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Toward Sustainable Development.......................... 03 Unilever Corporate History..................................... 05 Unilever Today......................................................... 07 Sustainable Development....................................... 09 Unilever and Sustainable Development: The Unilever Sustainable Living Plan..................... 10 Waste Management................................................ 12 Unilever's production in Russia.............................. 14 Inmarko................................................................... 16 Inmarko's Tula Factory........................................... 17 Ice-Cream Manufacturing Process......................... 18 Types of Waste at the Inmarko Factory................. 19 Methods of Waste Disposal.................................... 20 Unilever Way to Eliminate Waste........................... 21 Appendixes.............................................................. 23

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Having stepped out from the Klokovo airport hall in Tula, Ivan, an environmental development manager at Unilever, easily found the taxi that was waiting for him. Accommodating himself on the comfortable back seat, Ivan once again glanced at his watch. «One hour left to the meeting with the factory director,» he noted in his mind with satisfaction as the car sped off. Ivan had never been in Tula before and being a passionate sightseer he would have had his eyes glued to the window watching the streets, buildings, people and features of the city that was new for him if he had not been so preoccupied with thinking about the project of reducing the environmental impact of the Inmarko ice-cream production. All through the way, his mind was busy formulating questions for the Tula factory director. As it was the first sizable project entrusted to Ivan, he wished to be best prepared for the upcoming meeting. Ivan came to work with Unilever only one year ago. His appointment to the position of environmental development manager in November coincided with the first anniversary of the company’s new strategy — the Unilever Sustainable Living Plan. Having adopted the strategy in 2010, the company assumed responsibility for the long-term consequences of its activity and identified the following three principal goals for the next 10 years: health and prosperity, reduction of environmental impact, and improvement of the quality of life. Substantial results were achieved already in the first year. The introduction of innovative products, more envi-

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ronmental friendly packaging and optimization of deliveries have helped Unilever to achieve a growth of sales. The first step that has been made has only convinced the company in the importance of the new outlook. «A lot still remains to be done,» Unilever CEO Paul Polman stressed commenting on the results achieved to date. «But companies like ours simply have no alternative. A sustainable and objective growth is the only acceptable growth model. And this is a very efficient model too. The notions of growth and sustainable development do not contradict each other. That is why we have adopted ‘sustainable living’ for the basis of everything we do». The CEO’s words ‘a lot still remains to be done’ were particularly appealing to Ivan. Indeed, the Unilever Sustainable Living Plan (USLP) sets truly colossal-scale objectives many of which are only unwrapping today. As far as Russia is concerned, the strategy’s priority goal is reducing environmental impact of production. Therefore, in this country, the management of Unilever is focusing on the reduction of production wastes because being removed to dumps these wastes constitute the worst environmental impact of the company’s operation. Under the USLP, the company’s goal is formulated as ‘achieving a 50% reduction of production wastes by 2020.’ Precisely this objective is the most pertinent one for the company’s Russian operations which should seek to reduce waste generation and implement, to the maxi-


mum extent possible, new approaches to waste processing and recycling. The Tula-based Inmarko factory was selected to be the first in Russia to run a comprehensive waste reduction project. The company leadership thought that the recently commissioned facility furnished with newest equipment and having a sizable production capacity would be an excellent choice for introducing the environmental innovations which could then be disseminated among other operations in Russia and internationally. It was thanks to that managerial decision that Ivan was now sitting in a cab riding down the streets of Tula and thinking about waste management in the ice-cream production. It was a very important project both for him and for his team. Just imagine, approaches and solutions he could find now would save the area from thousands of cubic meters of litter, save the company from extra costs and improve her image among consumers. Ivan’s task for today was to get as much as possible information about waste disposal at the Tula facility and to think about possible ways for improvement. He would have to consider the peculiarities of different kinds and types of waste and the availability of waste treatment facilities in the region.

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So soon as by the end of the week, Ivan was expected to submit to the management a strategy for reducing the environmental impact of the wastes generated by the Inmarko ice-cream factory in Tula. The strategy should include an elaborate and realistic plan of actions aimed at zeroing the amount of wastes removed to landfills by year 2020 and a set of measures to manage existing waste treatment processes: reduce the environmental impact and to find the most cost-efficient way to utilize already recyclable wastes. Ivan knew that he was expected to come up with a feasible solution, and it was important for him to demonstrate how the proposed measures would affect both the region’s environment and the company’s competitiveness. Besides, since Unilever is implementing its Sustainable Living Program for the sake of her clients, present and future, it is important to have the consumers understand the project’s positive social effects.

UNILEVER CORPORATE HISTORY Unilever is nearly 100 years old now. It was founded in 1930 by the merger of Dutch margarine producer Margarine Uni and British soapmaker Lever Brothers. The company’s first years in business were difficult as they coincided with the Great Depression. The unfavorable economic conditions stimulated the merged company into dynamic changes and innovations. The second major challenge for the company was World War II. During the war, Unilever was separated with business units in Germany and Japan being completely cut off from those in London and Rotterdam. This stimulated the development of peculiar corporate practices: Unilever’s local business units were forced to operate with a high degree of independence and more focus on the local market. These features have preserved to this day: operational management is geographically divided and different brands are present on different markets. The post-war growth of well-being in Europe stimulated by the development of the European Community and followed by the consumption boom and general improvement of living standards also contributed to the Unilever’s new strategy. The company began paying increased attention to technology upgrading and established a research unit in Port Sunlight in charge of supervising corporate laboratories in Great Britain and the Netherlands. An ad hoc nutrition research

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team was set up in the Netherlands in that time too. Therefore, Unilever was expanding, adding versatility to its scope of products, introducing innovations and perfecting acquisitions. Simultaneously, the company developed its network of advertising agencies and ran campaigns in marketing research and packaging business. By the early 1980s, Unilever had achieved the ranking of the world’s No. 26 business. Its scope of activities included tropical crop production, freight traffic, plastics, packaging materials and a wide variety of foodstuffs, personal hygiene and household products. In the 1990s, Unilever made a sharp turn in its business strategy: diversification was abandoned in favor of focus on the key products and strong markets with high potential of growth. By the turn of the century, Unilever cut the number of goods categories in production from 50 to 13. Simultaneously, the company implemented its first environmental programs at selected factories and the Sustainable Agriculture Program was launched for suppliers. Unilever entered the 21st century with the launch of the Path to Growth program. Termed for five years, the program was aimed at developing the company’s leading brands, production improvement and accelerated growth. By the end of 2003, Unilever’s annual production capacity growth rate increased from 11% to 15.7% and the merger with Bestfoods had been successfully completed.

