In Winning Market Share, AICC Will Make A Difference! AICC 2003 SPRING MEETING

1. In Winning Market Share, AICC Will Make A Difference!AICC 2003 SPRING MEETING Dwight Schmidt Executive Director, Corrugated Packaging Alliance

2. Corrugated Packaging Alliance • Confronting the Brutal Facts • Industry Response • CPA 2002 Review • CPA 2003 Action Plan • Calling All AICC “Hedgehogs” • Are We “Built to Last?”

3. “Competing materials are reducing the demand for corrugated packaging and threatening the viability of your industry, your company and your personal success.” - Dwight Schmidt

4. Confronting the Brutal Facts • RPC’s have taken several markets: milk, beverage, automotive, some redistribution • Several areas are under attack: produce, case-ready meat • Future areas of concern: closed-loop distribution systems like fast-food and salty snacks • RPC’s go to market as a supply-chain solution; historically corrugated has sold to a point along the supply chain

5. Confronting the Brutal Facts • Increasing imports, decreasing exports • U.S. manufacturing decreasing • Retailer purchasing power consolidating • Product safety driving many decisions • Super-Centers with high volume and low cost are fastest growing retail segment • Supply-Chain solutions are being required to lower costs

6. Industry Response • Corrugated Packaging Alliance: An organized industry-wide effort to address competing materials • Sponsored by American Forest and Paper Association (AF&PA) and the Fibre Box Association (FBA) • Funded by containerboard producers through AF&PA assessment (23 companies)

7. Industry Response • Joint committee of AF&PA and FBA members oversee activity AF&PA MembersFBA Members I-P G-P Interstate Inland Simpson PCA Weyerhaeuser SSCC

8. Mission: Part 1 To foster growth and profitability of corrugated in applications where it can be demonstrated, based on credible and persuasive evidence, that corrugated should be the packaging material of choice

10. Mission: Part 2 To provide a coordinated industry forum that effectively acts on competing materials matters that could not be accomplished by individual members

11. OBJECTIVE A Maximize corrugated’s share in market segments under direct competitive threat, where it can be proven that corrugated is the best solution DELIVERABLES • CCF endorsed by majority of retailers in market segments under competitive pressure; readily available to all • We are successful in transitioning retailers’ perception of industry from point solution product sale in supply chain to total supply-chain-solutions partner

12. OBJECTIVE B Prevent government and other organizations from biasing packaging choices in marketplace DELIVERABLE No legislation favorable to RPC’s is passed and no misrepresentation of evidence goes unanswered

13. OBJECTIVE C Address marketplace concerns regarding impact of non-recyclable corrugated packaging DELIVERABLE Waxed corrugated replaced by corrugated packaging alternatives that can be recycled in normal OCC waste stream

14. OBJECTIVE D Implement coordinated communication strategy to inform target audiences of progress in corrugated market developments, and to enhance attitudes and behavior toward the corrugated industry and its products DELIVERABLE We are successful in changing attitudes and behaviors of targeted audiences with our messages • Identify next corrugated markets susceptible to competitive material threats. • Establish cooperative relationships to explore synergy and eliminate redundancy in our work and expense incurred on behalf of our industry.

15. OBJECTIVE E Identify next corrugated markets susceptible to competing material threats DELIVERABLE Competing materials don’t get a foothold in another market without our knowledge

16. OBJECTIVE F Establish cooperative competitive materials relationships to maximize synergy and eliminate redundancy in work and expense incurred on behalf of the industry DELIVERABLE Relationships established, synergies identified and expenditures minimized — within budget

17. 2002 EXTERNAL ACTIVITY • Established retail contacts including 14 face-to-face meetings • Softened Wal-Mart’s stance on RPC’s vs. CCF • Developed Draft Standard for CCF for case-ready meat, visited major meat processors and retailers to receive input • Received endorsement from Sam’s Club on CCF for produce • Completed successful commodity studies for grapes & strawberries and published findings

18. 2002 EXTERNAL ACTIVITY (continued) • CCF containers approved in variety of fruit commodities (grapes, strawberries, melons, tree fruit, citrus, apples, etc.) • Kroger committed to using CCF and has been requesting it • Facilitated use of CCF throughout SuperValu • Conducted and published Willard Bishop Study showing low RPC penetration, but higher penetration in some commodities

