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RECYCLING

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Sustainable electronics transforming consumer tech companies by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Sustainable Electronics Transforming Consumer Tech Companies

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Globally, electronics are discarded at alarming rates, generating unprecedented amounts of e-waste. On the other side, finite resources such as minerals and metals, which are used to make these electronics, are getting depleted. To foster sustainability across the electronics value chain, many tech companies are adopting strategies such as incorporating long-lasting product design, using recyclable and biodegradable materials, using clean energy for power generation, etc. However, the sustainable electronics concept is still in a nascent stage of adoption, and a lot of work needs to be done. Strict legislation, cross-sectoral collaborations, organizations facilitating networking and knowledge sharing, and changes in business models are needed to implement sustainability across various business units in the electronics industry.

Growing need for sustainability in electronics

Global consumption of electronics is rising exponentially and is expected to double by 2050. This increase is set to adversely affect the environment, leading to more mining of raw materials, an unprecedented increase in e-waste, and increased carbon emissions during manufacturing.

Globally, people are discarding electronics sooner than before due to the availability of new electronics, owning outdated models, obsolescence, etc. Over the last few years, nearly 50 million tons of e-waste has been generated annually. Only 17% of this e-waste is recycled globally, and the rest is transported and dumped in developing countries such as Pakistan, Nigeria, and India, which do not have adequate facilities for processing and handling e-waste. This e-waste ends up in landfills, accounting for approximately 70% of hazardous chemicals, and pollutes the air and water streams. Moreover, e-waste generated globally contains recyclable or reusable raw materials, scrap rare earth metals, plastics, and valuable elements, which are valued at US$62.5 billion per year.

Given the economic and environmental cost of e-waste, as well as responding to growing consumer preference for sustainable products, several companies are looking to transition to sustainable electronics. Sustainable electronics are products that are made using recycled or reusable and biodegradable materials, as well as products that generate low carbon emissions during manufacturing and distribution.

Sustainable electronics transforming consumer tech companies by EOS Intelligence

Sustainable Electronics Transforming Consumer Tech Companies by EOS Intelligence

Recycling, clean energy power, and modular design for sustainable electronics

Over the last few years, consumer tech companies have been adopting many strategies for manufacturing electronics sustainably. In 2021, tech giants Cisco, Dell, Google, Microsoft, Vodafone, and many others together formed a “Circular Electronics Partnership (CEP)” to accelerate the circular economy for electronics by 2030 and to help businesses and organizations overcome barriers to sustainable electronics.

Several companies are looking to increase the life span of their smartphones to make them more sustainable. Increasing the phone’s life span by two years can reduce carbon emissions to a great extent, as 80% of the carbon emissions come during manufacturing, shipping, and the first year of phone usage. Fairphone, a Dutch-based smartphone manufacturer, has introduced smartphones with a lifespan of approximately 5 years, higher than the average lifespan of 2.5 years. Similarly, Teracube, a US-based sustainable smartphone manufacturer, has launched phones that can last up to 4 years.

Many companies are also designing their products with modularity, which allows users to repair, upgrade, customize, and disassemble their gadgets easily. For instance, Framework Computer, a US-based laptop manufacturer, sells laptops that can be upgraded. The company offers upgrading kits that contain laptop main boards and top covers to customize the device as per the user’s need. Similarly, Fairphone manufactures modular smartphones, which are easy to repair and upgrade. These kinds of gadgets eliminate the user’s need to buy new ones, saving both costs and wastage.

There is also an increased interest among consumer electronics companies to use recycled materials in various products. Sony, a Japan-based multinational corporation, has developed a recycled plastic, SORPLAS, and has been using it in a range of its products, such as audio systems and televisions, since 2011. In 2022, Logitech, a Swiss-American manufacturer of computer peripherals and software, used recycled plastic in 65% of its mice and keyboards. Similarly, in 2021, Acer, a Taiwan-based electronics corporation, launched a series of PCs named Vero, which uses recycled plastics for the chassis and keycaps. Acer also launched the Earthion program, an eco-friendly initiative, in the same year and started working closely with suppliers and partners to bring various sustainability measures in product design, packaging design, and production. Tech giant Apple stopped selling chargers and headphones along with the iPhone in 2020 to cut e-waste. The company used 20% recycled material in all its products in 2021 and uses robots to disassemble or separate metals from e-waste. There is 40% recycled content in the MacBook Air with Retina display, and 99% recycled tungsten is used for the iPhone 12 and Apple Watch Series. Samsung, a multinational electronics corporation, is using recycled plastics in refrigerators, washing machines, air conditioners, TVs, monitors, and mobile phone chargers.

Due to this increased demand for recycled materials, recycling companies are receiving investments to a significant extent. In 2021, Closed Loop Partners, a US-based investment firm, invested an undisclosed amount in ERI, a US-based electronics recycler that supplies materials to companies such as Best Buy, Target, and Amazon, to extend the capacity for the collection and processing of electronics. Similarly, in 2022, the Australian Business Growth Fund (ABGF), an investment fund focused on small to medium-sized Australian businesses, invested US$7.5 million in Scipher, an Australia-based urban mining and e-waste recycling business.

Significant activity has been happening in the refurbished electronics market as well due to the rising consumer awareness of sustainability. Trade-in and refurbishment reduce e-waste piling up at landfills, as it limits buying newer gadgets and thereby paves the way for greater sustainability across the electronics industry. Back Market, a France-based marketplace of renewed devices (which provides refurbished devices with a one-year warranty), has raised over US$1 billion since its launch in 2014. In 2022, Verdane, a European specialist growth equity investment firm, announced an investment worth US$124 million in Finland-based Swappie, a re-commerce company that sells previously owned, new, or used smartphones. Vodafone also announced a major initiative to extend the life of new mobile phones and to encourage customers to trade in or recycle their old devices. The company is planning to provide customers in European markets with a suite of services, including insurance, support, and repairs for their devices, in 2022. Samsung collaborated with iFixit, an online repair community, for its self-repair program in 2022. The company said that under this program, Galaxy device owners in the USA can make their own repairs to the Galaxy Tab S7+, Galaxy S20, and S21 products using easy-to-repair tools available from iFixit.

