Tackling the accelerating plastics crisis: The return of the milkman
May 07, 2019
Since Sir David Attenborough’s Blue Planet 2, we’ve seen a groundswell movement to raise awareness of the accelerating plastics crisis - and a global call to action to urgently find solutions. This has driven a resurgence in support for reusable and refillable packaging. We’ve recently seen some interesting experimentation with reusable packaging from packaging providers and consumer packaged goods companies. In January, TerraCycle made a big splash, launching its high-tech Loop platform in partnership with huge consumer brands at The World Economic Forum in Davos. A far more humble idea is reemerging in the UK, with Milk & More taking to scale the old fashioned notion of the milkman delivering milk to your door every day in reusable containers (although now powered by an app, of course!).
Could these brands capture this retro chic approach and make it the default model for consumption in the modern world? When thinking about whether they will succeed or not, it is worth asking why we stopped using reusable packaging in the first place.
Why did reusable formats drop out of use in the first place?
There are a few reasons for the changes over the past 3o years:
- Cost: Lighter, less fragile materials like carton board and plastic came down in price. The machines used to fill them also increased in speed and this lowered production costs.
- Capital efficiency: When a consumer buys a product in disposable packaging, they pay for both the product and the packaging. When they buy a product in reusable packaging, they only pay for the product inside. The reusable packaging belongs to the producer - and the capital costs of that packaging continue to sit on the producer’s balance sheet. So by moving from reusable to disposable packaging, producers could lower the amount of capital required and increase their return on capital (even if the gross profit from products sold in reusable versus disposable packaging was exactly the same).
- Changes in the product: Products today come from a cleaner production system and stay fresh for longer, so daily deliveries are no longer necessary.
- Consumer preference: Consumers’ lives changed, with the weekly supermarket shop seen as a cheaper alternative offering more choice.
When you look at how the high street has changed, it doesn’t take much to see that many of these points are being challenged. Consumers have started to shop online more and from a variety of sources, so home delivery is once again the norm. Can the cost disadvantages be overcome in this new world?
In with the new returnable solutions
There is a plethora of new services coming for consumers. These include premium reusable containers which enable brands to offer new experiences to consumers, with packaging that can be collected, returned and refilled. The great advantage of the premium model is that the additional revenue for a premium experience may offset the cost and capital efficiency problems of using returnable packaging.
What hurdles remain for new returnable solutions?
Transport remains a challenge - while returnable packaging could well reduce plastic use and perhaps littering, it does tend to be heavier. Consolidation of manufacturing sites and improvement in logistics means that production now happens much further away on average than it used to, which means you are transporting a heavier container over a longer distance - resulting in increased greenhouse gas emissions.
The second issue is one of losses. The vegetable delivery company I use for weekly organic vegetables claims to lose 1 in 9 of its boxes. Each lost box is a financial loss for the company. But it’s also a loss for the environment because the lost box can’t be reused and will end up being replaced - which increases the environmental impact of the system overall. Even a low loss rate might tip the balance of whether or not a reusable packaging system beats a one-way packaging in overall environmental terms.
The third issue is that of manufacturing impacts. Reusable packaging is made to last - and, compared to plastic, making packaging from more durable materials (such as glass or metal) generally results in greater greenhouse gas emissions. In order to repay this extra environmental burden, reusable packaging needs to be used many, many more times than its plastic counterpart - so we should only commit to the higher manufacturing impact of producing reusable packaging if we are confident that it will be reused many multiple times in practice.
What is the solution here?
I welcome new returnable packaging ideas as an attempt to solve this difficult problem - in fact I’ve just signed up to get milk from a delivery service, which I am looking forward to starting.
I think those businesses that are advocating returnable packaging on environmental grounds need to understand the key factors that could undermine the environmental benefits. Once they have understood those factors they need to manage them - by designing targets and driving the organisation to achieve them. The good news is that many of the factors will align to positive financial outcomes – e.g. reducing losses of the boxes and containers has a positive financial impact - a win-win all round. If we can find a way to overcome the hurdles that remain for reusable packaging, perhaps we can herald in a new era for the return of the milkman.