UNILEVER CORPORATE HISTORY Simultaneously, the company sold 140 brands and focused on the leading ones. In 2000, the company established partnership with Greenpeace, and in 2002, the Lifebuoy soap’s personal hygiene educational program was launched for the developing countries. The program continues to this day. Opened in the beginning of the 21st century, the Unilever Health Institute — a center of nutrition, health and wellness studies — is beginning to play an important role in the research and development of foodstuffs for healthy lifestyle. In 2004, the company launched its new Vitality mission. The main idea of the mission is to add vitality to life. In November 2010, Unilever took on a fundamentally new mission by adopting the Unilever Sustainable Living Plan as the basis for the company’s strategic management. Termed for 10 years, the plan identifies principal environmental, economic and social objectives surrounding the company’s new long-term course which should be viewed as a guideline by all its employees. The company acknowledges that there is no tradeoff between economic growth and sustainable development; on the contrary, they complement each other. The conclusion proved to be true already in the first year of USLP implementation. The new brands created in line with the sustainable development principles have demonstrated high sales. For example, the sales of the Lifebuoy

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concentrated cleaning liquids and the Comfort fabric softeners had doubled in 2011. The environmental efficiency and packaging material minimization programs implemented by the company translated into a reduction of costs. In 2011, Unilever achieved a 6.5% growth of sales, an increase in the market share and a generally stable operating margin.

UNILEVER UNILEVER TODAY Unilever today is one of the largest multinational consumer goods companies. Our products are sold in more than 190 countries with 160 million consumers worldwide using a Unilever product on any given day. With more than 400 brands focused on health and wellbeing, company touches so many people’s lives in so many different ways. Unilever portfolio ranges from nutritionally balanced foods to indulgent ice creams, affordable soaps, luxurious shampoos and everyday household care products. The company produces world-leading brands including Lipton, Knorr, Dove, Axe, Rexona, Domestos and Cif and many others. Unilever recorded revenues of 46,467 million euro in 2011. The personal care segment includes skin care and hair care products, deodorants and oral care products.The group’s major brands in this segment include Dove, Lux, Rexona, Sunsilk, Axe, Pond’s, Lifebuoy, Vaseline, and Close Up. The foods segment includes sales of soups, bouillons, sauces, snacks, mayonnaise, salad dressings, margarines and spreads, and cooking products such as liquid margarines. Popular brands operating under this segment are Knorr, Blue Band, Rama, Hellmann’s and Amora. Unilever’s refreshment segment includes sales of ice cream, tea-based beverages, weight-management products, and nutritionally enhanced staples sold in developing markets. Heartbrand, Lipton, Slim-Fast, Becel and Flora are the prominent brands sold under the refreshments segment.

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The home care segment includes sales of home care products, such as laundry tablets, powders and liquids, soap bars and a wide range of cleaning products. Unilever’s global brands in this segment include Omo, Surf, Comfort, Radiant, Cif, Domestos and Sunlight. The Unilever Group operates in three geographic zones: Americas, Western Europe and the rest of the world, including Asia, Africa, Central and Eastern Europe. Special attention is devoted to the developing markets which have demonstrated stable growth of sales for over 20 years now and which presently account for over 40% of the company’s turnover. In the thirteen developing countries where Unilever currently operates, the combined sales total to EUR 0.5 bln and their growth is higher than the company average. In all of its segments of business, Unilever devotes special attention to innovation and creation of new products. Pursuing the ‘open innovation’ paradigm, the company is looking for ideas worldwide. In 2009, Unilever announced a new R&D program, the Genesis Program, which helped create a steady flow of ideas for new products, including the recently appeared Lipton Yellow Label pyramidal teabags which preserve the fragrance of freshlypicked tea leaves. Another successful product is the Rexona for Women anti-perspirant which gives protection even in active motion. In 2011 FY, the company invested over EUR 1 bln in research and development. Unilever runs six R&D labs worldwide employing over 6,000 researchers.

Unilever headquarters in London

UNILEVER UNILEVER TODAY Unilever’s R&D efficiency is confirmed by the annual registration of 250-350 patents. In 2011, the company launched 10 new household care products, including Domestos Toilet System in Great Britain and Sunlight dishwashing fluid in Vietnam. Successful hair care products include Dove Damage Therapy, Suave Pro-Styling and others. The aggressive pursuit of innovation and permanent renewal of product range allow Unilever to effectively compete on the rapidly changing market and remain the world leader. Unilever’s portfolio includes a lot of world famous and popular brands. The company’s top 11 brands, such as Heartbrand, Knorr and Dove, are worth over EUR 1 bln each. There are other 17 brands, Lifebuoy, Signal and Pond’s among them, worth over EUR 0.5 bln each, and the value of each of the still other 34 brands (Clear vita ABE, Ben&Jerry’s, Sunlight, etc) is over EUR 250 mln. HR is the company’s one more strategic focus. Unilever understands that employees are its key resource and is serious about fostering motivation and HR brand promotion. In 2009, Unilever launched a Talent and Organization Readiness career pursuit program for talented youth and continued running its famous Unilever Future Leaders Program . In 2011, college graduates in 14 countries named Unilever as the best employer. According to the poll conducted by the Global People Pulse Survey, 86% of the Unilever manages were proud of being employed by Unilever.

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Now the company is setting its goal as doubling its business to meet the growing international demand for FMCG. Again, special attention is given to the developing markets which lead in the tempo of growth. Unilever will deliver its ambitious mission through Compass strategy, launched in 2009. The Compass focuses on delivering growth — winning market share and growing volume profitably across all of the categories and countries. The company does this by winning: with brands and innovation through continuous improvement and with people. But the larger is the business, the more important it is to properly manage costs and to reduce environmental impact, specifically in view of the rapid growth of the world population and other modern day tendencies. Aware of that, Unilever is setting key social goals and adopts a long-term sustainable development plan, that complements the Compass strategy and commits to ecological and social development.






