CHAPTER 5: CASE
5.2 T AISUN
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5.2 Taisun
5.2.1 Introduction
Taisun, established in 1960, is a major food manufacturer in Taiwan with specialization and revenue coming from three major areas which are food, animal feed and oil. Of the three product lines, the greatest portion is oil (~50%), then animal feed (20~30%) and food of around 20%. Taisun has 21.82% share in Family Mart, the second largest convenience store in Taiwan with 27% market share, next to the largest chain 7-11 of 50% market share. The principle products under food business are beverages, congee and pure water; these occupy the production capacity of Taiwan facility by 80%.
Figure.5.3 Organization Chart of Taisun
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Figure.5.4 Taisun Business Departments
5.2.2 Stage 1: Motivation
Taisun has been a pioneer in introducing green food products to the market. It is also the first food company to put carbon footprint label on its products. This section discusses the motivation behind Taisun’s carbon footprint label project including the company’s internal force and external force from the government.
Stage 1: Taisun Motivation
1. Taisun motivation: Corporate Social Responsibility (CSR) is an important vision in Taisun. The leaders announce development of CSR at core meetings and this vision is spread to the entire company and permeates throughout Taisun. Both YuanJian (遠見) and Tian Xia (天下) magazines have invited the Taisun to the participate in the CSR award. The chairman of Taisun wanted to develop environmental-friendly product at the same time, to move the company into a green company and establish the CSR image. Other than the Twist Water, the Pure Water (Taisun ChunShui) was the first product in Taiwan to implement the food tracking
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code (ShiPin ZhuiSuMa). The food tracking code along with the expiry date on the water bottle allows consumers check the company which produces the water, the result of raw material testing, production line sanitization report, and final product testing report. The true benefit of having the carbon footprint label was not seen until it was ranked the top seller among bottled water when it was introduced to the market in March 2010.
Comment: As can be seen from Taisun’s activities, it has been a pioneer in offering more socially responsible products to consumers.
2. Motivation: Government support
The government was also supportive of the development of carbon footprint labeling. The government was initiating the carbon footprint labelling scheme, and needed to implement the scheme on a few companies as demonstration. Therefore, the EPA approached and selected a few companies which it has good cooperation experience with before.
5.2.3 Stage 2: Project Planning
This section discusses the leadership style of Taisun’s president, the project design and product selection of carbon footprint label product. Under the leadership of President Mr.Zhan Yuelin, Taisun’s corporate culture allows employees to have freedom and authority to do their work and do not need to ask for approval for every stages during their product development. The initial idea is given by the leader, then the product team will develop the project along with the cost-benefit analysis and present to the top management team. Following the feedback from the top management team, the product team then proceeds to work with engineers and for development of bottle shape, the rigidity and pattern.
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1. Leadership style:
According to Mr.Wang, President Zhan is highly demanding about others and himself. He is always ahead of everyone else and has strong belief in integrity and honesty. Once someone has made a promise, one must do one’s best to accomplish it.
2. Parties involved
Cooperating parties: Plastic Industry Development Center, BSI and EPA EPA only authorized two companies for certifying life cycle assessment, with one of them being BSI.
3. Project design
The leader wanted to develop an environmental friendly product, most of GHG emission comes from packaging for beverage industry. Therefore, the part of product to improve environmental performance would be the plastic bottle. The idea was to create a bottle which is softer and lighter, but able to withstand pressure during water storage and transportation. Over-packaging of products though sometimes deliver a more attractive appearance, it in fact results in more burden on the society and the earth as a whole. The inspiration for the twist water came from the chairman’s cousin who visited Japan and saw a twistable water bottle in 2009 September, then the following March, in 2010, Twist water went on the market. The twistable idea was developed by a product specialist and the slogan was chosen from a consumer questionnaire to put on the bottle and in the commercial. The resulting slogan was "twist water, AiDiQiu"' translated into English is "twist, love earth". On the bottle, the carved pattern is ripples crossing over each other, not only is this design elegant in appearance it also has the functional benefit of making twisting easier.
