1. Dwight Schmidt Executive Director, Corrugated Packaging Alliance In Winning Market Share, AICC Will Make A Difference! AICC 2003 SPRING MEETING

2. Corrugated Packaging Alliance Confronting the Brutal FactsConfronting the Brutal Facts Industry ResponseIndustry Response CPA 2002 ReviewCPA 2002 Review CPA 2003 Action PlanCPA 2003 Action Plan Calling All AICC “Hedgehogs”Calling All AICC “Hedgehogs” Are We “Built to Last?”Are We “Built to Last?”

3. “Competing materials are reducing the demand for corrugated packaging and threatening the viability of your industry, your company and your personal success.” - Dwight Schmidt

4. Confronting the Brutal Facts RPC’s have taken several markets: milk, beverage, automotive, some redistributionRPC’s have taken several markets: milk, beverage, automotive, some redistribution Several areas are under attack: produce, case-ready meatSeveral areas are under attack: produce, case-ready meat Future areas of concern: closed-loop distribution systems like fast-food and salty snacksFuture areas of concern: closed-loop distribution systems like fast-food and salty snacks RPC’s go to market as a supply-chain solution; historically corrugated has sold to a point along the supply chainRPC’s go to market as a supply-chain solution; historically corrugated has sold to a point along the supply chain

5. Increasing imports, decreasing exportsIncreasing imports, decreasing exports U.S. manufacturing decreasingU.S. manufacturing decreasing Retailer purchasing power consolidatingRetailer purchasing power consolidating Product safety driving many decisionsProduct safety driving many decisions Super-Centers with high volume and low cost are fastest growing retail segmentSuper-Centers with high volume and low cost are fastest growing retail segment Supply-Chain solutions are being required to lower costsSupply-Chain solutions are being required to lower costs Confronting the Brutal Facts

6. Corrugated Packaging Alliance: An organized industry-wide effort to address competing materialsCorrugated Packaging Alliance: An organized industry-wide effort to address competing materials Sponsored by American Forest and Paper Association (AF&PA) and the Fibre Box Association (FBA)Sponsored by American Forest and Paper Association (AF&PA) and the Fibre Box Association (FBA) Funded by containerboard producers through AF&PA assessment (23 companies)Funded by containerboard producers through AF&PA assessment (23 companies) Industry Response

7. Joint committee of AF&PA and FBA members oversee activityJoint committee of AF&PA and FBA members oversee activity AF&PA MembersFBA Members I-PG-P Interstate Inland SimpsonPCA WeyerhaeuserSSCC Industry Response

8. To foster growth and profitability of corrugated in applications where it can be demonstrated, based on credible and persuasive evidence, that corrugated should be the packaging material of choice Mission: Part 1

10. To provide a coordinated industry forum that effectively acts on competing materials matters that could not be accomplished by individual members Mission: Part 2

11. OBJECTIVE A Maximize corrugated’s share in market segments under direct competitive threat, where it can be proven that corrugated is the best solution DELIVERABLES 1. CCF endorsed by majority of retailers in market segments under competitive pressure; readily available to all 2. We are successful in transitioning retailers’ perception of industry from point solution product sale in supply chain to total supply-chain-solutions partner

12. OBJECTIVE B Prevent government and other organizations from biasing packaging choices in marketplace DELIVERABLE No legislation favorable to RPC’s is passed and no misrepresentation of evidence goes unanswered

13. OBJECTIVE C Address marketplace concerns regarding impact of non-recyclable corrugated packaging DELIVERABLE Waxed corrugated replaced by corrugated packaging alternatives that can be recycled in normal OCC waste stream

14. OBJECTIVE D Implement coordinated communication strategy to inform target audiences of progress in corrugated market developments, and to enhance attitudes and behavior toward the corrugated industry and its products DELIVERABLE We are successful in changing attitudes and behaviors of targeted audiences with our messages E.Identify next corrugated markets susceptible to competitive material threats. F.Establish cooperative relationships to explore synergy and eliminate redundancy in our work and expense incurred on behalf of our industry.

