LITEHOUSE FOODS: THE GLASS

DILEMMA
Consumer Behavior

Group B4
Mayukh Bhattacharya 15S626
Saptarshi Chatterjee 15S638
Saurabh Doshi 15S639
Sonam R Singh 15S645
Srikanth Saratchandran
15S646

Q.1.What are the motivations for Litehouse considering switching its core 13 oz. jars of
dressing from glass to plastic packaging at the current time?
There were some clear advantages of switching from the currently used 13 oz. plastic jars to the
industry standard of 12 oz. plastic jar as elucidated by the following:
Impact on Costs:
The company, which was already facing a cash crunch could save $1.5 million per year by the
switch from glass to plastic. This would be enabled across two fronts- two-thirds of these
savings could be attributed to the reduced ingredients costs due to the reduction in the size of
the jar and the other one-third could be pinned on the savings in transportation due to the
reduced weight of plastic compared to glass.
Impact on Operations:
The usage of plastic offered additional advantages the most significant of which pertained to the
elimination of breakage risk in both transport and production:

Losses and wastes: Depending on where the jars broke, nearby jars too had to be

disposed to eliminate the possibility of glass shards remaining

Inaccurate inventory records: Inventory too was affected accuracy could not be

affirmed-every broken jar and the product contained were not always recorded
Production Downtime: The process of applying the tamper resistant sleeve to glass jar
was finicky and occasionally forced production line to be temporary shutdown. The

process for plastic was more robust

Ease for Production Staff: Plastic was not only quieter but also significantly lighter

which eased staff burden

Better Quality Assurance: Detecting broken glass and/or glass shards was very
difficult and the switch to plastic would eliminate that hazard

Impact on Logistics:
There were massive cost savings associated with the switch to plastic

Optimal Space utilization of Trucks: Litehouse owned a fleet of fifty refrigerated trucks
to self-haul almost 50% of its product. The cost savings would be realized due to more
product that could be loaded on each truck. Usage of glass jars resulted in plenty of
room left out as additional pellets would result in maximum permissible weight limits to
be crossed. Presently twenty-two pallets were carried which could be increased to
twenty-five due to lighter weight of plastic

Impact on Operations: Logistics Department estimated that $500,000/year at current

production volumes at current diesel prices could be expected. 80% of this would come

from fuel costs and remaining to operating costs due to additional pallets/truck
Easier Input Sourcing: Its dependency on the sole Taiwanese Glass Jar supplier would
be eliminated as plastic jars could be sourced from within US

Impact on Retail:
Retailers are primarily concerned over margins from product relative to the shelf space. They
preferred plastic due to the reduced risk of breakage
Environmental Concerns:

LCA studies commissioned by PETRA and NAPCOR conducted by Franklin Associates

in 1988,1993 & 2009 found that PET containers were more energy efficient and emitted
fewer greenhouse gases, relative to glass jars which generated 3 times atmospheric

waste & 70% more waterborne emissions by weight

The Institute for Energy and Environment Research in Germany, which conducted tests
that wasnt funded by any stakeholders of packaging industry too seemed to indicate
better disposability of PET beverage bottles they were more recyclable, weighed
lesser, used lesser energy and hence environmentally surpassed glass packaging

Q.2.What is the likely impact of a switch to plastic on consumer perceptions of the

product and on Litehouse brand?
Consumer perception of packaging used
The study which was conducted in 2005 showed that consumers perceived Litehouse brand as
a premium, high quality product that tasted great. Glass had not emerged as a brand
association factor. It was also known that consumer perception of the plastic was age related.
Older customers who mostly grew up purchasing products packaged in glass, seemed to have
very strong and positive perception of glass. Whereas the younger consumers who bought most
of their food items packaged in plastic were indifferent to the packaging. The younger
consumers who had a strong affinity to organic foods preferred glass packaging and had a
negative perception of plastic.
Industry trends

The salad dressing industry was inclined towards plastic packaging and encountered minimum
resistance from the consumers. The study conducted ahead of Renees switch from glass
bottles to plastic indicated that 95% of the consumers were either indifferent to the packaging or
preferred plastic over glass. The market leaders like Renees and Marzetti had switched to
plastic packaging with little impact. Though the general view of plastic is negative with respect to
the environmental hazards, Newmans own, a brand known for its social and environmental
positioning of the product shifted to plastic packaging without any notable backlash from
customers.
Likely Impact
Glass packaging is perceived as gold standard in packaging. It signifies purity of the product.
Most of the customers belonging to older age groups and consumers who prefer organic food
might feel that the quality of product has declined which might tarnish the brand image of
Litehouse. But the overall industry trends suggest that, the switch from glass to plastic was not
met with much resistance from customers and did not harm the image of the brands which
made this move. So it is likely that the move to change to plastic packaging by Litehouse Foods
will also not create consumer backlash. However, to ensure smooth transition, the company
should communicate that the change will not alter the taste and quality of the product.

Q.3.If you were Doug, what recommendations would you make to the Litehouse
management

team

regarding

the

decision

and

how

would

you

support

the

recommendation?
Having implemented a series of changes in the past few years, the major decision the
management of Litehouse was facing was whether to switch to plastic bottles immediately or
not.
The following recommendations would be made to the management

Delay the decision to switch to plastic with immediate effect and continue with glass
bottles for the time being. Let the other changes take their full effect before considering

another major change.

Make a proper plan to phase out glass bottles and shift gradually to plastic bottles once
the other changes have taken full effect.

Look for alternative suppliers of glass bottles. Proper research could get them a local

supplier within the country.

Try variants of glass bottles such as the industry standard of 12 oz. this might also help
save on transportation costs as more number of bottles can be accommodated.

The arguments in favor of supporting the recommendations are as follows

1. Litehouse had placed themselves as a premium brand. To suddenly shift to lower cost
plastic bottles would also make them have to cut down on their premium pricing. This
could have a negative impact on consumers who might interpret a drop in price as drop
in quality.
2. Customer perceptions about glass bottles even in blogs and websites have been way
better than that about plastic bottles. Hence it would make sense to do more research
before taking a final decision.
3. Even though glass bottles have greater recycle value, the environmental benefits of
plastic bottles are more. Different reports however had shown different results both for
and against the use of either variety of bottles. Thus, the shift to plastic bottles in the
long run is inevitable.
4. Shifting to plastic would need the purchase of a second descrambler, two additional
induction sealing systems, additional shelving space (apart from the space required for
new machinery) and even shutting down production for two weeks. All these factors
would have implications other than just on the cost. Thus, the non-cost implications need
to be considered before making the call.
5. A local supplier would tremendously help in reducing transportation and warehouse
costs. It would also lead to better utilization of resources such as the refrigerated
delivery trucks which could be employed for better purposes.
6. With the young generation being more accustomed to plastic bottles, the gradual shift
will mean that the sentiments and perceptions of the glass bottle users wont be affected
tremendously.