The idea was to create a bottle which is softer, but able to withstand pressure during water storage and transportation. The production process and ingredients play
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important roles in the design of bottle. For example, some beverages require heat processing, in this case, the bottle must be heat tolerant. Meanwhile, beverages containing sugar will need more rigid container; therefore, the twistable bottle might not be applicable for complex beverages which require extensive processing and contain too much ingredients.
Having identified the carbon lifecycle of bottled water, Taisun discovered that the raw material procurement accounts for the greatest share of emission. Therefore, reducing the use of the raw material would be the best means to reduce carbon footprint. Reducing the weight of packaging can be done through two ways, first, reduce the content volume, water, or reduce the other component of bottled water, the plastic bottle. Water is sold at set volumes, the volume cannot be modified, and therefore, the only option would be the plastic bottle.
Figure.5.5 GHG emission at different stages of life cycle of Twist Water
17%
8%
18%
52%
Product Life Cycle Emission
Transportation Use
Manufacturing
Raw material
acquisition
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4. Product design
The Twist Bottle: reduced plastic material by 43%, CO2 emission by 50g, weight from 20g to 14g and increased recycling space by 70%.
Figure.5.6 Taisun Twist Water
5. Product Selection: Why chose water to do carbon footprint labelling?
Answer: Bottled water has a very large market size, with about one billion water sold each year. Assuming one bottle is $10 NTD (water price range 10~40), then the total annual revenue of the water market would be $11 billion.
6. Product nature
Water is a fast moving consumer good (FMCG) therefore, the product life time is long in the way that it does not get updated or upgraded for better performance.
Therefore, even if the carbon footprint label can take a couple of months to implement, it still will not affect the product's performance. Unlike high-tech products, technology constantly moves forward and evolves; if a new model goes on the market,
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the previous model will be taken off the shelf. Therefore, the carbon footprint label application period must compete with the speed of technology advancement. If a model does not get updated fast, then it is acceptable to apply for carbon footprint labeling. If the product advances quickly, then by the time the carbon label is implemented, the product is off the market already.
5.2.4 Stage 3: Execution
This section discusses the resources allocated to the carbon footprint labelling project including research and development, capital budget, and marketing resources.
1. Research and Development
Taisun worked with plastic industry development center, to develop the twist bottle. Following the design of the bottle, it has to go through pressure testing to assess its functionality for water storage and processing, restoration of bottle after twisting, and transportation. Design and bottle appearance was outsourced to Glory Trade.com.tw (XiaoZhiYanFa) and bottle shape development was outsourced to Plastic Industry Development Center. A new injection blow moulding skill was developed and a new die (manufacturing tool) was introduced.
2. Carbon footprint label:
After the entire production flow process of Twist water was confirmed, life cycle assessment was done and carbon label was registered. Taisun worked with plastic industry development center, life cycle assessment was done by BSI, using the sigma pro software for the database, and the verification of the LCA was done by BSI.
Q. How to make sure the resulting product will have a lower GHG emission?
Prior to confirming the production flow process, Taisun needs to check with BSI’s reference data for each production step. Once it has checked with BSI and confirmed
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confirmed. Therefore, the resulting product will have a lower GHG emission.3. Cost: total around 90 million NTD
Table.5.1 Cost composition of Twist Water Marketing Expense
Around 70 Million NTD Around 0.2 Million NTD
Around 10 Million NTD
The complexity of life cycle assessment will have impact on the cost of carbon footprint labelling implementation. On the other hand, since the bottled water does not involve too much technological development, the investment in research and development of this project is lower than those of electronic products. However, if the content of the beverage requires development of new flavour, the R & D investment will be increased.
4. Marketing:
Unlike GMP and CAS labels, the carbon footprint label is not a commonly recognized standard, it needs complementary education on the public to raise awareness of GHG emission and the relationship between consumer decision and effect on the world.
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Slogan: twist, love earth, was selected out of a consumer survey to best represent the product with a catchy slogan.
Selling Point: more environmental friendly, and is fun. Since climate change is not a commonly accepted and recognized status in Taiwan, Taisun has integrated the fun element into the product, to make the product both fun and environmental friendly.
