Case study: which business models enable prevention of waste in the plastic packaging industry
1. The players involved in the plastic packaging value chain
As you might be already aware, big brands, retailers and other stakeholders are increasing their commitments to introduce new systems for closing the loop on plastics, most notably the New Plastics Economy Global Commitment and Alliance to End Plastic Waste. To better understand who is involved in introducing innovation within the plastic packaging industry, let’s identify the stakeholders of the plastic packaging value chain.
At the start of the value chain we find the raw material suppliers. For example, for petrochemicals derived plastics the material suppliers polymerise fossil fuels into polymers. Traditional polymers follow the process of fossil fuels being converted into chemical monomers, which are then converted into polymer materials.
Examples of material suppliers: BASF
Thereafter we find the compounders that prepare plastic formulations by mixing and/or blending polymers and additives in a molten state. Once the mix reaches the desired characteristics, it is extruded into solid strands and then granulated into pellets.
Examples of compounder: Evonik
At this point, converters take the plastic pellets and covert them into shapes through moulds. Converting technologies for hard packaging include thermoforming, blown film extrusion, rotational moulding, blow moulding, injection moulding.
Examples of converters: APLA
The next phase consists in filling the packaging with contents. Here we find either brands owners who outsource the packaging suppliers and fill the packaging with the content they produce. During this phase, assembly machines of considerable size take the empty packaging, fill it and usually apply the labels.
Example of fillers: KRONES
Distributers & Consumers
Thereafter the packaged product is shipped to the customer via distributers. The latter can be online retailers or brick&mortar retailers. Specifically for FMCG the products will reach a point of sale before reaching the end-consumer. During the consumption phase, the consumer has the power over the packaging’s end-of-life, or at a more general level he defines when the product becomes waste.
The end-of-life of the packaging consists in collecting and recycling the material that composes the packaging. Municipalities are responsible for collecting household waste. Collection is one of the most challenging phase because it relies on the consumer disposal, and the current way of collecting does not focus on the variety of types of plastics that packaging is made of. This is why after collecting, a complex sorting process is necessary to obtain a valuable secondary raw material.
The recycling process results into a secondary raw material, which is sold back to the compounder to obtain a material that has a technical performance meeting markets standards.
Example of recyclers: VEOLIA
Of course the above list is not exhaustive. Many more players are involved in the plastic packaging supply chain, especially if we look more precisely at product category. However, I wanted to give a general overview of the major players involved.
2. Gathering data on the current status of innovation in the plastic packaging industry
During a research project, funded by the Climate KIC, called eCircular (Catalysing a switch to a circular economy through plastic waste prevention) we joined a consortium, including the Wuppertal Institute, TU Berlin, TU Delft, Circularise and Ciruclar Berlin. Together we gathered data on the current status of innovation in the plastic packaging industry for decreasing the amount of plastic waste it generates.
As a first step, we carried face to face interviews with selected industry partners. These included ALPLA (converter), BSR (recycler), Bio Futura (distributer), BeoBottle (distributer). To gather additional data, we participated to the biggest plastic packaging tradeshow in the world, the K-Messe. Every 4 years, the most prominent packaging manufacturers, technology providers, material suppliers as well as recyclers gather in Düsseldorf to showcase their technologies.
We gathered a list of enablers and barriers to reducing plastic waste coming from the packaging industry:
- No holistic legislation covering the entire value chain of plastic packaging
- Difficulty to determine technical specs of the material of a packaging product once it becomes waste
- Challenge to obtain good quality recyclates (the offer does not meet the demand for recycled material)
- Technical difficulty to process plastic waste and recover it, due to contamination during collection
- High costs and long timelines for testing new technologies and materials
- Challenge to measure the impact of the supply chain and understand the environmental impact of materials and of the supply chain steps (no standard way to measure the impact from packaging)
- Low prices of plastics does not incentivise producers to take it back or track it
- Financial incentives enabling return, for instance the deposit scheme for plastic bottles (in order to increase collection)
- High sustainability regulatory pressure pushing brands to search for sustainable products (putting pressure on brands and producers)
- Consumers demand more transparency and evaluation of the impact on the environment
- Industry understanding of finite fossil fuels sources
- Knowing precise technical specification of the waste mix
- Higher market demand for recycled material
3. Industry perspective on plastic packaging innovation results: which business models enable prevention of waste in the plastic packaging industry
Plastics recycling is becoming an attractive business. Since the demand for good quality recycled material is increasing, new recycling technologies are appearing. Chemical recycling is being vastly researched, as an alternative to mechanical recycling (which requires too many technical sorting processes). There are too many limitations to mechanical recycling, as the final secondary raw material obtained does not have a high enough quality to be used for producing the same product where the waste came from. This means that the recycled material is not often recyclable a second time. On the other hand, chemical recycling enables to obtain a much purer material to re-enter the loop as new material for producing the same product.
Another example of new plastic recycling technology is based on enzymes, which break down plastics. Rebios is an example of this new recycling technology, based on enzymatic recycling.
The biggest challenge for recycling is the collection. Since collection of waste is mainly controlled by municipalities and recycling companies, it is very difficult to introduce much innovation. Some startups have started to introduce products which enable the tracking of a household’s generation of waste, such as the French start up Uzer. They give the control to the consumer, who, by scanning the barcode on the packaged product, can understand how to dispose of his waste.
Since there is a common understanding that industry will eventually exhaust our fossil fuel resources, packaging producers are turning to material substitution. Producers starts offering alternative materials to virgin plastics. Bioplastics are on top of the list. They are indeed the most trending in the current packaging market. Some bioplastics companies include Braskem, Full Cycle Bioplastics, Natureworks. Even tough bioplastics are not always the most environmentally friendly alternative to fossil fuel, the demand for these is increasing.
In addition to bioplsatics, adding a percentage of post-consumer or post-industrial (recycled) plastic to the material mix is also a diffused strategy, however as mentioned before, the quality is often an obstacle to the application of such material.
The last business model that we would like to mention is the redesign of the packaging with the end-of-life in mind. Two strategies which enable prevention of waste and contribute to the creation of a circular business model: design for reuse and design for recycling. In the case of design for reuse, the objective is to bring a multi-usable product on the market, which preferably has to be made of durable materials. The strategy focuses on product as a service and development of product loyalty. The lifespan of the packaging can be considerably increased by putting in place a reusing system.
Design for recycling addressed the pressure for industry to meet higher recycling rates. A product which is easier to be recycled benefits recyclers and an increase in the availability for good quality recycled material. This approach requires the involvement of the user to make sure that the right disposal of packaging is known.
Marilu is an award-winning designer, actively working in the circular economy field. She consults on sustainable product strategy and she designs innovative packaging solutions. Her experience combines a creative approach with the technical experience of packaging manufacturing and plastic recycling.
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