15. OBJECTIVE E Identify next corrugated markets susceptible to competing material threats DELIVERABLE Competing materials don’t get a foothold in another market without our knowledge

16. OBJECTIVE F Establish cooperative competitive materials relationships to maximize synergy and eliminate redundancy in work and expense incurred on behalf of the industry DELIVERABLE Relationships established, synergies identified and expenditures minimized — within budget

17. 2002 EXTERNAL ACTIVITY Established retail contacts including 14 face-to-face meetingsEstablished retail contacts including 14 face-to-face meetings Softened Wal-Mart’s stance on RPC’s vs. CCFSoftened Wal-Mart’s stance on RPC’s vs. CCF Developed Draft Standard for CCF for case-ready meat, visited major meat processors and retailers to receive inputDeveloped Draft Standard for CCF for case-ready meat, visited major meat processors and retailers to receive input Received endorsement from Sam’s Club on CCF for produceReceived endorsement from Sam’s Club on CCF for produce Completed successful commodity studies for grapes & strawberries and published findingsCompleted successful commodity studies for grapes & strawberries and published findings

18. 2002 EXTERNAL ACTIVITY (continued) CCF containers approved in variety of fruit commodities (grapes, strawberries, melons, tree fruit, citrus, apples, etc.)CCF containers approved in variety of fruit commodities (grapes, strawberries, melons, tree fruit, citrus, apples, etc.) Kroger committed to using CCF and has been requesting itKroger committed to using CCF and has been requesting it Facilitated use of CCF throughout SuperValuFacilitated use of CCF throughout SuperValu Conducted and published Willard Bishop Study showing low RPC penetration, but higher penetration in some commoditiesConducted and published Willard Bishop Study showing low RPC penetration, but higher penetration in some commodities

19. 2002 INTERNAL ACTIVITY Presented industries’ point of view at nine forumsPresented industries’ point of view at nine forums Established Executive Director position, office and CPA identityEstablished Executive Director position, office and CPA identity Worked out infrastructure, deliverables, action items, budgetWorked out infrastructure, deliverables, action items, budget Revised Plan below objective levelRevised Plan below objective level Visited senior managers of seven AF&PA/FBA members to discuss Plan and progressVisited senior managers of seven AF&PA/FBA members to discuss Plan and progress Developed Comprehensive Communications PlanDeveloped Comprehensive Communications Plan

20. ROLE of CPA 1.To coordinate, focus and enable all competing material efforts undertaken at industry level 2.To identify and fund projects that generate factual information, and communicate information to positively affect attitude and behavior of those who influence use of corrugated

21. ROLE of CPA “Facts are stubborn things; and whatever be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.” - John Adams

22. Willard Bishop Study February 2002 Determining the Market Penetration of Returnable Plastic Shipping Containers

23. Bishop Study Participants 21 individuals, representing 19 retailers, from all three major food store formats 21 individuals, representing 19 retailers, from all three major food store formats

24. Bishop Study Conclusions Not much RPC penetration, except Wal-MartNot much RPC penetration, except Wal-Mart Retailers like and want to adopt Common Footprint – we need to make sure it’s available!Retailers like and want to adopt Common Footprint – we need to make sure it’s available! Retailers have 3 choices: Common Footprint, RPC’s, traditional corrugatedRetailers have 3 choices: Common Footprint, RPC’s, traditional corrugated

25. Retailers concerned about up-charges they have to pay grower/shippers – separate fact from fiction while retaining value-added positionRetailers concerned about up-charges they have to pay grower/shippers – separate fact from fiction while retaining value-added position Display-ready CCF not always requiredDisplay-ready CCF not always required Wax containers continue to be vulnerable to RPC’s; retailers want CCF without wax and iceWax containers continue to be vulnerable to RPC’s; retailers want CCF without wax and ice Bishop Study Conclusions