TV commercial: The TV commercial with celebrity twisting the bottle and singing the commercial music.
Individual website: an individual website was set to share Twist water’s brand story, the carbon footprint label, news, media and Twist water blog.
(Public, Schools, Government cooperation)
5. Marketing Activities:
Lucky draw for Twist Water’s limited T-shirt every week
Sponsored the Love Earth event hosted by Taiwan Institute for Sustainable Energy (TAISE)
Initiated the donation event: for every bottle sold, Taisun donated 1 dollar to the love earth foundation. The foundation is a capital fund for participants (from school, business, NPO or government organizations) who share their stories relevant to climate change and earth protection through blogs. During this period of time, the slogan changed to “Together, let’s love earth”. Together in Mandarin can have two meanings, one of the meaning is together, the other is “one dollar”. Therefore, the slogan implies both meaning. To love earth together and to use one dollar to save the earth.
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Beach cleaning day: cooperated with Environmental Protection Agency (EPA) to clean up the JinShanXiangZhongJiao ShaZhuWan beach (Close to Danshui and frequented by surfers)
Cooperated with Taipei City Department of Transportation’s “Carless Event”
to host a “Hula Hoop Twist Bottle event” which the winners receive coupons for purchase at Family Mart convenience store.
Cooperated with the famous Spring Shout Event (hosted in Kenting every spring). Worked with the initiators of the Spring Shout Event to build outdoor art from Taisun Twist Water bottles. Below is a guitar built from Taisun Twist bottles displayed at the Spring Shout Event.
Figure.5.7 The guitar made of Twist Water bottle
5.2.5 Stage 4: Difficulties
This section discusses the problems that Acer encountered during the implementation of carbon footprint label.
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Problems Encountered
I) Environmental Friendliness only a marketing tool but not allow comparison marketing
Since carbon footprint labelling is a demonstration project, only a few companies have implemented the practice. Therefore, to ensure the fairness of market competition, Taisun is not allowed to use carbon footprint labelling as the key differentiator from other competitors. Since BaiLan detergent introduced a comparison commercial to attack its competitor Kao YiChiLing, comparison marketing has been banned. The carbon footprint labelling is the major competitive advantage of Twist water; however, Taisun is banned from using it as a competitive advantage to differentiate itself from others. EPA bans Taisun from using the label as comparison tool with other brands. Therefore, it cannot indicate or mention the GHG emission of competing product.
II) Lack government support
It is within EPAs plan to lower emission, but only promotes consumer lifestyle emission reduction not product selection emission reduction. Government does not promote buying green products. Although EPA promotes and supports this project, but there is not corresponding strategy to bring up the industry.
III) Lack of distributor support, product goes off shelf
The major distribution channel, 7-11, has decided to take Taisun Twist water off the shelf because of Coca Cola's “Shui Sen Huo” water. The “Shui Sen Huo” water is also lighter weight, thinner, softer and twistable. Furthermore, it also features a bottle built with 30% of the material from plants.
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Taisun Twist Water Shui Sen Huo
Plastic Use: Use of plastic reduced by LOHAS pure water). The oil saved from drinking “Shui Sen Huo” is able to fly 1.1 billion, if the bottled water bought is Twist Water, it will reduce around 55,000 tonnes of CO2 per year.
CO2 reduction: no emphasis on CO2 reduction
Space use: increase recycling space by 70% (before twisting and after twisting)
Space use: twistable and easy for recycling. However, does not compare space use difference between before and after
Coca Cola is an internationally renowned and highly valued brand; therefore, carrying Coca Cola's products can add value to 7-11 brand value. On the other hand, Taisun is a Taiwan-based company, its brand image and value is not as desirable as that of 7-11. “Shui Sen Huo” also has a remarkable commercial starring popular actor, Hiroshi Abe. Taiwanenese market follows Japanese trend closely; therefore, Japanese products are very popular in Taiwan. With a Japanese style marketing strategy (Japan's actor, filmed in Japan and by Japanese makers), it received overwhelming feedback from the market, and was ranked the number one seller in Japan. In addition, Shui Sen Huo also cooperated Taipei Zoo, FamilyMart, a.mart, RT-mart and Formosan Black Bear Conservation Association to host the “Saving Formosa Black Bears” event at the 2010 Taipei International Flora Exposition, a grand international exposition of flowers. The event includes exhibiting works of bear sculpture by emerging artists using the “Shui Sen Huo” plant bottles. This marketing event has garnered support from NPO organization, such as Formosan Black Bear Conservation
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Association and three major distribution channels. Exposure at the grand national exposition resulted in 30, 000 participants and 4000 fans on Facebook event page.