Sustainable development is one the key issues of the 21st century. This is a concept for the world’s development which is based not only on the short-term economic interests, but the interests of the future generations. In other words, present consumption and its environmental impact should not be to the detriment of those who are to come next. Under the USLP, the company’s development shall have the following three aspects: economic, social and environmental. The issue of thrifty use of the planet’s available resources is getting increasingly topical in view of the known world tendencies. The first problem is the rapid growth of the world population which hit 7 billion in 2011. Problem No. 2 is access to fresh water: 2.8 billion people are not getting enough of fresh water today. Thirdly, excessive consumption in the developed world is causing obesity and other health problems, while quite a few people in the developing countries are hungry. Fourth, the non-renewable resources are not being used thriftily enough. Companies working on the global market cannot ignore the challenges of today in their business strategies. Websites of 80% of the companies from Fortune 500 contain information about their socially responsible policies and practices. Ethical considerations do not represent the main reason why the concept of sustainable development is so popular today. The companies have understood that a responsible way of doing business is not only good as an image-making tool,

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but is also good for boosting their competitiveness, especially in the long-term. The Atlanta-based company Interface® — the worldwide leader in design, production and sales of environmentally-responsible floor coverings — set a good example by adopting the concept of sustainable development in the mid 1990s. The company’s CEO, Ray Anderson, put in a great deal of effort to persuade his colleagues into making the decision, but his efforts bore fruit. By 2005, Interface was saving around $400 million annually thanks to the reduction in waste generation. Furthermore, by that time the company emitted by 92% less greenhouse gases and consumed by 92% less water and its profit had doubled. Anderson understood how the ‘green’ strategy could influence the company’s financial performance. Many retail and FMCG companies now follow the example set by Interface adopting the strategy of sustainable development. Wal-Mart, IKEA, Tesco, Nestle, Procter & Gamble, Coca-Cola, PepsiCo, Kraft, Johnson & Johnson and Unilever are just to name a few.




Open innovation is a term promoted by Prof. Henry Chesbrough, is a paradigm that assumes that firms can and should use external ideas as well as internal ideas. 2 The Future Leaders Program is a 2- or 3-year course of training talented young college graduates to make them prepared for taking managerial positions in the company. 3 The concept of sustainable development gained momentum in the 1970s. In 1987, the World Commission on Environment and Development (WCED) presented the Brundtland Report called Our Common Future where sustainable development was defined as “the kind of development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” This definition of sustainable development is currently recognized and used in many countries. 1

UNILEVER AND SUSTAINABLE DEVELOPMENT THE UNILEVER SUSTAINABLE LIVING PLAN The Unilever Sustainable Living Plan is the company’s first long-term strategy with strong emphasis on social and environmental goals. The plan is remarkable for its broadened perception of responsibility where the company is responsible not only for its direct activities, but also for the activities of its suppliers and distributors and, what is particularly important, for how consumers use its products. The plan identifies three major goals subdivided into eight areas, including health & hygiene, improving nutrition, greenhouse gases, water, waste, sustainable sourcing, better livelihoods and our people. The areas are further subdivided into 60 more specific objectives with rigid timelines designed to help the company appraise its performance in terms of social, economic and environmental criteria and embracing the whole lifecycle of products — from the raw material sources to end use. Implementing the program, Unilever cooperates with numerous partners, including international organizations and funds and educational centers and associations. For example, in 2011, Unilever ran an education program on personal hygiene for secondary school students in Indonesia and received assistance from the Indonesian noncommercial and government organization. Aspiring for global-scale goals, Unilever catalyzes changes on the markets. For example, toward the end of 2011, the company mastered the production of Lipton tea bags compliant with the sustainable development principles and obtained certification from the

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Rainforest Alliance for 25% of its tea products. Quite a few tea companies followed suit. Unilever measures its progress using the criteria set in the Sustainable Living Plan. The company has her own system to estimate a product’s environmental impact. Brands and functional teams have their own system of performance indicators which are evaluated and appraised by the management on the quarterly basis. Remuneration of the company’s managers is rigidly tied to the achievement of the goals. Many of the tasks formulated in the Sustainable Living Plan had been fulfilled as of the early 2012: Salt content in the company’s products was reduced by 25%; the proportion of saturated fats in the spreads produced by the company was reduced to less than one-third of the total amount of fats; 60% of the ice-creams developed and produced specially for children were made to contain less than 110 kCal per serving; product recipes were changed to achieve a 15% reduction in greenhouse gas emissions (water vapor, carbon dioxide, methane and ozone); PVC was completely excluded from use in product packaging; one-half of the total amount of 13 vegetables and herbs purchased by the company now come from renewable sources. The company’s achievements have been recognized by both the company’s management and its clients. The most important thing today is to continue moving steadily toward the fulfillment of the established goals. Purposeful work is being carried out in each of the identified areas, including the reduction of environmental impact of production wastes.



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Waste management is one of the work areas included in the Sustainable Living Plan. This work area pertains to one of the Plan’s three paramount goals — the reduction of environmental impact. In this area, the company’s strategic goal is to achieve a 50% reduction in the amount of production-related wastes by 2020. This goal is subdivided into the following 6 tasks: ■ Reducing

the amount of packaging materials used; ■ Repeated use of packaging; ■ Recycling of packaging materials; ■ Reducing the amount of production wastes; ■ Resolving the sachet disposal problem; ■ Rejection of PVC . Task No. 1 is to reduce the amount of packaging materials by a third by 2020. Corporate studies indicate that packaging materials represent one of the major sources of waste. Therefore, the company is seeking ways to reduce the weight of packaging material per unit of production. Given the Unilever’s huge production output, even a minor improvement would require changes to be made to the hundreds of thousands of packages produced and distributed worldwide. Normally, Unilever brands change their packaging design once in every several years; since the adoption of the USLP, the company has been looking for lighter and better materials for every change of packaging design. For example, the new packaging for Unox

