An analysis of the process of packaging substitution in the drinks industry: The Spanish case

International Journal of Technology Management

Volumn 13, Issue 4, 1997, Pages 443-460

  Ventura, Juan ^a   Marbella, Federico ^b  

^a UNIVERSITY OF OVIEDO   (Spain)

^b UNIVERSITY OF LEÓN   (Spain)

Author keywords

Drinks packaging industry; Spain; Technological change

Indexed keywords

BEVERAGES; COMPETITION; ECONOMIC AND SOCIAL EFFECTS; ENVIRONMENTAL IMPACT; ENVIRONMENTAL PROTECTION; LAWS AND LEGISLATION; PACKAGING; SOCIAL ASPECTS; TECHNOLOGY TRANSFER;

PACKAGING TECHNOLOGY EVOLUTION;

TECHNOLOGY;

EID: 0030677721     PISSN: 02675730     EISSN: None     Source Type: Journal    
DOI: 10.1504/IJTM.1997.001675     Document Type: Article

References (24)

1. The Spanish Packaging Federation (Federacion Espanola de Envases y Embalajes) provides the following data indicative of the weight of this economic activity: 50,000 direct jobs and a production value estimated at 650,000 million pesetas or approximately 1.6% of GDP.
2. Abell (1980): Defining the Business, Prentice Hall, N.J.
3. ANFEVI; Spanish National Association Of glass Containers Industry
4. Established firms can react to the threat of new entrants by following three different strategies: (1) blocked entry - in this case the market is not sufficiently attractive, and the firms already operational can behave as if there were no threat of new entrants. (2) restricted entry - firms in operation modify their behaviour to put obstacles in the way of entrants, creating strategic barriers. (3) easy entry - established firms find it easier to permit entry than to set up barriers to it. (Bain, 1956; Tirole, 1990).
5. Bain (1956): Barriers to New Competition, Harvard University Press, Cambridge Mass. Tirole (1990): The Theory of Industrial Organization, The MIT Press, Cambridge.
6. Bain (1956): Barriers to New Competition, Harvard University Press, Cambridge Mass. Tirole (1990): The Theory of Industrial Organization, The MIT Press, Cambridge.
7. For a description of the petrochemical industry, see Bower (1986):When Markets Quake, Harvard Business School Press, Boston
8. Aluminium has been gradually winning itself a place as the best material for drinks cans, and has reached a market share of 55% in Europe. It is expected to attain a market share of 50% in Spain in the course of this year. In the USA, over a twelve-year period, tinplate's share of the market has dropped from 62% to only 4%. Among the advantages of aluminium are its lighter weight, the fact that it is easier to print on, the higher value of recycled aluminium, and the fact that it affects the flavour of contents less. Its principal disadvantage is that it is more expensive than the alternative.
9. The CMB group was recently taken over by the US multinational Crown Cork and Seal Company.
10. The Nash equilibrium can be interpreted as a pair of expectations about the alternative that each of two players will take, such that, when either one reveals his choice, neither will wish to alter his behaviour.
11. Penrose,E.T. (1959): The Theory of the Growth of the Firm, Oxford University Press, Oxford. Prahalad, C. y Hamel, G. (1990): 'The core competence of the corporation', Harvard Business Review, 66: pp.79-91.
12. Penrose,E.T. (1959): The Theory of the Growth of the Firm, Oxford University Press, Oxford. Prahalad, C. y Hamel, G. (1990): 'The core competence of the corporation', Harvard Business Review, 66: pp.79-91.
13. Porter, M. (1991): 'Toward a dynamic theory of strategy', Strategic Management Journal, 12, winter, pp.95-117.
14. The relevant market size, despite the absence of barriers to free trade, is limited by the cost of transport which acts as a restraining factor on international competition. This does not prevent occasional importation or exportation in appropriate circumstances of any of the various types of container considered.
