations from one day to the other, sometimes announcing that water bottle is bad for health. These are scientifically proven for multiple times many times over that this is a very safe way to actually have access to safe drinking water, and especially when one is on the go, on travel. And during the pandemic, if there were no water bottles available, I shudder to think what would have happened and also in various calamities. So, I think this, first of all, this reality and myth and the regulatory framework are areas of opportunity. And then of course, the misconception that sustainability is expensive. This is not always the case. When you reduce the weight of a pack, you save money. But this can happen if one starts to think of packaging when a product is going through evolution of its new launches. Instead of not thinking of a recycling as a key element, this should be the centerpiece and we will find that a lot of sustainability elements will be cost saving elements. So yes, there are many challenges, but I think they're associated with many opportunities as well.

21:02 – 21:24
Madhuleen .
You're absolutely right!
Aligning the reality with myth is the most important when formulating regulations around these things.
The packaging industry, as we have seen, plays a vital role in achieving economic and environmental goals. So how do you see the manufacturing ecosystem evolve as a whole with packaging industry at the center?

21:25 – 22:47
Vagish Dixit.
That's a great question.
Well, not many people would know that India's packaging industry accounts for $50 billion and provides jobs to almost one crore (10 million) people with 70 to 80% of them being in the SME [small-medium enterprise] sector. Given the right support, this sector can truly support India's march as an exporting country of not just FMCG products, but any other products where packaging plays a vital role and therefore it is critically important that this industry should be treated with care and support, that it truly deserves. And here, I have to say that in the recent past, we have seen strong tailwinds from the Ministry of Commerce and Industry, especially through the Indian Institute of Packaging, which I head as the Chairman. The government is really keen to take the message to all the states and even to all districts on the importance of packaging and train youth and train people at district level to enable the journey of packaging industry to a higher platform.

22:48 – 23:26
These are some really encouraging signs for building towards the future.

Here is what I have learned from our conversation today: the packaging industry has great influence in achieving sustainability and resilience across manufacturing and supply chain, and to that effect, efforts are being made throughout the industry through collaboration and innovation in business models and packaging materials. But to make these efforts bear fruit, it needs to be supported by all stakeholders, by chalking out of timely and realistic regulations, and by building consumer awareness.

Thank you so much for joining us today! This has been a really insightful session.

23:27 – 23:30
Vagish Dixit.

Thank you very much.
Thanks for having me.

Vagish Dixit, Managing Director and Partner, ALPLA Group, India

Vagish Dixit is the Managing Director and Partner, ALPLA Group, India, the Chief Engagement Officer of ALPLA Worldwide and the Honorary Consul for Austria for the Indian states of Telangana and Andhra Pradesh. He also presides as the Chairman of the Indian Institute of Packaging and is the President of PACE (PET Packaging Association for Clean Environment). He has previously served as the Chairman of CII (Confederation of Indian Industry), Telangana, during 2022-23 and is currently chairing a Public Policy Task Force of CII.

The idea of ISB Management ReThink was born out of the impending need to revisit and redefine the time-tested tenets of management, and at the same time, identify how they can still hold on to their relevance in contemporary times. With the ever-changing dynamics of management philosophies, and the associated classroom teaching methodology, it is about time to readjust the focus by shaking the fundamentals, breaking myths and bringing about the change necessary to survive in this cut-throat era of stiff competition.