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Cup-a-Soup introduced in the Netherlands in 2011 contains by a third less aluminum and its overall weight is 6% less. Recently, Unilever presented a new packaging design for the Vaseline skin care product. The new packaging uses by 3% less plastic which allows saving approximately 113 tonnes of resins every year, and shifting to polypropylene allows reducing electrical power consumption down to 13,000 MW per year. Furthermore, the new packaging is much more attractive and easier to open. Unilever runs packaging repeated use programs only in a limited number of countries with sufficiently developed consumer culture. In 2011, the company launched a reusable packaging for the Sunlight brand in South Africa. The new packaging is 90% lighter than the bottle in which the fluid was originally sold. However, the creation of such packaging rarely pays back which is why the company runs such projects only if it is possible to simultaneously reduce packaging volume and add recycling opportunities. Task No. 3 is increasing the proportion of recycled materials in packaging up to the maximum attainable level by year 2020. Cooperating with industries, governments and popular associations, Unilever plans to increase waste processing and recycling by the average of 5% by 2015 and by 15% by 2020 in 14 countries of operation. Unilever helps its consumers in packaging recycling choosing materials which are best fit for recycling plants used in their countries. As a result, the packaging


produced in 2011 contained the overall amount of 1,700 tonnes of recycled materials. Important component of waste management is optimization of own production. The company has set the goal of having the amount of waste generation in 2020 equal to that of 2008. In 2011, the amount of landfill-disposed wastes was reduced by 62,000 tonnes from the year 2008 figure thanks to combined implementation of waste incineration and processing programs. This translates into a 40% reduction in the total amount of wastes generated per one tonne of finished product. Compared to 1995, the overall amount of landfill-disposed wastes has been reduced by 82%. By the end of 2011, 100% safe waste disposal processes were introduced at 74 out of total 258 production units ran by the company. In 2012, plans call for achieving 100% waste disposal safety for one-half of the company’s production units. Another goals is to develop and implement an environmentally safe model for sachet disposal by 2015. Sachet is an economically efficient replacement for a larger packet or a bottle. Products packed in sachets are cheaper for end users. At the same time, sachets are made of multilayered materials which are hard to process. The result is that sachets are mostly disposed off by removal to a landfill. Unilever is looking for ways of their processing. In partnership with Chennai in India, Unilever has proved the possibility of processing sachets and other packaging materials into liquid fuel. Hindustan Unilever factory in the Indian city of

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Pondicherry has successfully used such fuel for its boilers. Now the task is set as finding ways for collecting sachets on a larger scale. For this purpose, Unilever is looking for opportunities of partnering with specialist companies as well as municipalities and nongovernmental organizations. Task No. 6 is PVC rejection for all types of packaging by the end of 2012, except for the cases where this is technologically impossible. This task has already been fulfilled in Russia where PVC has been removed from packages, containers and antirust coatings. Waste disposal is not on the list of Unilever’s specializations which is why the company needs to cooperate with the governments, specialist companies and NGOs to fulfill this task.

Rainforest Alliance is an independent international non-governmental organization dedicated to the conservation of tropical forests. In order to be certified by the Rainforest Alliance, a farm should meet high environmental, social and business standards. 8 PVC = polyvinylchloride, a colorless plastic material. 9 Dishwashing fluid. 7


In 2012, Unilever marked its 20th anniversary of operating in Russia. During all these 20 years, Unilever has steadily increased its production capacities in this country to meet growing demands of the Russian consumers. Unilever portfolio in Russia includes well-known brands of food items, personal hygiene and household cleaning products. Most of the Unilever’s products sold in Russia are produced locally. On a par with its international brands, Unilever develops here the original Russian brands of Baltimore, Inmarko and Kalina. Unilever has harmonically blended into Russia respecting its traditions and business culture, and this is an important distinguishing feature of Unilever from many other foreign players on this market and the secret of its success. As things stand today, the total amount of Unilever’s investment in the Russian economy is approaching EUR 2 bln and the number of personnel is around 7,000 . Unilever currently owns a number of large enterprises in Russia, including the Moscow Margarine Factory, a sauce, tea packaging and perfumery & cosmetics factories in St. Petersburg, a concentrated foods and ice-cream factories in Tula, an ice-cream factory in Omsk and the recently acquired Kalina Group. The “Severnoye Siyaniye” (Northern Lights) St. Petersburg perfumery & cosmetics factory was the first Russian operation to join Unilever back in 1994. The acquisition was followed by a mas-

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sive modernization and upgrade. As a result, the factory acquired a new business development department, a department for customs service relations, new equipment for quality monitoring of both raw materials and finished items, and new production lines were launched. In 1995, Severnoye Siyaniye produced first products using Unilever technologies — Sunsilk and Timotei shampoos, shortly followed by Rexona roll on antiperspirant and other brands. Already in 1997, Severnoye Siyaniye was ranked as the largest Unilever operation in Europe. Currently, the factory puts out Sunsilk, Timotei, Dove, Clear vita ABE, Rexona, Dove, Ахе, Domestos, Glorix and Cif products among others — to a total of 370 varieties, and its overall production amounted to 192 mln items in 2011. Part of the factory’s produce is exported. For example, Severnoye Siyaniye produces Unilever stick antiperspirants for the whole Europe.

a total of over EUR 40 mln in the modernization and upgrade of the Moscow Margarine Factory. And this is not the end. It is worth noting that the Moscow Margarine Factory was the first in Russia to have launched a fat refining line utilizing a special technology of fat treatment that allows producing Unilever spreads and margarines containing no harmful trans isomers .

In 1998, Unilever acquired the Moscow Margarine Factory which marked its 80th anniversary in 2010. In 1999, the factory started producing the Rama spread, Delmy and Pyshka margarines, followed by the Calve mayonnaise in then-innovative soft packaging. Over the next few years, the factory added more mayonnaise and sauce varieties. In 2005, a Crème Bonjour production line was installed and launched at the factory. It is appropriate to note that drive toward innovation is a common feature with the Moscow Margarine Factory and Unilever. Over the period from 1998 to 2011, Unilever invested

Accounting for most of the factory’s output are products belonging to the world-famous brand Knorr part of which are exported to the EU countries. The Tula Concentrated Foods Factory produced over 100 product varieties, including seasonings (“Kroshka” Knorr and “Aromatnaya” Knorr), quick soups (“Chashka Supa”), main course dishes, broths, mashed potatoes and many other products that have won great peculiarity among Russian consumers. Since April 2000, the factory has produced popular mayonnaise brand Hellmann’s Real, and in 2001 it added Calve to the product list. From the late

In 1999, Unilever launched one more operation in Russia — the Tula Concentrated Foods Factory. The factory is particularly unique in that it combines two absolutely different product types — convenience foods and mayonnaises. The Tula Concentrated Foods Factory is furnished with the newest equipment (Unilever invested over $15 million) and is one of the most modern convenience foods and mayonnaise factories not only in Russia, but in Europe too. The factory’s output has reached 60,000 tonnes per year.