Tech companies have also started transitioning to renewable energy and looking for ways to reduce their carbon emissions. Intel, a US-based technology company, uses green energy of up to 3,100,000 MWh annually in the manufacturing of processors and computer accessories. Samsung’s facility operations in the USA and China switched to 100% renewable energy in 2019. In 2021, Microsoft entered into a partnership with IFC, a member of the World Bank Group, to reduce carbon emissions in the organization’s supply chain. IFC is said to work with selected Microsoft suppliers in emerging markets, primarily in Asia, to identify technical solutions and financing opportunities to reduce emissions in the production process.

Legislation to aid the shift toward the circular economy in electronics

For years, many countries did not have appropriate policies enforcing sustainability across the electronics industry. Nevertheless, the trend is reversing with several countries adopting legislation for the circular economy. For instance, in 2020, the European Commission announced a circular electronics initiative that would promote eco-design (a design that considers environmental aspects at all stages of the product development), right-to-repair rules, including a right to update obsolete software, and regulatory measures on universal chargers, to name a few. France became the first European country to pass the Anti-Waste for a Circular Economy Act (AGEC) in 2020, which requires producers of electronic devices to provide details on how repairable their products are. According to AGEC, manufacturers are required to scale their products at a rate of 1-10 based on the reparability index. France also plans to introduce a durability index by 2024, whereby manufacturers would be asked to describe the full lifecycle of their products. Moreover, the US government passed an order in 2021 to draft regulations that protect the consumer’s right to repair electronic devices and other tools.

It is not easy to manufacture sustainable electronics

While sustainable electronics are the need of the hour, and several leading players have already started promoting and investing in this space, the sector faces many challenges. Currently, there are no established standards, concepts, or definitions concerning sustainable electronics, and there is no strict legislation to enforce sustainability practices in the electronics industry. There are some rating systems that identify energy-efficient products followed in the USA and Europe (for example, the USA’s ENERGY STAR program). However, registering and complying with the ratings and their requirements is up to the manufacturer and is not mandatory. Moreover, e-waste regulations in several countries are poorly enforced due to low financing, and illegal practices such as dumping e-waste and incineration by the informal sector still persist.

Most electronics companies are also not transparent about their environmental performance, and the impact is often hidden. The term ‘sustainable’ is widely misused as a promotional tactic by companies targeting environmentally conscious consumers.

The electronic industry also operates on a linear established model, wherein products are manufactured (with planned obsolescence) and sold to consumers. Incorporating circular strategies for recycling and reuse requires a lot of remodeling and reconfigurations across the supply chain, and the rising consumption of electronic devices makes it difficult to adapt to any new changes. Challenges, such as complex recycling processes, costs of recycling, and consumer perception of green electronics, also hamper sustainability development. Most electronics are not designed for recycling and are made of a complex mixture of materials such as heavy metals, highly toxic compounds, glass, plastics, ferrous and nonferrous materials, etc. Recycling these materials is tedious and involves several steps such as dismantling, removing the hazardous waste, shredding into fine materials, and sorting the materials into various types. The process is also resource and cost-intensive, requiring human labor, more processing time, and adequate infrastructure such as various material screening types of equipment. Recycling e-waste could also be polluting, with potential exposure to toxic metal fumes.

Finally, the perception of consumers about sustainable electronics also needs to be changed, which is challenging. There is a notion among customers that the use of recycled, sustainable materials in electronics means products would be of lower quality. A lot of investment would be required to educate and convince consumers about the benefits of sustainable electronics and to address any concerns about quality. In most cases, it is difficult to pass on these costs to the consumers as they are unlikely to accept higher prices. Thus, this cost would be required to be absorbed by the companies themselves. Due to this, most current initiatives toward sustainable electronics can be best described as half measures.

EOS Perspective

The economic benefits of sustainable electronics are enormous. The resource scarcity and the price fluctuation of various minerals and metals make them necessary to recycle, recover, and reuse in the circular economy. Over the last few years, consumer electronics manufacturers have taken many sustainability initiatives, such as reducing energy consumption, eliminating hazardous chemicals, introducing biodegradable packaging, incorporating recycled and recyclable materials in products, and investing in renewable energy projects. Also, the refurbished electronics segment is growing fast, while interest is surging in introducing devices with built-in reparability. While several small initiatives are being taken by leading players, electronics manufacturers mainly do not know how to introduce sustainability across their products in a mainstream fashion.

Sustainability in electronics has still a long way to go. Several legislative initiatives are underway toward a circular (sustainable) electronics economy, and it is high time for electronics manufacturers to be proactive and rethink their business models. A complete business model transformation is required to integrate sustainability across every unit. Cross-sector collaborations with stakeholders such as product designers, manufacturers, investors, raw material producers, and consumers are crucial to understanding the technical know-how. It is essential to analyze the entire life cycle of products, from choosing raw materials to their disposal, and to prioritize circular strategies for such products. Electronic manufacturers also need to come up with creative and rewarding ways for consumers to be willing to choose sustainable products, as, in the end, the industry cannot flourish without consumer acceptability. The future of sustainable electronics can be bright, and manufacturers who see this as a potential business opportunity rather than a problem will benefit in the long term.

Upcycling A New Trend in the Food Industry by EOS intelligence
by EOS Intelligence EOS Intelligence No Comments

Upcycling: a New Trend in the Food Industry

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Upcycling, a growing trend in the food industry, uses surplus food and food by-products to produce products such as dietary supplements, beauty products, nutraceuticals, or animal feed. Food businesses are looking at upcycling as one of the strategies to reduce the amount of food waste they generate. However, they face continued challenges around unmarketable ingredients, process costs, and consumer acceptance. To ensure success of this niche sector, fostering partnerships to collect food by-products, collaborating with government institutions for technical know-how along with initiatives that promote upcycled food waste products could go a long way.

Burgeoning need for upcycling food waste

UN estimates that nearly 33% of the food produced globally each year is either lost (in the form of any edible food that goes uneaten, crops left in the field, food that gets spoiled in transportation or does not make it to the stores) or wasted (food discarded by retailers due to color or appearance, food left on the plate at restaurants, and scraps from food preparation at home). This accounts for 1.3 billion tons of food worth approximately US$1 trillion, enough to feed 3.5 billion people.

