Natureworks: Market Development for Bioplastics

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Case Details:

Case Code : MKTG169
Case Length : 23 Pages
Period : 1997-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : NatureWorks
Industry : Chemicals and Petrochemicals
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Bioplastics contribute to climate protection, save fossil resources, and create jobs in future-oriented sectors. We hope that bioplastics can increase their market share in Europe"¹

- Heinz Zourek, Director General, the Directorate-General for Enterprise and Industry², European Commission, in November 2006.

"With what we know, [PLA] is neither compostable nor recyclable at present, and it will degrade significantly the successful PET recycling program we have today."³

- Peter Anderson, Staff Director, Plastic Redesign Project⁴, and Executive Director, Center for a Competitive Waste Industry⁵, in January 2007.

Introduction

In November 2006, Berlin in Germany hosted the first European Bioplastics⁶ Conference. The conference, which was sold out weeks in advance, was attended by 300 participants from 27 countries. Many of the speakers at the conference reiterated what some recent reports had been saying, that there were rapidly growing business prospects for bioplastics⁷.

NatureWorks LLC (NatureWorks), a wholly-owned subsidiary of Cargill, Inc. (Cargill), a major US-based food company, and a member of European Bioplastics, too had been witnessing a sharp increase in sales as well as in commercial interest for polylactic acid (PLA)⁸, its corn-based biopolymer.

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PLA was claimed to be environment-friendly as it was made from renewable sources. Besides, it supposedly composted in a matter of weeks (in commercial composting conditions) as opposed to the several decades that conventional plastics took.

The company took several measures to popularize the polymer, which it marketed under the NatureWorks brand.

It developed several applications for PLA, thus improving its commercial prospects. In 2005, it bagged a deal with Wal-Mart to supply containers made of PLA. It entered into several agreements with converters, retailers, etc. in an effort to encourage the adoption of PLA.

However, probably more than any of its promotional efforts, two external factors contributed to the growth in PLA's appeal.

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1] www.european-bioplastics.org.

2] The Directorate-General for Enterprise and Industry assists the European Commission in ensuring EU policies contribute to the competitiveness of European enterprises and facilitate job creation and economic growth.

3] Mike Verespej, "Recyclers Keep up PLA Pressure," Waste News, Vol. 12, Issue 18, January 08, 2007.

4] The Plastic Redesign Project is a coalition of government agencies and regional associations dedicated to strengthening the economics of local plastics recycling programs. (Source: www.plasticredesignproject.org)

5] Center for Competitive Waste Industry, based in Madison, Wisconsin, is a not-for-profit research and advocacy organization set up to protect the competitiveness of the US waste industry.

6] European Bioplastics (EB) was founded as International Biodegradable polymers And Working groups (IBAW) in 1993. It was renamed EB following a decision by the EU General Assembly. Its mission is to assist the introduction of bioplastics in Europe. It has over 60 members including resin manufacturers, converters, and users.

7] Bioplastics refers to plastics derived from plant sources such as soy bean oil, hemp oil, corn starch, etc.

8] Polylactic Acid or PLA is an aliphatic (organic compounds in which carbon atoms are joined together in open chains) polyester derived from corn starch or sugarcane. PLA is among those biopolymers that can be used to make plastics. It is available in pellet form.


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