2003, the factory has drastically increased its mayonnaise production by adding the number of packaging lines. Currently, the factory produces Calve Light, Calve Olive, Calve Classic and Delma mayonnaises. Since commissioned in 2002, the St. Petersburg tea packaging factory has increased its production capacity by more than 60% up to 15,0000 tonnes per year. Around EUR 67 mln have been invested in the factory, which is among the best of its kind in Russia, over the last 8 years. Today, the factory is in world’s top five ranking of tea factories. The factory currently produces 128 varieties of Lipton, Brook Bond and Beseda tea bags and the number of varieties is permanently increasing. Three types of tea-bags are produced: dual-chamber, round and pyramidal tea bags. Over the last decade, the factory has produced 31 billion dual-chamber tea bags — enough to circle the Earth 450 times along the equator. And the 4.7 billion Lipton pyramidal tea bags produced by the factory would be enough to ‘build’ a full-scale model of the Cheops’ Pyramid at Giza. Since 2010, over 9 billion tea bags produced at the St. Petersburg factory have been exported annually to Vietnam, Hong-Kong, Israel, Moldova, UAE, Singapore and Turkey. In 2008, Unilever became a 100% owner of Inmarko — a company with a money turnover of around USD170 mln employing 4,500 people and running 3 factories located in Novosibirsk, Omsk and Tula — and consolidated its positions on the Russian ice-cream market.

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In July 2009, Unilever acquired the Baltimore company with its production facilities in the town of Kolpino near St. Petersburg. Unilever helped the Baltimore brand to win back its former popularity. As it follows from the results of year 2011, Baltimore became the leading brand on the Russian ketchup market with a market share over 19% in money terms (according to Nielsen). Despite inflation, the average retail price of a ‘classic’ glass bottle of Baltimore ketchup has increased by only 2 rubles over the last three years. From the late fall of 2012, the Unilever’s new Tula-based food industry cluster is going to become the basic facility to produce Russian ketchups and sauces under the Baltimore and Calve brands. The Kolpino factory will be closed. This will help optimize production and distribution and ensure maximum rate of return on investment. In 2011, Unilever acquired the Kalina Group thus taking a considerable share of the cosmetics market away from its competitors. The Uralsbased Kalina factory is the leader of the Russian cosmetics market. Over its 70-year long history of operation, the brand has won loyalty from Russian consumers. Today, Kalina produces over 1,000 products ranging from face, hair and body care cosmetics to eau-de-colognes wellremembered by Russian people yet from the 1990s. Every year, Kalina launches up to 350 new products created using the company’s proprietary innovative solutions in materials, recipes and packaging. In 2011, Kalina sold 440 mln

items. In addition to the domestic market, Kalina products are supplied to the former Soviet Union countries, and Kalina brands are recognized in many foreign countries too — from Canada to Taiwan. Today, the Kalina factory occupies 72.5 hectares of land and employs around 2,000 people representing different generations and having different views. The acquisition by Unilever will mark a new stage in the history of Kalina. The expected synergy would provide an additional impetus to the company’s development on the Russian market, while the brands, which won the love of the Russian people, would benefit from the Unilever’s international experience and technologies.

Sachets are used for packaging loose fill goods (granulated coffee, sugar, salt, dry yeast) as well as liquid or gel products (sauces, creams, shampoos and gels). 11 Not including the Kalina company group. 12 Trans isomers is a type of unsaturated fats the consumption of which increases the risk of cardiovascular disorders. 10


The collaboration of Unilever and Inmarko started in 2008 when Unilever acquired the company that produced ice-cream with factories in Omsk, Novosibirsk and Tula. The acquisition was fully in line with strategy of the company: Unilever ranks number one on the world market of ice cream production and it gained the leading positions on the Russian market after obtaining Inmarco. Russian consumers are well-informed about Inmarko brands, which can be found in almost every store across Russia. They are Zolotoy Standard, Ekzo, Magnat, San-Cremo and others. Inmarko’s popular Russian brands were enriched with some well-known Unilever brands — Carte D’or and Cornetto at the end of 2011. Since the acquisition of Inmarko, Unilever got the opportunity to produce ice-cream, using 3 production sites located in Omsk, Novosibirsk and Tula. In the management’s opinion not all of those 3 sites made simultaneous profit to the company. Subsequently the decision was made to optimize production and reschedule the capacities. The Novosibirsk factory is the birth place of Inmarko, which at the same time is the starting point of expansion to East and West directions. It is the oldest factory comparing to two others and its capacities are considerably lower. Besides that fact, the workshop in Novosibirsk has only two production lines whereas Omsk and Tula operate on a wider scale. When the management realized in 2011, that the modernization was not economically

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sound they started to consider alternatives of moving the capacities to other factories. The decision was made to reconfigure the factory in Novosibirsk to distribution warehouse and logistic center. The production was already put on hold, starting September 1st, 2011 and the production volumes were distributed between Tula and Omsk factories. Omsk factory is reasonably modern. The constant modernization supports both the quality of the equipment and production quality at the European level. However capacities allow for production of only 50,000 tons of the ice cream per year. Omsk factory was assessed as the most promising from the viewpoint of technological opportunities comparing to the first Inmarko factory, according to structural changes. Therefore it has partly compensated the shutting down of the Novosibirsk factory.