Moreover, food wastage contributes to 10% of global greenhouse gas emissions and is a huge burden on the environment and natural resources. As more and more food waste ends up in landfills, it produces methane, considered to be eight times more harmful than carbon, thus contributing more to global warming than automobile emissions.

Upcycling is one way that can help mitigate the ill effects of food waste, to a certain extent. Upcycling uses food by-products, produce with visual imperfections (produce often unattractive to sell due to color or appearance), food scraps, and surplus food to make new products. It is forecast that, in 2022, the market size for products made from food waste will be approximately US$53 billion and is expected to reach US$83 billion by 2032, growing at a CAGR of 4.6%.

Upcycling – A New Trend in the Food Industry by EOS Intelligence

Repurposing food waste into value-added products

Driven by sustainability, repurposing food waste offers a plethora of opportunities for start-ups and other players to make value-added products such as beverages, food products, dietary supplements, nutraceuticals, animal feed, cosmetics, and personal care products. Companies are coming up with innovative solutions to convert food by-products and surplus produce into something reusable and resalable.

Upcycled food

In 2021, Nestle Australia launched a carbonated soft drink called “Nescafe Nativ Cascara”, which uses cascara, the husk of the coffee berry fruit which is discarded in coffee production. Another interesting upcycling initiative taken by Nestle Japan is “Cacao Fruit KitKat” which uses the white pulp surrounding the cacao beans (70% of the cacao fruit is wasted and only the beans are used to produce chocolate). Moreover, in June 2022, Barry Callebaut, a Belgian-Swiss chocolate manufacturer, also launched whole fruit chocolate made from 100% pure cacao fruit.

Taking a step ahead, companies are also investing to set up research centers and business verticals that focus entirely on food waste upcycling. Nestle invested approximately US$4 million and expanded its R&D center in Singapore to focus on upcycling food waste and plant-based innovation. Another American-Irish agricultural corporation, Dole, is partnering with the Singapore Economic Development Board and has formed “Dole Specialty Ingredients”, a new business arm that uses food waste to produce specialty ingredients such as enzymes, seed oils, fruit extracts, etc.

Bakery industry is another sector that holds significant potential for upcycled food waste products. For instance, ReGrained, a food technology company, based in the USA, is using leftover spent grain from brewing beer and turns it into nutritious flour called ReGrained Supergrain+, which is then used to produce snacks bars. The company also sells this flour to other food producers. Another US-based food company Renewal Mill, uses byproducts of plant-based milk to develop high fiber, gluten-free flours which are used in cookie mixes.

Food waste is also used in beverage processing. WTRMLN WTR, a food processing firm based in the USA, uses watermelons that are discarded due to aesthetic reasons and upcycle them to make flavored water. WTRMLN WTR is currently available at 35,000 retail stores across the USA. Another UK-based brewing company, Toast Ale, uses surplus bread from bakeries to brew beer. To date, the company has salvaged approximately 2.6 million surplus bread slices that would have otherwise gone to waste.

Several companies also upcycle the not-so-appealing fruit or vegetables to produce food products such as sweet and savory snacks, condiments, etc. For instance, Barnana, a US-based banana snack company, uses bruised bananas and produces snacks such as dehydrated banana bites, plantain chips, and crisps. The company has used roughly 50 million metric tons of not-so-good-looking bananas and plantains since its inception in 2013. Rubies in the Rubble, a UK-based company, produces condiments such as plant-based mayo, apple relish, and spicy tomato relish from imperfect produce rejected due to size and aesthetics.

While most of the applications for upcycled food waste ingredients have been in baking, beverages, and snacks, other interesting applications are also emerging. For instance, Scraps, a start-up based in New York, USA, uses excess or bruised basil leaves and odd-shaped peppers to make frozen pizzas. Unilever uses ice cream, not used in the primary production process, and mixes it with chocolate sauce and white chocolate chips to create a new flavor called “Cremissimo”. White Moustache, a US-based yogurt company, makes probiotic tonics from whey, a by-product of yogurt. Austria-based Kern Tec, a fruit seed producer and processor, uses the pits of cherry, apricot, and plum, and transforms them into protein powders and oils.

Beyond food

Food waste can also be used to make products beyond food. Wastelink, a food upcycling start-up based in India, collects food waste from 300+ distributors and factories across India and converts it into nutritional-rich feed for animals. Over the past two years, the company has upcycled over 5,000 metric tons of food waste. Wastelink raised over US$1.2 million in seed funding in June 2022.

Food by-products are also finding its acceptance in the textile industry. Orange Fibre, a sustainable textile company based in Italy, has partnered with Lenzing Group, a producer of wood-based specialty fibers, to produce Lyocell fiber made from orange juice and wood pulp.

Japan-based PEEL Lab started in 2021, is another innovative start-up that upcycles plant and fruit waste into plant-based leather. The company’s products include bags and wallets (made from apple and pineapple leather), yoga mats (made from bamboo leather), and apple leather coasters.

TripleW, a biotech company based in Israel, utilizes food waste for the production of polymer grade lactic acid, which is further used to make Polylactic acid (PLA) bioplastics used in food and beverage packaging, car parts, toys, textiles, and kitchenware, among others.

Upcycling food waste has also found applications in the beauty industry. Circumference, a New York-based skincare brand started in 2018, sources unused olive leaves from California-based olive oil company Brightland, to produce an antioxidant extract, which is used in the brand’s cleanser. The company previously launched a moisturizer using leftover grape leaves. Another US-based skincare company, Farmacy, uses left-over apple extract in its cleansing balm. Klur, a US-based beauty brand, utilizes avocado and tomato seed oils discarded by the food businesses to produce cuticle oil. Another interesting use of food waste in the beauty industry is adopted by France-based beauty brand Kadalys, wherein they extract bio-actives from bruised bananas to be used in their skincare products.

