This is the choice bev/al execs face: Invest in innovative packaging or improve recyclability. That Hobson’s choice is being driven by rising input costs and growing sustainability concerns, according to analysts at Rabobank.
When it comes to recycling, the U.S. is failing miserably. Japan, Brazil and China all recycle 98% or more of aluminum cans, Europe recycles 76.4%, and the U.S. just 52.1%. The picture on recycling PET bottles is even worse — Japan recycles 92.2%, China, 75%; Europe, 63.7%; Brazil, 55%, but the U.S. recycles only 30.6%. At least when it comes to recycling glass bottles, the U.S. isn’t dead last: At a 54.6% glass bottle recycling rate, the U.S. follows Japan (86.2%), Europe (78.6), but leads Brazil (47%) and China (35%).
Why the high recycling rate in Japan? It is among the early adopters of the extended producer responsibility framework, which shifts the responsibility for a product’s post-consumer lifecycle to companies from municipalities.
The Rabobank analysts expect the extended producer responsibility system to spread in the United States, following its adoption in Maine in 2021, followed by Oregon. Currently, Rabobank says, 17 states are considering expanding the EPR regime to food and beverage packaging.
Improving recycling rates will change the mindset involved in packaging design. One example: Sprite and 7UP have ditched traditional colored bottles in favor of transparent, colorless designs. This doesn’t change the amount of plastic, but makes it a lot easier to recycle. Another example: South Korea has moved toward label-less packaging.
Rabobank expects net-zero ambitions — a result of government changes , investor pressure and sourcing innovations to drive decisions about the packaging mix. You see this already, with companies such as Heineken and Pernod Ricard committing to achieving net-zero emissions targets, including their supply chains. For Diageo to meet its stated goal of 100% recyclable packaging by 2030, it will need to significantly reduce glass bottle weights or shift some product to PET.
One of the more fascinating developments is Lasso Loop, a machine that is slightly larger than a dishwasher. It sorts, cleans and palletizes up to seven common packaging materials, which the company repurchases from the consumer at a pre-determined price. Lasso Loop, says Rabobank, “has the potential to create a paradigm shift in packaging sustainability performance.”