15. To the extent that packing in a particular fashion brings with it operations suited only to one type of container, a company may face some problems in changing supplier. This might be the case in respect of composite cartons. The installation of specialised equipment as a consequence of location very close to a particular source of supply can also lead to extra costs on changing supplier, at least in so far as the equipment installed by the packaging manufacturer and that used by the packer are more effective if used in tandem (co-specialised assets). This can bring about reductions in transport costs and deliveries in a shorter time and more frequently leading to reductions in the costs of holding stocks. In the metal can sector, where transport costs are high, the advantages of specific siting increase, and this is demonstrated by the recent link-up between Cobega (the Coca-Cola franchise holder) and National Can Ibérica, which has a factory producing aluminium cans contiguous to Cobega's in Tarragona.
16. The importance of replacement products leads the firms in each trade to work together through associations defending their interests, even to the extent of running generic product advertising (such as that put out by glass container manufacturers). At present the struggle between the sectors involved has moved into demonstrating the ecological qualities of their types of container, in view of the threat and opportunity that environmental concerns pose in the near future.
17. Research and development efforts undertaken by each of the trades so as to develop new materials and optimise the design of containers have permitted striking advances. Examples of these would be the reduction of the average thickness of tinplate from 0.20 mm. in 1972 to 0.14 currently, with 0.12 foreseen for the very near future; the weight of composite carton containers for milk, which dropped by 23% between 1974 and 1990, the reduction in the weight of 1.5 litre PET bottles from 62 to 42 grammes between 1977 and 1990; and the 31% decrease in the weight of glass bottles between 1969 and 1990.
18. Mansfield, E. (1961): 'Technical change and the rate of imitation', Econometrica, Vol. 29, 4. Stoneman, P.(Ed.) (1995): Handbook of the Economics of Innovation and Technological Change, Blackwell Publishers Inc, Cambridge Mass.
19. Mansfield, E. (1961): 'Technical change and the rate of imitation', Econometrica, Vol. 29, 4. Stoneman, P.(Ed.) (1995): Handbook of the Economics of Innovation and Technological Change, Blackwell Publishers Inc, Cambridge Mass.
20. Semi-public property is that which, when used, has the greatest effects on the purchaser, but also significantly affects third parties who have had no part in the process. The paradox of common goods illustrates this situation.
21. For the European Community an annual production of 50 million tonnes of packaging waste is estimated, and out of this some 20% is recycled, 60% goes to landfills, and 20% is incinerated. Statistics on Urban Solid Waste in Spain point to a total of 13.8 million tonnes, and analysis of this figure suggests that between 35% and 40% are packaging and container waste made of a range of materials, that is to say, approximately 5.5 million tonnes.
22. The contribution made by each company to the integrated system is a function of the number of items that it sells into the market. This amount, at first based on number of items sold, will be refined with time as a function of the materials used, weight and volume. Thus, the system is designed in the long run to adjust costs and spread them selectively.
23. In the Netherlands PET containers are authorised only on condition that there be a returns and recycling system in place and that PVC be progressively reduced. There is also an intention to reduce the amount of aluminium in composite cartons used for milk. In Denmark a voluntary agreement reached in 1988 envisages a 50% reduction in the use of PVC containers from 1993 onwards, followed by a further 10% reduction in 1995, and yet another of 23% in 2000. In Sweden the government intends to eliminate PVC but has not reached an agreement with the industry, which has, nevertheless, agreed to produce PET bottles suitable for refilling, with one-use bottles being acceptable only where an effective recycling system is maintained.
24. In Germany the entry into operation of the Topfer-Grünpunkt regulation hit the problem of the difficulty of recycling plastic containers, so much so that this constituted its Achilles' heel. Nonetheless, it is hoped that by 1996-97 sufficient capacity to deal with the needs for recycling this type of material will have been installed. This will be in the form of hydrogenation plants which allow recycling without loss of quality and at a low cost thanks to the advantages accruing from major economies of scale.