Challenges concurrent with upcycling food waste

Upcycling food waste poses many challenges. Most companies in this space are small and have limited product mix due to lack of consistent supply of upcycled ingredients. Another concern is maintaining the quality or freshness of the ingredients throughout the product lifecycle. Since these are mainly by-products or scraps, doubts on how these are stored (whether in a temperature-controlled environment or what sort of hygiene procedures are followed, if any), transported, and handled prevail.

Consumer acceptance is another challenge pertaining to upcycled foods. Consumers are often reluctant to buy upcycled food products owing to concerns about the quality of the ingredients used. Educating consumers that upcycled food is not just made from food scraps or leftovers but also from by-products which are nutritious and safe to consume is a daunting task. Moreover, the general perception that upcycled products are often priced higher further reduces consumers’ willingness to buy them.

EOS Perspective

Upcycling food waste is slowly but surely gaining acceptance, but still needs to go a long way to get established as a mainstream market. Owing to its environmental and economic benefits, the trend of upcycling is here to stay. ReFed, a non-profit organization in the USA, which strives to reduce the food loss and waste across the USA, claims that just by converting food by-products such as spent grains, fruit or vegetable pulps, and rinds into a new ingredient or an edible food product could save nearly 1.87 million tons of food waste diverted to the landfills resulting in financial benefits of US$ 2.69 billion each year.

Food waste industry offers multitude of opportunities for partnerships and cross-sector collaborations among start-ups, established food brands, food producers, philanthropic organizations, and technology and supply chain solution providers. For instance, ReGrained, in partnership with USDA (United States Department of Agriculture) developed a patented technology to convert spent grain into flour.

Several companies are also partnering with food producers for a consistent supply of raw materials. For instance, Barnana is partnering with farmers across Latin America to procure bananas and plantains on a large scale. Food producers are also working together in order to reduce food waste. An example of this is Kellogg’s UK’s partnership with Seven Bro7hers Brewing, a brewery company based in the UK, to turn its waste corn flakes into beer. Moreover, retail stores such as MOM’s Organic Market, an organic grocery chain in the USA, have also started dedicating shelf space for upcycled food products.

In addition to partnerships, philanthropic organizations such as Upcycled Food Association (UFA) also play an important role in reducing food waste by educating and connecting upcycled food companies globally to become a part of the growing upcycled food economy. Formed in 2020, UFA strives to improve the upcycled food supply chain. Currently, the association is a network of more than 180 businesses from over 20 countries. Credited with launching the world’s first third-party certification program for upcycled food ingredients and products, “The Upcycled Certified Standard” in 2021, UFA has received preliminary approval (in February 2022) from USDA FSIS (The Food Safety and Inspection Service), to include their certification mark in the FSIS-regulated ingredients and products. As of February 2022, nearly 400 products are waiting to be certified by the UFA. This initiative aims at educating consumers about the impact of upcycled food on environment and the economic potential it holds.

Furthermore, in 2021, UFA together with ReFed also launched the “Food Waste Funder Circle”, a network platform for private, public, and philanthropic funders for educating, collaborating, and investing to raise capital needed to reduce food waste by 50% by 2030 within the USA. Such initiatives highlight that the upcycling food waste industry has immense growth potential.

In the long run, it seems that upcycled products made from food waste could become a part of day-to-day life. Global appetite for sustainability is increasing and so is the upcycled food waste industry. Eventually, it is all about building an all-inclusive food system for a sustainable future.

by EOS Intelligence EOS Intelligence No Comments

Is Sustainability Just Another Buzzword in Food Packaging Industry?

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Sustainable food packaging has recently received an increased attention within the food & beverage sector. Most players try to make sure not to miss any chance of communicating their concern over plastic waste to the general public, showcasing their initiatives taken to curb the waste. Are such initiatives taken out of actual concern or are they just a move to position the brands right in the ‘environmentally-concerned’ market?

It is assumed that packaging is considered sustainable, if it meets three criteria of sustainability. First, it should be economically viable for the consumers as well as the manufacturers. Second, it should be socially acceptable in terms of ease of use, transporting, sorting, and storing. Most importantly, third, the packaging must be eco-friendly through the use of materials that are responsibly-sourced and reusable/recyclable, to reduce the environmental impact of the packaging.

Change fueled by multiple triggers                 

Food and beverage (F&B) and related packaging industry players have been under a growing pressure to be more transparent and to introduce changes to the way food products are packaged. Considering that a significant share of non-sustainable, non-biodegradable waste, especially plastic, comes from food industry, improving the packaging and transitioning to more eco-friendly solutions is becoming imperative, rather than optional, for increasing number of F&B companies.

At the same time, the pressure to reduce waste and protect the environment from non-biodegradable substances is creating new opportunities for the packaging materials producers and for F&B companies with regards to more relevant brand positioning in this highly competitive industry.

While a lot has been changing in the packaging sphere under the heat from environmentalists and legal requirements introduced by regulators, the role of an aware consumer exerting pressure through product scrutiny and shopping choices should not be underestimated in this process.

According to a report published in April 2019 by Globalwebindex, a market research company, there has been a rise in the number of consumers globally who are willing to pay more for eco-friendly/sustainable products (including their packaging), from 49% in 2011 to 57% in 2018. Consumer awareness is growing fast thanks to governments’ initiatives, educational media, and activists’ social media efforts, all of which have triggered an increased sense of responsibility amongst many consumers, who start to understand the importance of switching to eco-friendly and sustainable packaging.

Increasingly, consumer awareness is going beyond just passive understanding and translates into actions which have a real power to change F&B sector’s approach to food packaging. Consumers vote with their spending dollars and exert pressure by switching their loyalty to other brands, both of which approaches appear to be quite effective. According to the same survey by Globalwebindex, 61% of consumers are likely to switch from their currently-used brands to more environmentally-friendly ones if the latter score better on the environmental friendliness front. This shows that F&B companies really do need to re-think their product and packaging choices and start putting money and effort in sustainable solutions, if not from real concern over the environment, then for retaining consumer trust and maintaining brand values.

Big F&B brands appear to show initiative

The increased scrutiny over F&B companies’ packaging choices has already started bringing some results. Several major players are looking to invest in transforming their packaging materials to sustainable ones. Despite the challenges in bringing innovations into packaging materials and designs, and altering their supply chain, several F&B players are claiming to strive for their sustainability goals. Some claims may surely be genuine but some could possibly be a strategy to get the ‘sustainable company’ tag to stand out from the competition in the F&B industry.

