Natureworks: Market Development for Bioplastics

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Case Details:

Case Code : MKTG169
Case Length : 23 Pages
Period : 1997-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : NatureWorks
Industry : Chemicals and Petrochemicals
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Market for PLA Expands

However, NatureWorks' fortunes soon changed for the better. The market for PLA began to expand from 2005, due to increasing petroleum prices (Refer Exhibit VIII for corn and petroleum prices). With the price of PLA becoming more competitive vis-à-vis conventional polymer resins (Refer Exhibit IX for more information on the packaging industry), more and more converters began showing interest in PLA and approaching the company for joint product development. For example, in 2005, the Lacerta Group began to explore new thermoforming applications for NatureWorks PLA...

Challenges

Though the prospects for PLA had improved, NatureWorks still faced several potential roadblocks. To begin with, some critics argued that bioplastics were not as environment-friendly as they were made out to be. According to them, the energy to operate farm machinery, irrigate growing crops, produce fertilisers and pesticides, transport crops and crop products to processing plants, and extract the processible biomaterials came, in all probability, from non-renewable energy sources. Even the factory that eventually manufactured the bioplastic materials would be powered by petro-based fuels.

Even though NatureWorks claimed that the production of PLA consumed less conventional fuel compared to the production of polyethylene -- partly because it used renewable energy in its manufacturing plant -- many critics remained unimpressed...

Outlook

In November 2006, in what seemed a blow to its environment-friendly image, NatureWorks was fined US$ 60,000 for incorrect assessment of its plant's VOC emissions. It was also ordered to fund a greenhouse project at a local high school. The company announced that it would immediately install regenerative thermal oxidators to reduce emissions to meet regulatory standards. In 2007, NatureWorks promoted the use of its PLA in pressure sensitive labels . Traditionally, petro-based plastics were used to make pressure sensitive labels...

Exhibits

Exhibit I: Cargill Product Portfolio
Exhibit II: PLA Manufacturing Process
Exhibit III: Characteristics of PLA
Exhibit IV: The Corn Mascot
Exhibit V: Advertising Natureworks
Exhibit VI: The Natureworks Logo
Exhibit VII: Applications of Natureworks PLA/Ingeo Fiber
Exhibit VIII: Corn and Petroleum Prices
Exhibit IX: The Packaging Industry
Exhibit X: Recycling Plastic


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