Big Consumer Brands Will Start Taking Their Packaging Back
(Bloomberg) -- In the environmentalist mantra “reduce, reuse, recycle,” almost all of the attention has been paid to recycling. Now some of the world’s biggest consumer brands are trying to shift the focus to the second R, with a program that provides products in reusable containers that can be returned for a refund.
The durable packaging program, called “Loop” -- a reference to a theoretical circular economy where nothing is wasted -- debuted at the World Economic Forum in Davos Thursday. Led by New Jersey-based recycling company TerraCycle, Loop will offer popular products from about 25 companies including Nestle, Unilever, Procter & Gamble and PepsiCo in reusable containers that customers order online or purchase in stores and return to the company when finished.
The effort evokes the milkman of the 1940s, or even the glass bottle deposits still collected today. In many ways, that’s a better model, said TerraCycle founder Tom Szaky. “In the milkman model, the packaging was owned by the dairy and this kind of garbage didn’t exist.”
About 80 percent of all plastic ends up in landfills or the ocean, and grocery packaging creates more waste than the popular scapegoats of plastic bags and straws. “We can’t recycle or clean our way out of this. We have to stop the waste from entering the system to begin with,” Skazy said.
By mid-May, products from Loop will initially be available online to customers in Paris through Carrefour and, in the U.S., in New York, New Jersey and Pennsylvania. TerraCycle is finalizing grocery partnerships in the U.S. and Toronto, adding distribution through London’s Tesco later this year, and targeting Tokyo in 2020.
Loop will collect a refundable deposit that customers will get back when they return their containers. UPS will pick up the empties for no additional charge. Even allowing for the energy required to transport and prepare the products for reuse, the program reduces waste, TerraCycle says. It won’t stop the stream of plastic waste entering the ocean, but the containers do recover their environmental cost of production after three or four uses.
The brands developed the durable containers with their own product designers. Clorox wipes will come in a shiny aluminum tube, Tropicana orange juice and Hellman’s mayonnaise will ship in durable glass. For Haagen-Dazs, Nestle designed a double-walled aluminum jar that actually keeps ice cream colder than the waxed-cardboard disposable packaging.
“Reusability does bring an additional element of complexity,” said Simon Lowden, president of PepsiCo’s Global Snacks Group. The company’s designers wanted to keep the packaging looking “fresh and untampered” and make sure it can be cleaned multiple times. The beverage company is also betting on reusable packaging in other parts of its business, most notably its $3.2 billion acquisition of SodaStream last year.
“We are looking to help build a world where plastics need never become waste,” Lowden said. “Trials like this help us evaluate the future potential for reusable models and our ability to scale initiatives.”
The packaging is about twice as expensive for manufacturers to produce, but the cost is offset through accounting rules that allow companies to depreciate the expense for wear and tear.
TerraCycle has invested about $10 million in the project, using its free cash and raising capital. “It’s a very big bet, but why not?” Szaky said. “Baby boomers look at this nostalgically and say this is how we used to do it, while millennials say, ‘I’m sick of all this plastic waste.’”
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