Understandably, players are very vocal about their initiatives targeted at improving their eco-friendly standing to appeal to the environmentally-concerned consumers. F&B brands such as Coca-Cola, PepsiCo, Unilever, Nestle, to name a few, have already announced time-bound plans to revolutionize their packaging models.

For example, in January 2018, the beverage giant Coca-Cola announced a goal to collect and recycle the equivalent of every bottle it sells globally by 2030. The company with its bottling partners started an initiative with a plan called “World Without Waste” that is focused on entire packaging cycle from designing and manufacturing of bottles to their recycling. For the execution of this plan, the company plans to educate the public on what, how, and where to recycle, teaming up with local communities, NGOs, industry peers, and consumers. Furthermore, under the plan of “World Without Waste”, the company aspires to create packaging from at least 50% recycled materials by 2030 and continue pursuing the goal to make all consumer packaging 100% recyclable by 2025.

Is Sustainability Just Another Buzzword in Food Packaging Industry? by EOS Intelligence

In addition to this, in October 2019, Coca-Cola European Partners (CCEP), the largest independent Coca-Cola bottler, announced it would switch the carriers on its multipacks from shrink wrap to paperboard to reduce packaging waste. The company claims that with this switch it will remove about 4,000 metric tons of single-use plastic per year from its current supply chain. The paperboard packaging is planned to be certified from either the Forest Stewardship Council (FSC) or the Program for the Endorsement of Forest Certification (PEFC). Similarly, in January 2019, Coca-Cola packaging partner, Coca-Cola Amatil Australia, announced to cease the distribution of single-use plastic straws and stirrers, and distribute biodegradable Forest Stewardship Council accredited recyclable paper straws.

According to a report by Packaging Gateway, Coca-Cola claims to have made 88% of the consumer packaging recyclable, while its packaging used 30% of recycled material by the end of 2018. Also, about 58% of the equivalent of bottles and cans introduced by the company into the developed markets were refilled, collected, or recycled during 2018. Overall, the company’s recover and recycle rate was said to be 56% in 2018 as compared to 59% during 2017 or 61% in 2014. This proves that with growing sales, Coca-Cola’s efforts might not make as much impact as the company would want the public to think.

Nevertheless, the company is undertaking further initiatives to improve its environmental score. It committed to invest US$15 million in Circulate Capital, an investment management firm dedicated to incubating and financing companies and infrastructure that work upon curbing the plastic waste thrown into the oceans. Further plans of the company include increasing the use of recycled plastic in Australia by 2020.

In another example, PepsiCo also talks about becoming an environment-friendly company, announcing to use 25% of recycled content in its plastic packaging by 2025. In order to meet its target, in September 2018, the company announced its participation in the World Economic Forum’s Global Plastic Action Partnership (GPAP). The partnership focuses on stakeholders located in coastal economies, such as those in Southeast Asia, and its purpose is to help businesses, communities, and local governments redesign waste management to create circular models that include collecting waste and recycling or composting it to reduce waste streams to the oceans or landfills.

PepsiCo also announced other targets for improved sustainability to be achieved by 2025. These include to re-design all of its packaging to be recyclable, compostable, or biodegradable, to reduce virgin plastic content by 35% across its beverage portfolio, and to amp up investment to increase recycling rates in key markets.

Apart from individual targets, another initiative was also launched in October 2019 jointly by a few beverage players. As reported by a publishing firm, William Reed, three beverage companies, Coca-Cola, PepsiCo, and Keurig Dr Pepper, announced their partnership with World Wildlife Fund, The Recycling Partnership, and Closed Loop Partners under the “Every Bottle Back” initiative. This initiative, starting in late 2020, will include investment of US$100 million and will focus on sorting, processing, and collecting discarded plastic bottles in four US regions. The initiative also targets to educate consumers that PET bottles are 100% recyclable, easily remade into new plastic, bottles, shirts, shoes, coats, park benches, and playground equipment, by introducing pack label messaging.

Smaller players are emerging with packaging innovations

The pressure to embrace sustainable packaging is even greater for smaller and mid-size F&B companies, if they want to stay relevant to the customers, grasp their attention, and grow own market share. Smaller players in the industry seem to understand this and have proven to be more agile in introducing new products that focus on organic ingredients with sustainable packaging, while challenging big brands’ prices.

For example, in March 2016, Alter Eco Foods, a San Francisco-based chocolate-centric, healthy indulgence, and sustainability-oriented food brand, launched the first stand-up pouch made from renewable plant-based materials, designed for storing quinoa grain. This innovative pouch named “Gone 4 Good”, is not meant to be recycled but to be thrown in a composting bin where it will disintegrate within three to six months. Made from eucalyptus and breech trees for the exterior and compostable resin called “Matter-Bi” for the interior, the pouch has several green certifications. Apart from this, in early 2019, the company also transitioned its chocolate truffles packaging from non-recyclable plastic pouch to a recyclable paper box and claims to be looking for solutions to replace its current plastic Coconut Cluster pouch, since it is yet not recyclable or compostable. The company is determined to make all its products packed in 100% recyclable or compostable packaging by December 2020.

Another player, B.O.S.S. Food, a Texas-based nutrition bar company, started selling its premium nutrition bars in compostable wrappers made by TIPA (an Israel-based compostable packaging company) in 2017, focusing on ensuring the products’ packaging is environmentally safe. TIPA’s packaging is a bio-based blend with all the properties of normal plastic but is certified for both home and industrial composting through OK Compost mark by the TUV institute. The packaging also complies with food contact regulations in Europe and the USA.

Similarly, a UK-based beverage company named Earlybirds launched a 100% plant-based packaging for its breakfast drinks – bottles and lids made from sustainable sugarcane, over the span of two months of September and October 2019. The launch made the packaging 100% compostable as per EU biodegradability standards. The company’s advertisements claim that, under the right conditions, the bottle will breakdown in twelve weeks and it can be thrown in food waste bin and then composted at an industrial composter, reducing it back to soil. The company is the first in the UK to launch sustainable packaging for beverages.

