Packaging innovation: Is it possible to deliver micro-portions in sustainable packaging and still achieve profitability?

What might the economic pyramid have in common with the Great Pyramids? It might be the coating of litter you wade through to reach each of them.

Khufu does not approve.

In "Danone Expands Its Pantry to Woo the World's Poor," one of this week's readings, the author discusses a key approach to achieve growth serving so called "bottom of the pyramid" (BoP) consumers: smaller portion sizes that fit the budgets of the customers. There are numerous examples from this article and others that touch on the same, insightful point: the packaging size of a commodity must be proportional to the budget constraints of the intended customer. 

Simplicity does not make this concept any less crucial in allowing a product-based venture or idea to take root and grow among BoP customers. A 60 cent cup of yogurt is not a responsible purchase for Mr. Gueye when that purchase would take up over a quarter of his daily food bill. A three dollar bottle of soap, a one dollar bottle of water, and a four dollar box of detergent all might meet the limits of disposable incomes and become major investments rather than daily tools of comfort, convenience, and health.

The solution proposed by Danone (and, again, an apparent theme amongst multinational manufacturers hoping to serve the market) is to miniaturize portion sizes and sell "sachets" instead of larger containers. From a financial perspective, this makes sense for both manufacturer and consumer: the manufacturer reduces cost by reducing the amount of product sold, while the consumer gets what they can afford. 

But consider the issue of waste. Let's do a little quick math on just the Danone Dolima product:

• 30,000 tubes sold per month as of November 2010. Using Danone's target of 10% monthly sales growth, this yields a total of roughly 550,000 tubes sold in the first year;
• I was unable to find much information on sachet plastic content, so I will assume 0.3 oz plastic/tube;
• With these numbers, the one year sales period generated 165,000 ounces of waste. Converted, this is more that 4.5 metric tons of solid waste - in one year and from one product. 

Sachets are almost universally composed of plastic, much of it non-biodegradable. The very nature of the small packages means limited value in attempting either recycling schemes or reclamation of the material. Unilever, a manufacturer of sachet-based products, admirably speaks to these issues on their own website and presents some waste-to-energy solutions they hope will help. 

Because I would assume the ecological impacts are fairly evident, let's instead tie this back to the week's topic, Venture Development and Growth, and consider how social ventures using micro packets could be at risk of diminished growth through the waste issue:

• Litter makes bad advertising. Inadvertently branding garbage ties the venture to the creation of that waste; 
• Reliance on plastic sachets could  run afoul of local regulations on plastic sales. Consider New Delhi's complete ban on plastic bags, approved just this month;
• Material for the sachets likely needs to be imported even if packaging and/or harvesting of the product itself occurs local to the distribution market. This might create customs headaches or friction if local governments move in protectionist directions. It also adds complexity to the supply chain.

I have neither a materials science background nor experience in the consumables industry, so I return to my opening question: is it possible to deliver micro-portions in sustainable packaging and still achieve profitability? Are there innovations in this area that could be of use to the consumables industry in their goal of providing affordable portions of their products? Does the cost of more ecologically-friendly packaging simply not work with the microscopic marginal profit margins of sachet-based sales?

Suffice it to say, careful thought is needed to ensure respect of the consumer and his/her environment. With four billion people qualifying as BoP consumers, there are four billion opportunities to offer micro-portions and the sachets in which they are delivered. And you can bet each customer wants more than just yogurt.