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3 ways Walmart and its suppliers are reducing packaging

<p>At a sustainable packaging expo last month, Walmart and its suppliers showcased the different ways they&#39;re reducing packaging, from cereal and shoe boxes to wine bottles and more.</p>

When you open a new cereal box, before you tear into the bag, you're likely to see some empty space at the top. Cereal settles during shipping, with smaller pieces filling all the space at the bottom and leaving that extra space on top. If you've ever tried to squeeze more cereal into something – a bowl, a bag or a storage container – and you've done it by shaking the container, you've taken advantage of this same phenomenon.

Earlier this year, General Mills (NYSE: GIS) found a way to use it to reduce the amount of packaging it uses for its bulk boxes of Cheerios. Thanks to a proprietary technology that had been under development for five years, the cereal now settles on the production line instead of during shipping, said Liz Mahler, General Mills’ marketing manager for the product. As a result, 10 percent more cereal fits into the boxes, reducing the packaging per volume and the related shipping costs and emissions.

The new cereal-box design was one of many packaging innovations showcased at the Walmart Sam’s Club Sustainable Packaging Exposition in May. Other examples include wine bottles and shoe boxes that were redesigned by Walmart (NYSE: WMT).

In the case of the Cheerios, the new boxes hit the shelves at Sam’s Club, Costco and BJ’s in February. Even though they contain 10 percent more cereal, the boxes are actually smaller, too: The new bulk packages consume roughly 4 percent fewer materials, resulting in an estimated reduction of 200,000 pounds of paperboard a year. That's the equivalent of more than 1,000 trees. Between the smaller boxes and the higher volume of cereal, the boxes are now 92 percent full instead of 75 percent full, said Ron Sasine, Walmart’s senior director for private label packaging.

Fitting more cereal into less space means fewer trucks are needed to transport the same volume of Cheerios. General Mills estimates it will need 10 percent less trucking for these boxes, which will save 25,000 gallons of fuel and reduce its carbon footprint by 220 metric tons annually. The company accomplished the smaller packaging – and more cereal per package – in spite of trading a single big box for a package of two smaller, connected boxes that can be split apart.

Getting more consumers to buy bulk

General Mills used the redesign to tackle one challenge it had been having with its previous bulk boxes: It turns out customers don't like big boxes. “They’re just bulky,” Mahler said of the old packages. She said ease of storing and pouring is the biggest barrier to the bigger sizes, although customer research showed that consumers like the value of larger packages.

And that raises an interesting point. If General Mills had applied the same cereal-settling technology to its previous one big box instead of switching to two boxes sold together, wouldn't it be able to reduce the packaging materials even further?

Well, that depends. While one big box would likely require less material than two small boxes (everything else being equal), if General Mills can get more consumers to switch from regular-sized boxes to these bulk boxes, it may end up saving more packaging in the long run. But if it only converts consumers who already buy bulk boxes of Cheerios, then General Mills might do better for the environment by sticking to one large box instead of two. In other words, it all comes down to consumer behavior.

Either way, of course, getting more cereal into a smaller package represents a step forward. And if General Mills ends up applying the same technology to its regular-sized boxes of cereal too, that could potentially have a much larger cumulative effect on reducing packaging and trucking emissions.

Wine bottles and shoe boxes

Also showcased at the packaging exposition were new bottles from The Wine Group, which makes Walmart’s Oak Leaf wine. Launched in April, the bottles no longer include a punt – the dimple or dent at the bottom of traditional wine bottles – and they're also lighter and shorter. Those measures are expected to reduce glass consumption by 6,700 tons per year, cut cardboard and other packaging by more than 75 percent annually and yield transportation savings.

Another product displayed at the exposition was one that consumers don't normally get to see: "replenishment boxes" for shoes, which hold loose footwear before they hit the racks. Roughly 30 million of these boxes are used each year, and Walmart redesigned the boxes to use 43 percent less paper – and to standardize their size to cut transportation costs. Three box distributors in Asia are now making the redesigned boxes, Sasine said.

Efficiency has always been a consideration in packaging, he said. But many of the new advancements in reducing materials stem from computer-aided design, which has made it easier to figure out in advance how different package designs will perform, he added.

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