These are just a few of several smaller F&B companies, which are focusing on bringing new packaging solutions to improve their rating as environment-friendly companies in the eyes of consumers. The initiatives are worth the effort, even though players face quite a few challenges in embracing sustainable packaging over traditional packaging.

Such challenges include higher costs, choosing the right material for packaging that must comply with the standards of environmental safety, as well sustaining the quality of the food product. It is estimated that the companies are required to spend nearly 25% more on the sustainable packaging than on the traditional packaging. This higher cost is attributed to major shifts in supply chain, including (but not limited to) procuring the raw material for packaging to collecting the used packaging for recycling. Another major factor contributing to higher costs of sustainable packaging is the R&D expenses that must be borne by the companies. The solutions still require a lot of research, as there are still very few commonly-used technologies and packaging products, thus a lot of players need to invent them. The companies need to invest considerable sums in developing an environment-friendly packaging material that is viable for their food product to sustain throughout the supply chain as well as shelf life, and (equally importantly) has the aesthetic appeal to grab the consumer’s attention.

But despite being smaller in size and having to deal with challenges, companies such as Alter Eco, B.O.S.S. Food, or Earlybirds have been investing extensively in R&D, a fact that resulted in several of them coming out with better and innovative packaging solutions. In fact, at times, smaller scale of operations works to these players’ advantage, as they do not have the constraint of having to convert the existing large-scale traditional packaging lines to ones suited to deliver new format or feature of packaging. Therefore, many efforts undertaken by smaller players seem to be converted into tangible solutions and launched more quickly and easily, also giving the companies a great marketing advantage over large F&B brands.

EOS Perspective

With the rise in awareness about plastic waste and environment safety among consumers, along with regulations formulated by governments across many countries to curb plastic waste, it has become paramount for F&B companies to enter the path of sustainability. At the same time, sustainability is becoming an important element of many companies’ marketing strategy to get ahead of the competition (or, increasingly, not to stay behind other players). The latter reason alone makes it no longer a matter of choice for F&B companies whether to keep assuring the public about efforts undertaken towards improving own sustainability rating across the supply chain.

Certainly, it is doubtful whether all these F&B companies are capable of actually achieving the claimed sustainability. On the one hand, there is a doubt if the scale of their efforts is relevant enough to bring about an actual change and not remain just a PR tool. On the other hand, the doubts seem to be really justified considering the challenges associated with achieving true sustainability goals.

The challenges range across many aspects. These include the complexity of the required changes in the supply chain, which involve both radical and incremental change, from manufacturers to users, owing to alterations in packaging materials and designs.

Another major challenge is the higher cost associated with changing the packaging materials from plastics to renewable or compostable materials. This starts with the development of the right product’s packaging material to ensure stable and long shelf life, and safe transportation with minimal waste, all of which is particularly challenging when dealing with food products. The costs and complexity of the task is further increased by the responsibility of creating an infrastructure for recycling of the packaging materials and taking the onus of collecting and recycling the packaging of own products, if not directly then through well-planned network of third-party entities.

Considering the complexity of these challenges and the high cost of going up the sustainability ladder, many F&B companies are likely to not be able (or to not want to) work towards full sustainability across their supply chain. In the midst of the growing pressure to meet the sustainability criterion, it is possible that some of the players might quietly opt for less sustainable solutions or stick to only those changes that are most visible to the consumer’s eye.

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Beverage Industry in Troubled Waters, Attempting Conservation Efforts

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Water is a finite resource, which is becoming constrained with the growing population and climate change. It is a vital component in production of beverages, both alcoholic and non-alcoholic. From growing raw materials (such as wheat or barley) for beverages, through product development, till the production process, water is indispensable at each step. The beverage industry has come to realize that water scarcity could tremendously impact businesses, forcing them to reassess water management strategies and tap into efficient conservation measures.

Water covers around 70% of the earth’s surface and only 3% is available as freshwater, which can be used for various commercial and non-commercial activities. Unfortunately, this quantity of water is inadequate for growing population and thriving businesses using this resource without considering its limited availability. According to WWF, an international NGO for preservation of wilderness and nature, two-thirds of the world’s population may face water shortage by 2025, with demand for water exceeding supply by 40% by 2030.

Beverage production is highly water-intensive, with water being used at each step across the value chain. According to Water Footprint Network, it takes at least 70 liters of water to produce 0.5 liter of soda, 74 liters of water for a glass of 0.25 liter of beer, and 132 liters of water for a cup of 0.125 liter of coffee. Water footprint for beverage companies is evidently high, and this can be mitigated by implementing water management technologies across the value chain, from farming to beverage production.

Water scarcity posing challenges for beverage producers

Water stress is a pressing problem for all beverage industry players, causing various operational challenges that are impacting business operations.

Opposition to water extraction from natural resources

California suffered a searing seven year drought that ended in 2017. Distress from water scarcity impacted communities, as well as companies operating in the region. For instance, Nestlé, a Swiss multinational food and beverage company, faced opposition from local communities and criticism from conservationists for extracting large quantities of water from Californian springs even during the drought-stricken years.

These events impacted Nestlé’s operations and eventually, succumbing to the pressure, Nestlé invested US$7 million in conservation projects across five of its bottling plants in California in 2017. The projects focused primarily on reducing the amount of water used in filtration process while simultaneously maintaining hygiene of the processing plant. Only after consistent water conservation efforts, Nestlé was granted a three-year permit by US Forest Service in 2018 to extract water within the limit of 8.5 million gallons annually from Californian springs.

Similarly to Nestlé, Coca-Cola faced opposition from local communities in India resulting in closures of two of its bottling plants located in the states of Kerala (in 2004) and Uttar Pradesh (in 2014), due to extensive water extraction from local resources. In order to sustain operations, Coca-Cola announced plans to invest about US$5 billion between 2012 and 2020 to help replenish groundwater in India, allowing the company to also use water for beverage production.

Water shortage impacting business operations

According to global survey of 600 companies by Carbon Disclosure Project (CDP), water scarcity and stricter environmental regulations cost businesses around US$14 billion in 2016. Many companies agreed that water-related issues have affected their businesses directly or indirectly.

