Rubbermaid sees its future as innovation + premium prices

Newell Rubbermaid Inc. plans to trim its product line — eliminating low-end plastic storage containers, trash cans and office chair mats — in favor of high-end, innovative products. The company “plans to invest more heavily in research and advertising for more-innovative products,” according to a Wall Street Journal article, aptly headlined: “Rubbermaid Wants to Be Less of a Commodity” (16 July 2008). The innovative products include containers for fruits and vegetables with vented lids to keep those foods fresher.

The primary reason for trimming the low-end of the product line is the rising cost of the petrochemical-based resin used for making plastic products.

As the Associated Press reported:

“Put simply, the forecast for dramatically higher ongoing energy costs means that the world has changed, and we must change with it in order to maintain a healthy portfolio,” Chief Executive Mark Ketchum said in a statement.

Particularly vexing to the company, which also lowered its full-year earnings guidance on Tuesday, are increasing oil and natural gas prices — important components of resin, a key ingredient in many of the company’s plastic products.

“In categories where resin is a high percentage of cost of goods sold and the consumer’s willingness to pay for innovation is low, the economics are no longer viable,” Ketchum said.

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Related: Newell Rubbermaid to drop products, raise prices

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