Tom Szaky, founder and CEO of TerraCycle and founder of the Loop global shopping platform.
The transition to reusable packaging is now being seen as a must in the consumer packaged goods industry. The pressure is on from the international community—take the United Nations treaty on plastic pollution and calls from organizations like Greenpeace, for example. And reuse legislation is on the way. As far back as 2020, French law 2020-105 called for 10% reusable packaging on the market by 2027. Recently, the European Commission issued a proposed revision to its Packaging and Packaging Waste Directive that includes reusable packaging mandates. Among the controversial targets: reusable packaging for 95% of cold and hot beverage cups by 2040.
Even the world’s biggest packaging creators have set specific commitments in response. In February 2022, Coca-Cola set a target of 25% reusables by 2030. PepsiCo recently followed suit, with a target of 20% by the same year.
The time to begin transitioning to reusables is now, and many companies are launching reuse pilots. But can they meaningfully implement at scale?
Reuse is scalable—it's proven Let’s start with the main methods for approaching a reusable packaging program. You could opt for a concentrate, refill, or prefill model—each of which boasts success stories.
With concentrate-based systems, companies remove the water from their products, delivering them in capsule, tablet, or other concentrate form. Shipping is inexpensive, and “just add water” is relatively easy for consumers. Look to the cleaning product company Blueland to see this model in action.
Refill can be approached through in-store or at-home models, with consumers either refilling their own packaging at kiosks in stores or receiving refill packs directly at home. For the former, picture classic bulk bins full of cereals, pet food, and laundry powder, or more modern Algramo refill vending machines. For the latter, consider Above & Beyond, which sells its lip balm in an aluminum case and then sends refills to users in compostable pods.
Then we have the prefill model, in which consumers can pluck prefilled items off of shelves. They pay a deposit that they receive back when they return the empty container. Prefill has been proven time and again. Great examples are the German beverage system, The Beer Store in Canada, and our propane tanks in the U.S.
With Loop, consumers can purchase a range of products in prefilled, reusable/returnable packaging, either online or at select retailers across three continents.From a personal perspective at Loop, we’ve found our prefill strategy to be highly scalable. It’s convenient for all stakeholders and, most importantly, it can be deployed in all product types (from ketchup to shampoo to tea), which isn’t true of concentrates or bulk bins. Consumers still get to grab a package right off the shelf, rather than having to fill a container.
When it comes to operations, Loop has successfully passed all quality and safety audits from our partners and has proved that it can reuse a wide variety of products—from baby food with Gerber to motor oil with Shell—in a wide range of materials, shapes, and forms. It has been operational across channels, from e-commerce to in-store, has become fully integrated into its retail and brand partners’ supply chains, and has successfully handled deposit reimbursement to consumers by leveraging its own online application as well as through the cashier or via smart bins.
Loop also has proven scalability. With successful pilots across three continents, Loop has shown that reuse can successfully be applied to any packaged good at large. The consumer response has been very strong and consistently reconfirmed via both qualitative and quantitative research. In-market sales showed up to 4% conversion, and return rates were up to 80%. A McKinsey & Company study, commissioned by one of our partners, also proved that the model was as profitable as single-use for both brand and retailers.
All this is to say that prefill reuse works. The key now is focusing on scale.
What’s needed to scale? As consumers are ready to adopt refillable options, the true roadblock to scalability is that reuse is often not made a commercial priority. Through our learnings from launching and growing Loop, we’ve identified four aspects needed to scale a reuse program.
1. Make it a commercial priority: To be successful, reuse has to be a priority across the entire corporate ecosystem, from commercial to supply chain to packaging suppliers to retailers. Too often, reuse is seen as simply a sustainability pilot (with no commercial ownership) versus a commercial priority. The key KPIs should not be learnings and publicity but objective volume shift from disposable to reusable.
Health drink brand Pocari Sweat in Japan approached the launch of its reusable packaging with a comprehensive public relations, social media, and POS marketing strategy.2. Support it in market: It’s been shown that if a reusable version of a product is supported, it can outsell its disposable counterpart. For example, health drink brand Pocari Sweat in Japan approached the launch of its reusable packaging just like the launch of a brand-new product, with a comprehensive public relations, social media, and point-of-sale marketing strategy. Products were sold out every single day across 66 stores for the first weeks and continue to outsell the brand’s disposable products.
3. Create the right value equation: Approach reusable package design from a product innovation standpoint. What value can reuse help unlock? Durable packages have the opportunity to deliver extra benefits to the consumer. For instance, we found that reusable Häagen-Dazs containers had a number of new functional benefits as well as better aesthetics.
4. Pick scalable materials: We learned that stainless steel or aluminum, while durable materials, can be less scalable because they are more expensive than durable plastics and are not compatible with existing fill lines. A more scalable alternative for some companies could be to transition packaging that is single-use today into something durable enough to be reusable—for instance, by swapping PET to PP or simply increasing wall thickness, which would mean existing production molds could still be used.
The reuse revolution is here
The world wants reusables, and legislation is coming. Organizations that start planning for reuse now will be ready for the inevitable mandates and gain a competitive advantage.
While shifting to reusables is an important and necessary step, it’s not the answer. As we always say, the only real solution to the waste crisis is for us all to buy less.
Tom Szaky is founder and CEO of TerraCycle and founder of the Loop global shopping platform.
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