For instance, severe droughts in Southeast Brazil in 2014 and 2015 disrupted water supply in the area, limiting production capacity and disturbing operations of Danone, a French multinational food and beverage corporation. As a result the company suffered sales loss of ~US$6 million in 2015.

Not only Danone was affected. As Brazil is one of the world’s leading coffee producers, limited availability of water for irrigation due to the drought, crop production in the region took a hit. Eventually, the situation threatened supply, which led to higher raw material prices for coffee manufacturers. One of the producers that felt the repercussions was J.M. Smucker, an American producer of food and beverages, reported a net loss of US$90.3 million in 2015 due to higher coffee bean prices in Brazil.

Tapping into innovations to reduce water consumption

Water risk for beverage companies highly depends on external factors, such as water quality and availability either through natural resources or municipal bodies. Industry players have very little control over the external factors but can regulate water usage in their internal manufacturing operations to reduce consumption.

Recycling water using zero water technology

Beverage companies are collaborating with technology providers to incorporate innovative water recycling methods.

For instance, in 2014, Nestlé collaborated with Veolia Group (a French company providing water, waste, and energy management solutions) and GEA Group (a German food processing technology firm), to introduce Cero Agua (zero water) technology across dairy production plant in Lagos de Moreno, Mexico. Using the technology, the factory does not have to rely on external water sources. Instead, it recycles and reuses the waste fluid extracted from milk – Nestlé extracts 1ml of water from every 1.6ml of milk. The treated water is used in non-food production applications such as cooling, irrigating the gardens, and cleaning, thus, eliminating the need to depend on external water sources. The company has invested around US$15 million to introduce zero water technology in the plant.

With the help of this technology Nestlé claims to have saved 168 million liters of water in the first year of implementation, reducing water consumption by more than 50%. Zero water technology has been rolled out across its other diary factories located in water-stressed areas of South Africa, India, China, to list a few.

Moreover, between 2004 and 2014, Nestlé claims it was able to reduce water consumption globally by one third and by 50% across its Mexican plants.

Onsite wastewater treatment

Brewing companies are not far from adopting technologies to reduce water footprint. Waste water treatment is one of the effective ways to reuse water and several brewing companies have jumped on the bandwagon to conserve water using this approach.

Since 2014, Lagunitas Brewing Company, a subsidiary of Heineken, has been using EcoVolt membrane bioreactor, a wastewater treatment technology that removes up to 90% pollutants from water so that it can be reused onsite for cleaning purposes. Using this solution, the company has reduced its water footprint by approximately 40%.

In 2016, Bear Republic Brewing Company, a brewery based in California, invested US$4 million in a waste water treatment system that uses electrically active microbes to purify wastewater, which helps the brewery to recycle about 25% of water that it uses to clean factory equipment.

Furthermore, in 2015, a Boston-based craft brewer, Harpoon Brewery, collaborated with Desalitech, a US-based water treatment company, to produce beer made from treated Charles River water. Desalitech uses its ReFlex Reverse Osmosis systems to purify the river water and has been able to recover 93% of the treated river water to brew beer.

Innovative farming techniques

Farming is highly water-intensive and sustainable beverage production can only be achieved if water consumption is cut down during farming. Hence, companies are employing various water management solutions to check water utilization during farming.

In 2014, Anheuser-Busch, an American brewing company installed six AgriMets, a network of agricultural weather stations, in Idaho to provide farmers with real-time weather and crop water use data. Using AgriMet data, growers can monitor rainfall and soil conditions, which helps them to cut down on the amount of water required in irrigation and decide when to irrigate. This ensures efficient use of water across the fields.

Further, for improving water management, the company is employing various seeding and harvesting techniques – for instance, it plants and harvests winter barley earlier in the year, resulting in 30% higher crop yield and 40% lower water usage.

PepsiCo and Coco-Cola have been promoting drip irrigation (a type of irrigation system where water is allowed to drip slowly to the roots minimizing evaporation) in water-scarce Indian states of Maharashtra, Gujarat, Karnataka, Haryana, among others. Coca-Cola started with drip irrigation project in 2008 with 27 farmers covering 13.5 hectares of agricultural land in India, which expanded to over 513 drip irrigation systems installed, stretching across 256.5 hectares of agricultural land by 2011. Drip irrigation leads to significant water conservation, with an average saving of 1200 kiloliter/ hectare of water for a cropping cycle of 110 days/hectare (an agricultural cycle comprising activities related to the growth and harvest of crops). Additionally, savings on account of electricity, fertilizers, and pesticides are estimated at about US$ 29/hectare/year.

Beverage Industry in Troubled Waters - EOS Intelligence

EOS Perspective

For decades, water has been regarded as free commodity in processing and manufacturing environments, but this notion is beginning to change with growing awareness about water scarcity. Limited availability of water puts pressure on industrial activities and often pushes operational costs of beverage companies up. Availability of water is likely to get worse in the future, which could jeopardize operations of food and beverage companies unless the crisis is treated as a priority.

The solution to water scarcity lies in the hands of businesses as much as the governments of various countries. Water management requires stringent policies by the governments to better regulate the use of groundwater or natural resources for irrigation. The governments also need to implement efficient wastewater management and recycling technologies to conserve water. Countries such as Singapore have undertaken water recycling and management measures, but unfortunately such examples are relatively scarce in other parts of the world, with most conservation efforts being implemented only by large food and beverage companies. It is time that the governments as well as all industry players (including small-to-mid sized companies) wake up to the challenges that lie ahead owing to water stress.

Solutions to water scarcity do not always need to be expensive. Small-to-mid sized companies could start with small and inexpensive measures such as installing flow meters or leak detection systems, measuring water usage at each step and setting short and long term goals to reduce consumption across those processes.

Other measures could be to reduce water consumption across most water intensive processes, such as cleaning, which typically accounts for 60% of a beverage plant’s total water consumption. Water could be replaced with dry ice to manually wash equipment or it can be physically cleaned using vacuum systems or high-pressure hoses that can be used to move debris.

