Reusable packaging is not new or novel: These solutions have existed for much longer than single-use packaging. However, digital tools are giving reusable packaging a new wave of life, potentially allowing for significant benefits and accommodating shifting consumer preferences around sustainability and brand interaction. Innovative reuse business models can help deliver a superior user experience, gather user insight, build brand loyalty, optimize operations, and help reduce single-use packaging waste. Reusable packaging could be a critical part of the solution to eliminate plastic pollution. CPG companies are also quickly exploring reusable packaging for food products with various business-to-consumer (B2C) reuse models that differ in terms of packaging "ownership" and the requirement for the user to leave home to refill/return the packaging. The companies developing reusable packaging solutions claim the benefits for adopting this business model include reduced overall energy and resource load of the packaging system and reduced plastic pollution, and such schemes cost less when done at scale. In this blog, we break down the technologies, players, and challenges in reusable packaging.
Consumer demands are now more sophisticated than ever and include personalization, quality, and positive environmental impact. Reacting to user preferences, retail is now physical and digital. Innovative reuse models can tap into these shifting preferences by, for example, delivering better-looking, more functional packaging that gathers valuable user intelligence and allows the user to customize the product. However, consumer behavior is unpredictable, and to ensure adoption, brands will need to make the solution as convenient and efficient as possible. This will require cooperation from across the value chain with different partners working closely together to enable reusable packaging.
There are 5 necessary features for the success of reusable packaging:
- A container return scheme with technology solutions to ensure high collection and return of packaging
- Retailer cooperation to take empty packaging back
- Investment in reverse logistics, distribution, and key infrastructure (e.g., cleaning, coatings)
- Standardization and premiumization of packaging
- Measures to ensure convenience, efficiency, and public awareness
There are 3 core digital technologies to enable reusable packaging:
- Deposit-based systems have been used for milk bottles, beers, and some other beverages in the past and have acceptable effectiveness for consumer use. However, studies have shown consumers moving toward buying a plastic bottle of milk that they can easily dispose of over opting into the glass bottle return system. Mass consumers prefer the ease, comfort, and minimal upfront cost of single-use packaging over deposit-based reusable packaging.
- Gamification in packaging can be used to create deeper connections and engagement with the consumer, provide educational experiences, manifest a sense of fun, and keep consumers focused on your product. This is a less trialed solution and so may be less reliable but could be a good method to test consumer buy-in for change. Starbucks' "Bring Your Own Cup" is an example of this, as consumers are rewarded with a discount for bringing their own containers but face no consequence otherwise. Sadly, only 1% to 2% of Starbucks customers bring their own cup, so gamification may not be an effective model at a large scale.
- Digital marker tracking and sorting, such as using blockchain, RFID tags, or chemical markers, allows companies to track and retrieve the packaging. This packaging could be returned to partner stores, or using collection bins, or through buy-in from waste sorters. A digital solution is effective, but it requires cooperation and buy-in from different members of the value chain and can be challenging to implement. A few startups and SMEs have piloted this technology.
There are limited available partners in the space, with TerraCycle's Loop being the leader. The business case of and interest in reusable packaging spiked in 2019. Lux expects the market landscape to boom with new companies in the following year, with emerging and existing companies developing solutions to enable reusable packaging. The figure below shows the overall technology landscape through the logistic value chain to enable and enhance the trip of a returnable bottle.
Unfortunately, there aren't many companies in the reuse packaging industry for returnable and refillable beverages. However, this is quickly changing, with more solutions emerging. One interesting partner for clients to consider collaborating with is ReLoop. Reloop is a platform focused on bringing together industry, government, and nongovernmental organizations to form a network for advances in policy that create opportunities for reusable packaging and enabling system conditions for circularity. ReLoop is located in the U.K.; regulations for sustainable packaging seem to be moving faster in the EU, and a country in the EU would be a good location to trial a reuse business model. This partner can help find more partners throughout the value chain and assess the policy drivers that may be required for mass adoption of reusable packaging.
There are 3 main key takeaways for reusable packaging:
- It is very unclear if reusable packaging is a viable solution to the single-use waste problem – it is highly dependent on consumer behavior changes that cannot be guaranteed or relied upon. But it is a solution that is growing in popularity; clients should cautiously engage with this solution to pilot test it, or alternatively monitor other companies' projects to see the end results for mass adoption.
- With the COVID-19 pandemic, coatings and cleaning of reusable packaging are critical. Barrier coatings and ownership of cleaning in the value chain will be important areas of development. Aesthetics and convenience are also critical for mass adoption of reusable packaging. Consumers cannot be relied upon for change, so alternate solutions need to be as transitional as possible.
- Companies like TerraCycle's Loop, CupClub, and other service providers essentially provide a platform to "test the waters" of reusable packaging, but these providers are not essential to the overall value chain. CPGs and brand owner companies can and should eventually directly provide reusable packaging to retailers and establish a leaner value chain to avoid dilution and complicate the logistics of a complex business model. Fundamentally, the CPGs and brand owners are the more critical partners in the value chain and will determine the adoption of reusable packaging.
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