26. Credible Evidence Studies Conducted by University of California - DavisConducted by University of California - Davis Sponsored by FBA and RPCC (Reusable Pallet and Crate Coalition)Sponsored by FBA and RPCC (Reusable Pallet and Crate Coalition) Purpose: To compare existing corrugated packaging used to ship produce with RPC’s and Corrugated Common FootprintPurpose: To compare existing corrugated packaging used to ship produce with RPC’s and Corrugated Common Footprint Commodities: Grapes, Tree Fruit and StrawberriesCommodities: Grapes, Tree Fruit and Strawberries

27. Corrugated Common Footprint Containers … Grape Study Results 1. Allowed a 5 – 9% larger payload of fruit 2. Cooled at the same rate 3. Showed no difference in moisture loss... than RPC’s

28. Tree Fruit Study Results 1.Allowed a 6% larger payload of fruit 2.Cooled slightly slower, but faster than traditional 8-down corrugated box 3.Generated significantly less bruising … than RPC’s Corrugated Common Footprint Containers …

29. 1.Allowed an 11% larger payload of fruit 2.Cooled at the same rate 3.Generated significantly less bruising... than comparable RPC packs Strawberry Study Results Corrugated Common Footprint Containers …

35. Other Tools “Full Disclosure” Software“Full Disclosure” Software –Activity-based costing –Unbiased tool –New updates in 2003 Collateral Material for Industry MembersCollateral Material for Industry Members Comprehensive Communications PlanComprehensive Communications Plan –Trade Shows –Advertising –Press Releases

36. 2003 Goals 1.Revise our produce focus from retailer CCF specification preference to commodity by commodity implementation challenge to RPC’s 2.Implement CCF standard for case-ready meat 3.Make revisions to “Full Disclosure” to make it more user-friendly as well as generate and publish supply-chain case studies for key commodities 4.Fight pro-returnable legislation at all levels

37. 2003 Goals 5.Collect and communicate with retailers the industry’s ongoing wax replacement efforts while aligning with AF&PA Containerboard Technical Committee to define single waste stream wax replacement criteria 6.Execute comprehensive Communications Plan to affect behavior of key audiences and place more information in hands of industry’s front line sellers

38. 2003 Goals 7.Study RPC poolers to understand their strengths, weaknesses and economic drivers to better predict corrugated’s vulnerability by market segment 8.Establish cooperative relationships directly with Canada and Mexico and with rest of world through ICCA 9.Leverage maximum impact on 2003 goals within approved budget

39. In Winning Market Share, AICC CAN Make A Difference!

40. Calling All AICC “Hedgehogs”

41. Twin Cities Project “A Better Way” Campaign

42. “STOP SHREDDING MONEY” “Would you buy a new wheelbarrow after every trip?” “What if you tossed the toaster after every breakfast?” “What if you threw out the baseball after every pitch?”

43. Calling All AICC “HEDGEHOGS!” Sponsored by SWMCB and RPCCSponsored by SWMCB and RPCC Hosted workshops for local businessesHosted workshops for local businesses Began direct mail campaignBegan direct mail campaign Hosting website: www.swmcb.org/better-wayHosting website: www.swmcb.org/better-waywww.swmcb.org/better-way Market researchMarket research Marketing planMarketing plan Utilizing tax dollars for interest-free loansUtilizing tax dollars for interest-free loans

44. Built to Last? CPA’s Role: Make direct contact to challenge claimsMake direct contact to challenge claims Alert lobbyists to prevent spreadAlert lobbyists to prevent spread Develop public relations campaignDevelop public relations campaign Remain active in all areas of competing materialsRemain active in all areas of competing materials

45. Built to Last? AICC “Hedgehog’s” Role: Educate and arm your sellers with information to fight returnablesEducate and arm your sellers with information to fight returnables Formulate strategies that influence behaviors of your customersFormulate strategies that influence behaviors of your customers Keeping vigilant to save your marketsKeeping vigilant to save your markets

46. Built To Last? “ The battle goes not to the strong alone, but to the vigilant, the active, the brave.” - Patrick Henry

47. In Winning Market Share, AICC CAN Make A Difference!