Nonetheless, sustainable water management efforts by large beverage companies have resulted in lowering of operational costs, improvement in quality of final products, and in building better brand perception among customers. These strategic advantages could motivate all industry players to reduce water footprint and play their part as responsible water users.

plastic waste landfill
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Commentary: How USA Can Deal with Its Waste Crisis

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It is not often that one can hear that a US$100 billion industry is in tatters, however, this is currently the reality in case of the US recycling industry. For years, the USA has been dependent on waste exports, to countries such as China, India, and Korea. However, that dependence has now placed the USA in a very difficult position, as the implementation of National Sword policy by China, the largest export destination for US waste, amidst the China-USA trade disputes, resulted in waste exports coming to a virtual halt since the start of 2018.

With waste generation growing, the USA has been left scrambling to look for alternative destinations for its waste, the largest being India, Malaysia, Thailand, and Vietnam, albeit none of them capable of completely compensating for waste exports to China. Recently, in March 2019, India also banned imports of plastic waste, eliminating another major avenue through which the USA could get rid of its trash.

US dependence on exports for waste recycling meant that the development of domestic recycling facilities has been neglected. The country’s domestic waste recycling sector is now incapable of handling the ever-increasing waste, a major chunk of which ends up in landfills, creating other environment and health-related problems.

However, where there are challenges, there are opportunities as well. We look at what challenges the USA currently faces, and how the recycling industry is trying to adapt and come up with potential solutions to the country’s waste problem.

USA’s linear model left recycling industry unprepared

Traditionally, US municipals have depended on external companies to dispose their waste. Most disposal companies follow a linear model, under which they collect the municipal waste and then segregate it for further processing (with majority of it previously being exported to China). This dependence on waste exports led to limited investments in developing or expanding the domestic recycling infrastructure, which the country has been left to rue in the wake of the waste import ban imposed by China and India.

Limited capacities have put extra burden on the system. Moreover, elimination of revenue from scrap sales to China puts additional economic pressure on waste processors. As a result, many waste collection agencies have either suspended waste pickup or raised prices to dispose of waste. Municipals too have to bear greater economic burden. Cities, which were earlier paid for their waste, are now being charged significant amounts for hauling waste.

Current waste disposal process is not up to the mark

Another key challenge is the lack of sorting at source, i.e. at the household level. Due to consumer’s preference, the USA follows a single-stream recycling system, where all recyclables are collected in the same receptacle. With no segregation happening at this stage of waste collection, the processor is responsible for sorting different type of materials for recycling.

However, the lack of capacity and established infrastructure makes it difficult and expensive to sort these waste materials, resulting in most of the waste being discarded, either ending up at an incineration facility or a landfill, which are much more cost-effective compared with recycling. Currently, only 10% of plastic waste generated in the USA is recycled, while 75% of it is discarded in landfills (remaining 15% being incinerated to form electricity – but that too has its critics due to the pollution caused).

How USA Can Deal with its Waste Crisis

Recycling companies invest to boost processing capabilities

Impacted by the loss of the key buyer and facing own limited capacities, several smaller recycling companies reliant on exports to China have shut down their operations, while several other recyclers have been forced to reassess market strategy from exports to processing.

Several recycling companies have already started investing to develop their domestic waste processing and collection infrastructure. As an example, Waste Management, a US-based waste disposal and recycling services provider, invested more than US$110 million in 2018 alone in developing additional processing capacity, acquiring new technologies, and boosting waste collection infrastructure.

Robotic technology is likely to witness more investment

With limited capacities and waste production growing, there is a need to improve the overall efficiency of waste sorting and recycling process. Companies across Europe and Asia Pacific have been researching and developing trash robots (also called “trashbots”) capable of collecting, sorting, and recycling waste and other scrap materials.

The trend is now catching up in the USA as well. Waste Management has already installed a waste sorting robot at one of its material recycling facilities, and plans to install three more robots in 2019. The company is also planning to install additional screeners and optical sorters at its facilities.

New opportunities are emerging in plastic waste recycling

With a significant focus on promoting sustainability, several other companies also see recycling as a promising business opportunity, thereby driving investment in recycling infrastructure. GDB International, a US-based company selling plastic scrap to international markets, was impacted by the Chinese import ban, and decided to invest in developing its own recycling capabilities. The company plans to recycle plastic scrap domestically, and sell recycled plastic pellets to plastic product manufacturers within the USA and abroad.

EOS Perspective

Chinese and Indian waste import bans have jolted the US recycling industry as a whole, pressing it to search for a solution to its swelling problem. The industry is witnessing problems which question the entire structure of the industry and challenge companies to reconsider their commonly utilized business model – shifting from a linear model to a circular economy.

The most obvious solution for the US recycling industry, in the short term, is to consider alternative waste destinations, such as Vietnam, Malaysia, and Thailand, to share the waste burden. However, since none of these markets are developed enough to sustain over a long term, this solution, at best, can be considered a temporary fix.

The government needs to take several initiatives to lay a strong foundation for a revamped recycling industry, such as banning or restricting the use of hard-to-recycle plastics (including single-use plastics such as straws and disposable spoons), and laying down strict guidelines for sorting of waste already at the household level, which will improve the efficiency and costs associated with the recycling process.

A coalition of plastics players and other industry groups is lobbying for provision of funds by the US government, an investment of US$500 million, to help develop local waste management systems. If disbursed, these investments will enable development of the recycling industry until it becomes self-sufficient in handling domestic waste. Once this happens, the costs of disposing and processing waste are also likely to reduce.

In the long run, significant private investments in building domestic recycling capacities will be required to effectively address the ever-increasing waste. Excess waste, which was earlier exported to China and India, offers a sustainable source of raw materials to justify these investments in developing the recycling infrastructure. Furthermore, increasing focus on sustainability is driving a demand for recycled raw materials. Development of downstream recycling and processing capabilities can also enable recycling companies to tap this lucrative business opportunity. Partnerships with end users are likely to open further revenue stream.

While private investments in recycling infrastructure have started flowing in and the rate is expected to pick up, these investments will take time before the added capacities actually become operational. The success of these investments, however, will depend on how effectively the US government is able to execute initiatives to aid growth of domestic recycling industry.

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