Key ingredients for scaling circular reuse business models
Companies are setting bold goals that address plastic waste and prioritize plastics reduction and recycling. The media and influencers have woken the public to the need to support solutions to this global challenge, and governments are taking big and small steps to build effective policy.
We are at a moment where we have the political will from most stakeholders to solve this issue, but in order to maintain that will, we must leverage the current momentum to show real progress in the coming years.
There is no silver bullet. We need to use every tool in the box to achieve this outcome — new material science, packaging redesign, recovery innovation and the subject at hand, reuse.
Just a few years ago the idea of scaling reuse habits among the public would have felt like an unlikely reality. But today, large consumer goods companies and retailers realize that contemporary reuse models can and must be part of solutions for addressing plastic waste and consumption.
Because of this, we are seeing a wave of innovation in reuse business models. We are excited by the solutions we are seeing and are supporting innovation through our investment funds and our Center for the Circular Economy at Closed Loop Partners.
Cost competitiveness: We know consumers want to reduce waste, but we have little evidence that reusable solutions will scale if they are more expensive than conventional packaging — especially if we want to reach beyond the high-income, sustainability-oriented consumer. This is why we love our newest investment, Algramo. Its vending machines dispense staple products, such as household cleaners and grains, "by the gram" to customers. It’s an elegant solution that incentivizes consumers to reuse a single chip-enabled bottle to fill up their detergent, saving consumers money and helping them accrue value with each use. And with an 82 percent return rate in Santiago, Chile, and integration with big brands such as Unilever, we expect fast adoption as Algramo expands into new markets such as the United States, India and Indonesia.
Convenience:Will the consumer need to take extra steps to embrace a reuse model? Do they need to remember to bring packaging with them? These are barriers to the success of Algramo’s program. Companies such as CupClub, RECUP and Muuse, all winners in the NextGen Cup Challenge, help take the onus off the individual by allowing consumers to get a reusable cup at the point of retail and drop it off at convenient drop spots.
Ease of integration: Loop has built a system that handles all of the logistics for the brands via online ordering and delivery. For these models to evolve into retail at scale, they will need to work with existing point of sale systems, reward programs and store set-ups.
Measurable impact: Some reuse and return models that are compared to the old "milkman model" produce new impacts from cleaning, transporting and potentially using more material to create durable packaging. Companies will need to prove that these new impacts are minimal when compared to the impact of single-use packaging. Glass refill models such as Conscious Container have clear data on the model showing that a refillable 12-ounce glass bottle has a 95 percent lower carbon footprint than a single-use 12-ounce glass bottle.
Health and safety standards: Brands and retailers need to pass strict health and safety standards to minimize risks. There is a huge opportunity for local governments to advance this work by clarifying regulations around liability for safety of reusable containers.
What’s next? We are on the cusp of a reuse revolution and expect to see more big innovations related to other applications, such as shopping bags and food packaging.
Reuse will be a growing part of the plastic solution portfolio used by brands and retailers. It’s certainly not going to solve the whole plastic waste challenge, but as more of these models come to market, we are excited to see new solutions that collectively build reuse back into our cultural and behavioral norms.