INMARKO TULA FACTORY Inmarko had acquired the Tula factory yet before the deal with Unilever. The factory is conveniently located with the access to the Central, South and Northwestern Regions, as well as high capacity figures and huge area of 8 hectares. Moreover, around 3 hectares of unoccupied area gave the company an opportunity for expansion and further development. After the agreement which was signed at the 3rd Tula Economics Forum in 2009, the decision was made to build ice-cream production facility as well as logistic center for 5,000 tons of finished product in this area. The investment project required around EUR 100 million of investment. As early as in March 2010, the phase 1 of the facility was opened, i.e. the logistics center with a refrigerator warehouse and a shipment zone. The total capacity of the logistic center amounted to 20,000 pallet positions which in turn were worked out for 5,000 tons of ready-made product. The maintenance of the facility created 200 new jobs. The factory’s pilot launch took place in May 2011. The total floor space of the facility is 60,000 sq.m. with the maximum output capacity at the launch stage of 60 million liters of ice-cream. Production variety includes different types of products. Bulk ice-cream products account for most of the production. A bulk ice cream product is a carton or otherwise packed amount of ice cream large enough to be divided into several servings. Zolotoy Standard and Torzhestvo brands represent this type of products on the Russian market. Horn ice-cream is represented by Ekzo and Magnat and ranks second on the product list, followed by the San-Cremo

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cone ice-cream and Zolotoy Standard ice-cream cup. In addition to that, the factory produces icecream cakes, cylinder-shaped ice-cream, sandwich ice-cream, stick ice-cream and other varieties. The increase of production volumes by 2 times is being planned. Company plans both the increase of existing brands production and new product development. The construction and adjustment of all processes is to be completely finished by the end of 2014. In that case the facility will be able to produce approximately 120 million liters of finished product and provide more than 600 jobs. By the time the construction is complete, the facility would be Unilever’s largest ice-cream producer in Eastern Europe and would make it among the World Top 5. Precisely the Tula Inmarko factory was selected to be the starting point for the projects aimed at industrial waste reduction.

INMARKO ICE-CREAM MANUFACTURING PROCESS An ice-cream presented in store is a frozen, sweet product that is obtained through whipping and subsequent freezing of the milk-based blend. The blend includes milk and dairy products (such as cream, whey, butter, buttermilk and others), sugar (sugar syrup, caramel, sugar substitute), vegetable fats (mostly coconut oil), stabilizers (agar-agar, agaroid, sodium alginate, sodium caseinate, pectins, potato-starch, cornstarch, jelly starch, modified starch and others) and flavor and aromatic fillers which relish the product we all like. THE ICE-CREAM MANUFACTURING PROCESS CONSISTS OF SEVERAL CONSEQUENT STEPS:

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1. The first step is

2. Then the blend

3. The blend is

4. Pasteurizing, i.e.

5. Then the blend is

6. The blend is

7. The blend is

8. Next step is

the preparation of raw material.

made homogeneous; large beads of milk fat are broken into smaller pieces in order to achieve required extent of overrun and good body of an icecream. This process is also run at a high temperature.

for an ice-cream is prepared to a recipe.

cooled down to 2-6°С.

filtered. During this process undissolved nubbles of the raw material are removed together with suspended solids.

stored at slow stirring so all the elements are distributed even, emulsionized and are able to trap the air (24 hours at most at a temperature of 4-6°С and 48 hours at most at a temperature of 0-4°С)

thermal conditioning carried out at a temperature 80-85°C at exposure of 50-60 seconds or at a 9295°C without it.

freezing which is the key operation wherein the blend is beaten, filled with air and partly frozen (blend’s temperature at the output is -3.5°С). Blend’s size considerably increases. As a result of freezing the foamy structure appears. Owing to dissolved air, an ice-cream can be consumed very cold.

Out of the freezer an ice-cream comes to the extruding machine of relevant configuration. It is squeezed out and the string cutting mechanism cuts the portions of specified weight, which fall on the deepfreeze room conveyor. The filler, such as jam, chocolate, evaporated milk is then injected inside by flow-control pump if necessary. When an ice cream pop is made, the stick is inserted in the product at the cutting stage.

INMARKO TYPES OF WASTE AT THE INMARKO FACTORY The Inmarko factory has well-established business processes, thus the total amount of produced waste is not more than 123,08 per ton of product output. All types of waste are divided into 5 hazard classes, according to legislation: 1 — the most hazardous waste, 5 — almost non-hazardous waste. TULA FACILITY HAS DIFFERENT HAZARD CLASSES OF WASTE:

1st class — the most hazardous waste (mercury vapor lamps, luminous tube lamps) 2nd class — hazardous waste (outspent accumulators with non-poured sulphuric acid) 3rd class — hazardous waste (outspent engine and industrial oil, oil filters) 4th class — low-hazard waste (solid domestic waste, scrap iron) th class — almost non-hazardous waste (garbage from mopping-up operations, polypropylene waste, food waste, wool waste, outspent carborundum wheels, polyethylene containers, saw dust from natural clear wood).


In practice, all of these kinds of waste is divided into 2 groups: hazardous (1st and 2nd classes) and non-hasardous (3-5 classes). The share of hazardous waste in overall production process is extremely small — only 0,05%, that is 0,07 kg per ton of product output. And this kind of waste is recycled by specialist companies that have a license to do it.

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The major part of all waste is non-hazardous waste, which amounts to 99,9% of overall waste (123,08 kg per ton of output). The waste of 4th and 5th class are either recycled or moved to waste deposit for dumping. Unilever also concludes an agreement for waste recycling with subcontractors that specialize in specific raw materials. Consequently Unilever has set up the business with the company from St. Petersburg called OAO “Avtopark №1 Spetstrans” that deals with moving and recycling waste, and another St. Petersburg company called OAO Ekotrans whose area is defined as work with hazardous waste. As things stand today, far from all wastes belonging to the 4th and 5th class of hazard are processed at he Tula factory. One of the top-priority objective for the company is the maximum retrogression of non-hazardous dumping. The goals can be achieved either through attraction of new organizations or through new ways of recycling. The main types of 4th and 5th hazardous class waste that are meant for dumping are as follows: solid domestic waste, ice-cream waste, non-sorted paper waste, purification facility waste, spicery waste and others.

INMARKO METHODS OF WASTE DISPOSAL During the production of an ice-cream around 40 different types of waste appear, that need to be recycled. Residuals of raw stuff, materials, semiproducts, other goods or products that appeared during the production or consumption and are considered waste, as well as finished products that have lost their consumer attributes. The easiest way to get rid of garbage is to move it to special disposal dumps and waste deposits. For instance, Tula has approximately 15 waste deposits for dumping solid domestic waste that accept the garbage at the price of 33 to 130 rubles per cubic meter. But landfill also requires the transportation costs. The average cost for transportation of 1 cubic meter of non-hazardous waste is varying from 250 to 350 rub in Central Region. Another way of recycling waste is to incinerate it. It happens in special refuse incinerators which release heat energy during burning waste which in turn transforms to electricity. All kinds of garbage can be burnt: solid domestic waste, industrial waste, including toxic, poisonous and medical waste, bioorganic waste and others. Modern waste recycling plants are associated with full burning of waste without realizing pollutant emission in the atmosphere. It happens due to the generation of high temperature in chamber, while special additives to the garbage prevent the formation of pollutant emissions. The energy obtained from burning powers burning kiln, while the excessive energy is transferred to urban electric networks. Greenpeace thinks that this method of obtaining

