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February 17, 2008
Owens-Illinois, other glass makers seize on plastic's problems
By GARY T. PAKULSKI
O-I, which operates this bottle factory in Atlanta, says on its Web site that glass 'is the most sustainable packaging material on Earth.'
( OWENS-ILLINOIS INC. )
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TO EXECUTIVES at Perrysburg's Owens-Illinois Inc. and other manufacturers of glass bottles, there is gold in them there hills.
America's obsession with single-serving water is creating ugly mountains of cheap plastic bottles in landfills nationwide and a public relations headache for a segment of the packaging industry struggling with the three-headed hydra of escalating oil prices, rising environmental concerns, and health fears.
The big question is whether manufacturers of glass bottles can capitalize on the plastic-bottle industry's problems by persuading customers to come home to glass.
Firms like O-I, the world's largest manufacturer of glass bottles, are beginning to get inquiries from baby-bottle makers responding to consumer fears about a chemical compound called bisphenol-A as well as from the folks who supply soccer moms with their daily water fixes.
"There are opportunities," said Joe Cattaneo, who represents glass manufacturers and their suppliers as president of the Glass Packaging Institute.
Makers of plastic bottles maintain that researchers have debunked health fears and insist that competitors exaggerate the industry's use of oil.
But the glass manufacturers are wasting no time trying to turn the perceived problems to their advantage. The Web site of the Glass Packaging Institute features a green color scheme and environmental symbols.
O-I's Web site boasts, "Glass is the most sustainable packaging material on Earth."
U.S. consumers’ thirst for single-serving water has created piles of plastic waste in landfills across the country.
( ASSOCIATED PRESS )
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The glass industry, which a decade ago seemed ready to concede defeat in the war with plastics, has had recent successes in attracting business away from plastic and aluminum.
Norway's bottled-water marketer Voss uses unusual cylindrical glass bottles that have shown up in the FX network series Dirt, and the Adam Sandler film Clicks. Many producers of food and soft drinks use glass containers when introducing new, higher-priced products, industry officials said.
O-I has resumed production of glass baby bottles after 20 years at a plant in Charlotte, Mich., south of Lansing, said Kevin Stevens, the firm's vice president for sales and marketing in North America. The bottles will begin hitting distribution channels in the next 30 days.
Meanwhile, customers like grocery chain Safeway Stores are using glass for fast-expanding lines of organic food products, he added.
With their acquisitions of premium soft drink companies targeted at health conscious people, PepsiCo Inc. and Coca-Cola Co. are once again experimenting with glass bottles after largely abandoning the containers in the early 1990s, Mr. Stevens said.
In growing health-oriented retail chains such as Whole Foods Market, products packaged in glass are welcomed on shelves more than at traditional supermarkets, where veteran managers associate the breakable packaging with the once common public-address announcement: "Clean up on Aisle Six," said the Glass Institute president.
So far, industry executives concede, food and beverage makers are not making a mass return to glass (except brewers, who bottle less than 60 percent of beer in cans today, compared with 70 percent in the early 1990s, according to O-I officials). Shipments of glass bottles rose just 1 percent last year to 35.8 million from 35.6 billion in 2006, according to figures from the U.S. Commerce Department.
But the campaign to boost glass sales by getting out the word about environmental and image-related advantages has an influential cheerleader.
Since arriving in late 2006, Chief Executive Albert Stroucken has converted O-I from a stock market laggard to a Wall Street darling. Delivering a reality check that emphasized, in effect, cutting up the credit cards, not giving away the farm, and confronting tough choices, the onetime warehouse worker from the Netherlands has helped move the firm's shares from less than $20 each to almost $55.
"Al believes that the glass industry has failed to tell our story well enough," said Carol Gee, a spokesman for metro Toledo's second-largest company, which has annual sales of $7.7 billion. Telling that story is easier now that O-I has exited plastic packaging with the sale last year of its remaining plastic-bottle plants.
Surveys have shown that consumers prefer glass, by a ratio of 6 to 1, saying beverages and other products packaged in glass taste better.
Industry researchers say consumers consider it "purer" than other materials.
And executives like to tout its sustainability, pointing out that it is made with common materials like heated sand, while plastic containers require resins made from petroleum.
The rise in oil prices has sent production costs of plastic bottles to an average of 8 cents each from 6.5 cents, said Ghansham Panjabi, a stock analyst and packaging expert at Wachovia Securities. Still, that is nearly 70 percent cheaper than production costs for glass bottles, which average about 13.5 cents each, he said. And oil prices would have to rise much higher for production costs for plastic to approach those for glass.
Food and drink producers that sell in glass containers are willing to pay more because they believe it creates a premium image that can help products win acceptance. O-I's customers include a number of foreign firms seeking to penetrate U.S. markets, the spokesman said.
But manufacturers of plastic say they continue to score more wins over glass than losses.
Despite public relations problems caused by mounds of discarded water bottles, plastic is more likely to be recycled than are glass bottles, according to recent figures from the U.S. Environmental Protection Agency. About 31 percent of plastic bottles were recycled in 2006, compared with a quarter of glass bottles, the agency contends.
Less than 1 percent of oil consumed nationally is used to produce plastic bottles and jars for food and beverages, said Rob Krebs, a spokesman for the American Chemistry Council, which represents manufacturers of plastic resins.
"The idea that plastics are a big user of oil is a misnomer," he said. And, he said, comparisons often ignore that transportation of glass requires more fuel than transportation of the lighter glass.
But the council is sensitive to criticism. To combat fears about potential health problems from plastic baby bottles and other containers, officials formed a unit to review research and field questions. Although researchers disagree about the health hazards of bisphenol-A used in baby bottles and some other plastic containers, the chemistry council said levels found in food are too low to cause harm.
So far, Mr. Panjabi, of Wachovia, has seen no migration back to glass from plastic. Food manufacturers continue to substitute plastic bottles for glass, although at a slightly slower pace, he said.
"What glass customers are finding is that it's easier to raise prices on premium products," he added.
Today, most glass bottles are produced for beer, liquor, and wine.
Glass producers' strategy isn't to supplant plastic but to persuade more food and beverage manufacturers to add glass for premium products that fetch higher prices, said Mr. Cattaneo, of the Glass Packaging Institute.
Environmental activist Betty McLaughlin prefers to sip water from a glass bottle acquired on a Caribbean vacation 30 years ago and continually reused.
As executive director of the Container Recycling Institute in Glastonbury, Conn., she attempts to draw attention to environmental impact of the millions of plastic water bottles that enter landfills every year.
"People have become much more aware of the waste associated with the plastic," she said.
For many reasons, she considers glass a good alternative to plastic. "Glass has to tell its story," she said. "Once it does, I think people will be listening."
Contact Gary Pakulski at:
gpakulski@theblade.com
or 419-724-6082
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