19. 2002 INTERNAL ACTIVITY • Presented industries’ point of view at nine forums • Established Executive Director position, office and CPA identity • Worked out infrastructure, deliverables, action items, budget • Revised Plan below objective level • Visited senior managers of seven AF&PA/FBA members to discuss Plan and progress • Developed Comprehensive Communications Plan

20. ROLE of CPA • To coordinate, focus and enable all competing material efforts undertaken at industry level • To identify and fund projects that generate factual information, and communicate information to positively affect attitude and behavior of those who influence use of corrugated

21. ROLE of CPA “Facts are stubborn things; and whatever be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.” - John Adams

22. Willard Bishop StudyFebruary 2002 Determining the Market Penetration of Returnable Plastic Shipping Containers

23. Bishop Study Participants 21 individuals, representing 19 retailers, from all three major food store formats

24. Bishop Study Conclusions • Not much RPC penetration, except Wal-Mart • Retailers like and want to adopt Common Footprint – we need to make sure it’s available! • Retailers have 3 choices: Common Footprint, RPC’s, traditional corrugated

25. Bishop Study Conclusions • Retailers concerned about up-charges they have to pay grower/shippers – separate fact from fiction while retaining value-added position • Display-ready CCF not always required • Wax containers continue to be vulnerable to RPC’s; retailers want CCF without wax and ice

26. Credible Evidence Studies • Conducted by University of California - Davis • Sponsored by FBA and RPCC (Reusable Pallet and Crate Coalition) • Purpose: To compare existing corrugated packaging used to ship produce with RPC’s and Corrugated Common Footprint • Commodities: Grapes, Tree Fruit and Strawberries

27. Grape Study Results Corrugated Common Footprint Containers … • Allowed a 5 – 9% larger payload of fruit • Cooled at the same rate • Showed no difference in moisture loss ... than RPC’s

28. Tree Fruit Study Results Corrugated Common Footprint Containers … • Allowed a 6% larger payload of fruit • Cooled slightly slower, but faster than traditional 8-down corrugated box • Generated significantly less bruising … than RPC’s

29. Strawberry Study Results Corrugated Common Footprint Containers … • Allowed an 11% larger payload of fruit • Cooled at the same rate • Generated significantly less bruising ... than comparable RPC packs

35. Other Tools • “Full Disclosure” Software • Activity-based costing • Unbiased tool • New updates in 2003 • Collateral Material for Industry Members • Comprehensive Communications Plan • Trade Shows • Advertising • Press Releases

36. 2003 Goals • Revise our produce focus from retailer CCF specification preference to commodity by commodity implementation challenge to RPC’s • Implement CCF standard for case-ready meat • Make revisions to “Full Disclosure” to make it more user-friendly as well as generate and publish supply-chain case studies for key commodities • Fight pro-returnable legislation at all levels

37. 2003 Goals • Collect and communicate with retailers the industry’s ongoing wax replacement efforts while aligning with AF&PA Containerboard Technical Committee to define single waste stream wax replacement criteria 6. Execute comprehensive Communications Plan to affect behavior of key audiences and place more information in hands of industry’s front line sellers

38. 2003 Goals • Study RPC poolers to understand their strengths, weaknesses and economic drivers to better predict corrugated’s vulnerability by market segment • Establish cooperative relationships directly with Canada and Mexico and with rest of world through ICCA 9. Leverage maximum impact on 2003 goals within approved budget

39. In Winning Market Share, AICC CAN Make A Difference!

40. Calling All AICC“Hedgehogs”

41. Twin Cities Project “A Better Way” Campaign

42. “STOP SHREDDING MONEY” “Would you buy a new wheelbarrow after every trip?” “What if you tossed the toaster after every breakfast?” “What if you threw out the baseball after every pitch?”

43. Calling All AICC“HEDGEHOGS!” • Sponsored by SWMCB and RPCC • Hosted workshops for local businesses • Began direct mail campaign • Hosting website: www.swmcb.org/better-way • Market research • Marketing plan • Utilizing tax dollars for interest-free loans

44. Built to Last? CPA’s Role: • Make direct contact to challenge claims • Alert lobbyists to prevent spread • Develop public relations campaign • Remain active in all areas of competing materials

45. Built to Last? AICC “Hedgehog’s” Role: • Educate and arm your sellers with information to fight returnables • Formulate strategies that influence behaviors of your customers • Keeping vigilant to save your markets

46. Built To Last? “ The battle goes not to the strong alone, but to the vigilant, the active, the brave.” - Patrick Henry

47. In Winning Market Share, AICC CAN Make A Difference!