20 / Unilever Case: Tula 0

energy can not be considered as “green”. Burning of 1 ton of garbage releases at most 240 kW of electric energy whereas if we recycle the amounts required (and do not produce it again), we will be able to save much more energy. In Central Region there is no special refuse incinerators, which produce energy — there are only facilities to burn and detoxify waste. From the ecological point of view, the most preferable methods of dealing with waste are to reduce waste, reuse them and recycle, which is also known as 3R concept: reduce, reuse, recycle. Recycling presupposes turning waste into new resources. The most commonly encountered recyclable materials are glass, paper, aluminum, iron, plastics, and fabrics. These materials are separately recycled by the specialized factories, which commonly pay back for the assorted waste. Thus, for the 1 kg of paper company can get 1-2,5 rub., for the 1 kg of plastic — 6-10 rub. These money doesn’t matter much for the business, but they can potentially compensate the transportation costs of waste. But to use this method of waste utilization company should sort the waste during the production process, which implies special containers installation and instructing employees. It is also possible to recycle food waste as a result of which compost, fertile land or crops occur. But this type of recycling is often organized by the factory itself. Recycling provides a lot of social and ecological benefits: it helps to prevent dumping,

shortens energy use, while the branch of recycling on the whole creates new work positions. At the same time recycling costs three-fold or fivefold more than regular waste moving to disposal dump. Recycling is a concept of careful attitude to resources and their multiple uses. Organization is able both to re-use resources and to deliver them to other organizations where they be used. Finally there is nothing like simple absence of waste. That is the reason why companies should struggle to optimize their production. There are 3 considerable ways to reduce waste. First of all, package design can be improved, which will consequently reduce its use and harm the environment respectively. Secondly, there is an opportunity to utilize ingredients with longer expiration date during production stage, or to improve home formula. When prolonging expiration date of product, the company can reduce loss of faulty and damaged production. Thirdly, the production process itself can be improved which will lower the scrap of production resources. Recycling and reducing are not actually means of waste management, though we should bear in mind these 2 options when dealing with industrial waste.


Unilever aims for maximum reduce of waste volumes that are taken to a disposal dump, when dealing with waste. There are 6 alternatives, depending on type of waste pointed out by Unilever. The waste hierarchy is ascending starting with the harmless and ending with the most hazardous types for environment. Dumping in the landfills causes the greatest damage to environment. This type of waste is not used at all, and is simply buried in special landfills. The following waste are taken from Tula facility to a landfill: regular garbage, waste from clean-up, fabric waste, old clothing, old shoes, faulty icecream products from production line that cannot be re-used, expired ice-cream, outspent brakeshoes, floatation foam. Unilever is planning to eliminate dumping completely by 2020. Technically, most waste categories have an alternative in recycling, some of them are already used at the Unilever facilities in other countries. For instance dust and waste at the three Turkish facilities are taken to a special mini-TPPs (Thermal Power Plant), that are using refuse-derived fuel (RDF) which produce electricity from waste. Turkish ice-cream production facility also has preparatory depuration for blend’s waste and faulty products which are then sent to cement plants in order to be used as fuel for cement kilns. The next most harmful type in the Unilever hierarchy is production of energy from waste (biomass). Yet Tula facility doesn’t have waste that could be recycled that way. Solid domestic waste which may be burnt is now being dumped in landfills.

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The third level of the hierarchy is treatment of waste, i.e. primary treatment before recycling. Tula facility treats the following waste: mercury vapor lamps and industrial oil. It is worth mentioning that the treatment process of industrial waste is subject to law. These are mercury vapor lamps and luminous tube lamps .When they are mishandled they can cause significant harm to the environment. It is impossible to avoid long lasting process of recycling mercury lamps. Though there are alternative sources of light, such as LED lamps which are actively used in German Unilever offices. A LED lamp doesn’t require much recycling, due to the fact that harmful substances like lead and mercury are not used to manufacture them. The major disadvantage of these lamps is their cost, which is tenfold higher than that of regular lamps. One of the best ways to get rid of waste, which cannot be shortened, is recycling. Recycling allows for secondary use, which prevents garbage accumulation. Unilever does not recycle, but they actively use subcontractors for this purpose. Unilever recycles accumulator batteries, package waste, polyethylene waste such as wraps, pallets, junk, plastics, paper and cardboards, with the help of subcontractors, who processes them into a new product. Reusing occupies one of the levels of resource processing. Unilever is an environmentally friendly company. It is reflected in production (Blend for an ice-cream is used second time in Russian facilities if it is possible to digest it according to production technology) and in the office routine. Employees try

to handle resources with care (used paper serves as drafts and rough copies) Finally, the best way to deal with waste is to reduce or eliminate it through improving production and business processes at the facility. The company constantly strives to optimize the production in a way to cut the losses. For example Turkish icecream facility managed to dispose of glycerin waste by innovating technological process. Lowering of domestic garbage can also be referred to waste reduction process, though its volumes are considerably lower than industrial. These means are vital due to forming an environmentally friendly culture among employees. For instance, many Unilever offices have stopped to use plastic cups for water and now employees are using their own mugs instead.








22 / Unilever Case: Tula 0





The Unilever’s key products

Unilever €1bn brands


Personal care

Home care


■ Soups ■ Bouillons ■ Sauces ■ Snacks ■ Mayonnaise ■ Salad dressings ■ Margarines ■ Spreads ■ Cooking products

■ Skin care products ■ Hair care products ■ Deodorants ■ Oral care products

■ Laundry tablets ■ Detergent powders and liquids ■ Soap bars ■ Cleaning products

■ Ice cream ■ Tea-based beverages ■ Weight-management products ■ Nutritionally enhanced staples

24 / Unilever Case: Tula 0

Unilever €1bn brands



Unilever’s key competitors and their sustainable development strategies and initiatives

Sustainability goals of consumer goods companies and retailers




Colgate-Palmolive Company

“Giving the World Reasons to Smile” 2011 to 2015 Sustainability Strategy

2011- 2015

Johnson & Johnson

Healthy Future 2015


Kao Corporation

Strategic CSR activities



10-year strategy


Shiseido Company Limited

Ecological plan


Long-Term Environmental Sustainability Vision



L’Oreal S.A.

