International Track: Containers and Materials Tuesday, November 11, 2008

1. InternationalTrack: Containers and Materials Tuesday, November 11, 2008 Building the Business Case for Reusable Transport Packaging Presenter: Brian Lindell, General Manager, Food and Beverage Division Rehrig Pacific Company Blindell@rehrigpacific.com770-339-9888

2. Established in 1913 Fourth generation family owned & operated Technologically advanced plastic product manufacturer Focused supply chain solutions provider World-class product design and innovation Nine (9) state of the art manufacturing facilities 750 employees Rehrig Pacific Background “A family tradition of growth, service & innovation”

3. Rehrig Pacific’s Manufacturing Locations 3 Sales Offices: Europe – United Kingdom; Asia – Hong Kong; Licensees - Worldwide

4. What customers use Rehrig Pacific?

5. Reusable/Returnable Transport Packaging Topics • Reusable/returnable packaging and the environment • Including a recently commissioned study on the energy use and the solid waste and greenhouse gas impact of reusable plastic crates versus one-way corrugated packaging • Benefits of reusable/returnable packaging • Including cost drivers of reusable packaging • How to get the reusable/returnable packaging back and reduce shrinkage • Including a typical cost-benefit financial model for reusable transport packaging • The important issue of asset management Both a User and Non-User Perspective

6. So what is most green? Reusable/Returnable Packaging and the Environment One-Way OR Reusable

7. Reusable/Returnable Packaging and the Environment • Sustainability – balancing three components: • Environmental • Social • Economic • Reusable – continued use • Renewable – replenished by natural processes at a rate comparable or faster than its rate of consumption

8. Reusable/Returnable Packaging and the Environmentcont. Open Loop Supply Chain for Grocery Retail

9. Reusable/Returnable Packaging and the Environmentcont. Closed Loop Supply Chain for Grocery Retail: Reusable/Returnable Packaging

10. Reusable/Returnable Packaging and the Environment cont. • Carbon Footprint or Global Warming Potential (GWP) – • The measure of greenhouse gases (GHG) that are either directly or indirectly emitted to sustain a human activity, normally expressed in CO2 equivalent. • Life Cycle Assessment (LCA) – • A complex study that is the most accurate way of calculating the carbon footprint of a product. • LCA analyzes every single part or process involved in the life of a product and gives a clearer picture of a product’s effect on the environment, but not its social or economic impact.

11. Reusable/Returnable Packaging and the Environment cont. • Sustainable packaging systems*– • Society – effective, add economic and social value • Packaging system – efficient with minimum use of materials and energy • Packaging material – recyclable or compostable • Packaging component – safe, non-toxic to humans and ecosystems • *from a Michigan State University presentation

12. Reusable/Returnable Packaging and the Environment cont. • In accordance with ISO 14000, • Franklin Associates, an independent laboratory, used the Life Cycle Analysis methodology for determining the environmental impact of three packaging types. • Franklin Associates’ September 2008 study compared • 1,000 cases of 20 oz. bottles packaged in the following • three ways: Reusable Plastic Crates Corrugated Tray with shrink film, one-way Corrugated Pad with shrink film, one-way

13. Reusable/Returnable Packaging and the Environment cont. • The three categories in which the packaging was measured: • energy use • solid waste contribution • greenhouse gases • The Life Cycle steps analyzed in the study include: • extraction of raw materials from the earth • materials and container manufacture • outgoing transportation of containers • backhauling of empty plastic shells, and recycling • and end-of-life disposition.

14. Reusable/Returnable Packaging and the Environment cont. • Two scenarios were analyzed: • Baseline: • Plastic crates: 10 turns/year, 6-year life, 5% annual losses • Both corrugated packages: 25% recycled content, 95% recycling, 50% film recycling • Alternative (to provide a more favorable scenario for one-way systems and less favorable for reusable plastic crates): • Plastic crates: 10 turns/year, 3-year life, 10% loss • Both corrugated packages: 50% recycled content, 95% recycling, 95% film recycling

15. Reusable/Returnable Packaging and the Environment cont. • Results: Baseline scenario for reusable plastic crates versus film with corrugated pad and film with corrugated tray. • Per the Wall Street Journal, U.S. residents generate an average of 118 pounds CO2 equivalent per day, or 20 metric tons per American annually.

16. Reusable/Returnable Packaging and the Environment cont. • Results: Alternative scenario for reusable plastic crates versus film with corrugated pad and film with corrugated tray:

17. Benefitsof Reusable/Returnable Packaging • Product protection – reduced unsaleables • Product display – improved merchandising • Financial economics – continuously lower cost per case • Warehouse space – space savings, improved stacking • and stability • Ergonomics – improved for handlers, stock employees • and drivers

18. Cost Driversof Reusable/Returnable Packaging • Product development cycle: Things to consider • Main cost drivers: • Product weight - over 50% of cost • Tooling - varies dependent on process • High pressure injection molding - most expensive • Material, HDPE and PP (100% Recyclable) • Color, black is least expensive and allows for recycled material.

19. Cost Driversof Reusable/Returnable Packaging cont. • Float size– how many turns does your business average • 5 turns = 10% 3 turns = 17% • Recycled materials– tremendous cost savings, but difficult to source if color other than black • Decoration– hot stamping vs molded-in logos

20. Reusable Packaging Companies Recommend PurchasingMore Containers and Pallets Because: • Your business is growing • Reusable packaging makes business sense • for your application • Not because of loss.

21. How to Get Reusable/ReturnablePackaging Returnedand Reduce Shrinkage • Asset management • Loss due to theft • *Asset tracking • *Third party logistics companies, pooled floats • *Radio Frequency Identity (RFID) • *Due to time constraints, this presentation will onlyexplore Asset Management, but to represent a complete picture of ways to get packaging returned and reduce shrinkage, these three items are also listed here. More information about them is offered in the copy of my notes which you may request after this presentation.

22. Asset Management • Asset Management has successfully reduced packaging purchases by as much as 20%. • Steps involved in Asset Management process should include: • Objective assessment – execute with management to determine expectations (Goals) • Preliminary preparation – interview key stakeholders already involved in the process • Financial study – examine past performance • Supply chain analysis – conduct case float analysis • Planning and assessment – format information flow to educate and build awareness.

23. Asset Management cont. Implementation – Hold key meetings to kick off initiative, test and monitor. Identify results – Comprehensively review how the new system is working, present the results to all stakeholders. Structured and timely reviews – Process must be ongoing and have continued support of upper management and continuous feedback to all stakeholders.

24. Loss Due to Theft • Loss* represents less than 5% of missing assets • Misperception exists around how many assets • are actually stolen • *The loss-due-to-theft study was partially funded • by Rehrig Pacific Company, • Private Investigators were hired in South Florida, Los Angeles, Baltimore and Atlanta.

25. Loss Due to Theft cont. • Findings: • South Florida – no illegal recycling was found. • Baltimore – no illegal recycling was found. • Southern California – one illegal recycler was found with approximately 150K lbs. of mixed products. • Atlanta – one illegal recycler found with approximately • 25K lbs. of mixed products.

26. Summary • Reusable packaging and the environment • The recently commissioned study revealed that reusable/returnable plastic crates require less total energy, produce less total solid waste and generate less total GWP than the two corrugated options. • Benefits of reusable packaging • Ask for a cost-benefit financial model – make sure it works for you. • How to get the reusable packaging back • and reduce shrinkage • An asset management program can be beneficial.