Compared with Taisun, the difference of Coca Cola’s “Shui Sen Huo” was having gathered support from distribution channels, which are the key to sales of the products. Taisun was also involved in many activities in affiliation with the government and public; however, it lacked support from distribution channels.
I) Absence of public education and industry standard results in misunderstanding Mr.Wang stated that since the carbon footprint label was not fully clear to the public;
therefore, consumers might misunderstand the products with the label are in fact less environmental friendly than others because they have the carbon footprint label, which states the amount of carbon emission the product has. When other products do not have the carbon footprint label, consumers are misled into thinking since these products do not have carbon footprint label, they do not produce any environmental impact. Therefore, wide-scope public education is needed to ensure consumers understand what the label is. On the other hand, industry standard must also be developed so that consumers can make comparison among different brands and companies will have the driver to lower their emission so that they can remain competitive in the market. Industry standard includes making carbon footprint labelling a requirement for all kinds of products within an industry and making the assessment method consistent among different companies.
II) Difference in assessment method results in different scope of measurement
For example, for the assessment of a can of orange juice, if company A includes measuring the emission associated with growing orange while company B only includes the emission associated with processing the orange into juice, the result of GHG emission will obviously be lower for company B because one major step of the
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life cycle assessment is omitted. As a result, the result of the assessment will not facilitate consumers purchase decision making, and worse, it will mislead public into encouragement of higher GHG emission.
III) Fun vs. environmental friendliness
Environmental friendly the selling point or the innovative marketing and packaging?
When Twist water was first released, it was the number one seller in bottled water market; however, after a while, its performance declined. The possible reasons for this phenomenon are the 1) introduction of a competing product(LOHAS water), 2)market returns to normal after the hype of the innovative marketing and new product, 3) distributor no longer promotes the product and places it in spot light sections in the store, 4) 7-11 introduced 7 select H2O, the private label brand which emphasizes cost friendliness during economic down time. The selling point of the Twist water is that it is more environmental friendly because its bottle is softer and twistable and therefore, it will be increase recycling efficiency, reduce the material use, and generates less GHG emission during production process. However, since the marketing strategy of the product was very innovative and popular, a lot of attention was diverted to the innovative marketing rather than the original claim of the product, which is being environmental friendly.
IV) Price-sensitive market
The Twist Water was sold for $18 NTD while the “Shui Sen Huo” is sold for $17 NTD. The one dollar difference for a FMCG can be the key to consumers’ decision making element. The additional cost associated with carbon footprint labelling project must be balanced with the price of the product. Therefore, this made it difficult for Taisun to lower the price of Twist Water.
V) Attacks on environmental claim
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Because of Twist Water’s claim on being environmental friend, it has caused controversial reactions among the public. While some consumers like Twist water for its reduction of GHG emission by making the bottle lighter, others challenge that the best practice for the environment is to not sell bottled water at all. Some see Taisun’s activity as a way of “green-washing” consumers and wrote a letter to Mr.Shen Shih-Hong, the Minister of Environmental Protection Administration, to express his views on Taisun twist water’s environmental claim. In his statemens, he mentioned regardless of the reduction of material used and GHG emission reduced from the Twist water, production of the bottled water still releases GHG emission. Claiming Twist water is more environmental friendly is misleading consumers into buying bottled water rather than brining their own cup and drinking fountain water.
5.2.6 Stage 5: Achievement
Twist water received instant popularity in the market and also won award from Food
Twist water received instant popularity in the market and also won award from Food