Procter & Gamble Company







Coca-Cola Reckitt Benckiser




Best Buy Nestle

2010-2020 Kroger


Henkel 2006







FMCG companies

Size of circle =


relative revenue 2010

Note: FMCG is fast-moving consumer goods Sources: Company reports and websites; A.T. Kearney analysis

25 / Unilever Case: Tula 0


05 ECONOMICAL REASONS FOR USLP IMPLEMENTING The Plan is not just the right thing to do for people and the environment. It is also right for Unilever.

1. Consumers want it. A small but growing

number of consumers around the world are seeking the assurance that the products they buy are ethically sourced and responsibly made. A more sustainable brand is often a more desirable brand.

2. Retailers want it. Many retailers have

sustainability goals of their own and need the support of suppliers like Unilever to implement them. This collaboration is deepening the relationships we have with our customers.

4. It helps develop new markets. Over half

Unilever’s partners in various improving health and well-being programs

Unilever’s sales are in developing countries, which often face the greatest sustainability challenges. New products that help people adapt to the changing world will drive growth.

5. It saves money. Managing our operations

sustainably reduces energy, minimises packaging and drives out waste. It not only generates cost savings, it can also save the consumer money.

6. It inspires our people. Unilever’s vision to create a sustainable, growing business is motivating for our employees and appealing to people who are considering joining the company.

06 Production structure of Inmarko’s Tula Factory by the types of ice-cream (1h2012)

3. It fuels innovation. Sustainability is a

fertile area for both product and packaging innovation. It is allowing Unilever to deliver new products with new consumer benefits.


2,9 2,3 0,3

12,7 3,4 12,1



26 / Unilever Case: Tula 0


cone ice-cream stick ice-cream waffle cup horn ice-cream sandwich ice-cream bulk ice-cream ice-cream cakes cylinder-shaped cup other


07 Types of waste in Inmarko’s Tula Factory and the methods of their utilization (1h2012) METHOD OF UTILIZATION WASTE Mercury vapor lamps, luminous tube lamps




METHOD 1 Detoxify by special licensed company


Outspent accumulators with non-poured sulphuric acid



Recycle by specialized company

Used motor oil



Detoxify by special licensed company

Landfill after detoxification

Used transmission oil



Detoxify by special licensed company

Landfill after detoxification

Used hydraulic oil without halogen



Detoxify by special licensed company

Landfill after detoxification

Used compressor oil



Detoxify by special licensed company

Landfill after detoxification

Used air strainer



Detoxify by special licensed company

Landfill after detoxification

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Types of waste in Inmarko’s Tula Factory and the methods of their utilization (1h2012)

Used air strainer


Textile polluted with oil (more than 15% of oil)


Used tyre casing with metallic cord


Recycle by specialized company

Domestic waste (without large-sized)



Garbage from mopping-up operations



Old clothes



Old leather shoes



Vegetable semi-finished products close to expiration date


Sell of products from the factory

Vegetable semi-finished products exceeded expiration date


Use as a raw material for the bone flour production

The blend for an ice-cream, non-used


Cook again for other type of ice-cream

The spoiled blend for an ice-cream



28 / Unilever Case: Tula 0


Detoxify by special licensed company

захоранивается после обезвреживания

Detoxify by special licensed company

захоранивается после обезвреживания


Types of waste in Inmarko’s Tula Factory and the methods of their utilization (1h2012)

Defective ice-cream suitable for cooking again


Use for other type of ice-cream

Defective ice-cream



Ice cream close to expiration date


Sell of products from the factory

Ice cream close exceeded expiration date



Wrapping stained by the product


Recycle by specialized company

Wrapping paper waste


Recycle by specialized company

Cardboard waste, clean and suitable for reuse


Reuse for the waffle products

Cardboard waste, dry, unsuitable for reuse


Recycle by specialized company

Polyethylene waste as film


Recycle by specialized company



Reuse for the waffle products

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Types of waste in Inmarko’s Tula Factory and the methods of their utilization (1h2012)

Parts of pallets, can’t be reused


Recycle by specialized company

Unsorted scrap of black metals


Recycle by specialized company

Unsorted aluminum scrap


Recycle by specialized company

Used brake blocks



Clean corrugated cardboard waste


Recycle by specialized company

Clean plastic boxes, that can be reused


Recycle by specialized company

Clean plastic boxes, can’t be reused



Paper waste from the office work.

V Reuse as drafts

Paper waste from the office work, can’t be reused Floatation foam

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Recycle by specialized company





Waste Management in the Tula Region

Waste structure in the Tula Region

Every year around 400 million tons of solid domestic waste appear in Tula Region, but there is not enough capacity to recycle and treat them.


The most commonly used way of placing production and consumption waste is dumping unsorted waste in landfills. On the whole, there are 15 landfills and 83 waste disposal facilities in Tula Region. The total size of official landfills and disposal dumps processing solid domestic waste accounts for 258.5 hectares. 15.99 million tons of waste were accumulated at the area specified.

6 8



Tula 492 1 400 Novomoskovsk................ 131,3........................................440 Donskoy............................ 64.............................................152 Aleksin.............................. 63,9..........................................139 Yefremov.......................... 39,9..........................................133 Shchekino......................... 58,7..........................................130

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food waste plastic and polyethylene wood metals rubber and textile glass other




Rates of solid domestic waste landfill in 2012 in Tula Region

Non-hazardous waste structure of Inmarko’s Tula Factory (1h2012)







Aleksina Special service



Nash Mir












Municipal managing company



32 / Unilever Case: Tula 0

12,7 1,0 5,3


0,7 37,8

0,1 2,3 6,3

flotation foam metal paper plastic cardboadr ice-cream waste wrapping waste domestic waste other




Average fees for recycled materials in Central Region

Percent reduction of environmental impact by recycling materials FACTORY’S FEE FOR 1 KG, RUB.




Paper, cardboard, newspapers, polygraphic products and other



PET bottle, polyethylene waste and plastic waste (containers, barrels, bottles)



All glass



Non-ferrous metals


33 / Unilever Case: Tula 0


14 Production process of Inmarko’s Tula Factory

34 / Unilever Case: Tula 0

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