SOURCE: UPSDESCRIPTION:Tom Szaky | TerraCycle Quint Marini | UPS Walter Peterson | Nestlé
Editor’s note: Lauren Phipps, Circular Economy Director and Senior Analyst at GreenBiz Group, recently hosted a panel on “Delivering Circularity” at GreenBiz 19 to discuss one of the most innovative solutions in reusability: Loop.
The following is a condensed version of a conversation between Phipps, Tom Szaky, CEO and founder of TerraCycle, Walter Peterson, Manager of Packaging Innovation and Sustainability at Nestlé, and Quint Marini, Packaging Laboratory Manager at UPS.
Lauren: To start off, Tom, can you give us a high-level view of what Loop is all about?
Tom: Loop is an engine. It’s an engine for brands to enable durable versions of their products and an engine for retailers to be able to embed that into their ecosystem, both e-commerce as well as in store.
So effectively you would see your favorite product like Häagen-Dazs ice cream now packaged in a durable alternative both in store and online. The idea really is to shift ownership from the consumer owning their packaging to the manufacturer owning the packaging.
This packaging is reusable but also has unparalleled design. The Häagen-Dazs container has extended cooling capability, which allows the ice cream to stay fresh and frozen for longer.
So it’s not just about reuse. It’s about redefining the future of consumption.
Lauren: And Quint, talk a little bit about how UPS brought this to life.
Quint: I run the package design and test lab at UPS. Our group focuses on two major things: damage reduction and optimization. You want to be able to optimize the package-to-product ratio — the more robust the product, the better the packaging system.
So there are two work streams for evaluating packaging. The first one was more of an in-house, package-design testing platform, where we perform tests to identify and resolve weak points in the packaging.
The second part had more to do with the environment the package would be shipped in. To test this, UPS and TerraCycle would send the packages back and forth, take pictures, get on the phone and discuss it.
Lauren: And where does Nestlé come into play?
Walter: As a company, we’re constantly exploring different business models. A couple of years ago, TerraCycle came to us, as they were going around to a lot of the other suppliers, and said, do you want to be part of this? And of course we said, yeah, but — there were a lot of those responses.
We toyed with exactly which products to use, and we toyed with different parts of products in our portfolio. We ultimately chose the Häagen-Dazs brand. Everybody likes ice cream, so it was the right fit for this particular supply chain.
Lauren: I want to ask you about the economics because single-use plastics and packaging is popular for a reason — it’s easy, you don’t have to deal with it once it’s out of your hands. So how does this actually pencil out to the economic level for the different pieces of the puzzle?
Tom: So today when you buy a product as a consumer, you pay 100 percent of the price of the package in the price of your product. And you own it. In a durable, loanable version, you borrow the package, which means you don’t pay for it at 100 percent.
Instead, you substitute that for the depreciation of the package, which is the cost of making it, the cost of making, say that seventh-generation hand soap over the total number of times that can go around. So you depreciate over the total number of uses. That’s the depreciation cycle.
This comes in line with the general concept of disposability. So what you will be able to do is access products like this and pay about the similar price, which means in some cases, the exact same price. In some cases it may be a little more. But never the cost you would pay if you had to pay for this on your own.
Walter: We discovered that there’s really no precedent for what we are doing – we’re crossing new ground.
In a lifecycle analysis, end of life really determines where that usage would be. And what people don’t sometimes put in lifecycle analysis is the social impact of these polyethylene cups that we’re putting into the environment and the whole design around getting that cup to us, supply chain, filling it and so forth.
So we looked at it a little bit differently. We looked at it from, of course, a financial perspective. But we also looked at what would be the social impact if we went this way versus another way. We joined this program because we saw a very positive end of life for this type of packaging.
Lauren: What is the incentive for UPS’s involvement in a project like this? Why not continue with business as usual?
Quint: I think this is a game changer. I think TerraCycle put a stake in the ground, and we’ve been talking about things like this for a long time.
We deal with a lot of customers that do warranty. That’s easy. That’s coming back and forth. But I think this is a real difference maker.
This enables commerce, and having 29,000 Access Point locations around the globe gives us another way of pointing people to turn in their packaging to get reused. And that’s what we all want.
Lauren: I think people are wondering, how many times can you reuse these containers?
Tom: There’s two types of containers. There’s the container that our colleagues at UPS developed, which is the primary container. That container, the Loop box that was developed in UPS’s labs, should be able to do about 100 trips back and forth.
Now, the reality will dictate the actual answer, but that’s what it’s been lab tested for. The aspirational goal we try to move every partner toward is 100 uses. Why 100? Because once you get to 100, going above that is incredibly, incredibly easy.
Lauren: So, I go into the portal, I order my products. They come to my door. I eat ice cream in one sitting. It’s delicious. And then I put it in this box. What happens on the back end? How is it washed, where does it go and what do those relationships look like?
Tom: It’s picked up by UPS, taken to a Loop distribution center. You don’t have to wash or clean anything.
You treat it like garbage. Throw it out, literally. You throw it out, and you throw it into a Loop bin, which is now your reuse bin. So it gets picked up by the team at UPS. It goes to our distribution center.
Our role is simple. Once the container is checked in, our system will send back your full deposit. By the way, all damage, wear and tear is responsibility of the maker, not of the user. From there, your next order is triggered.
Lauren: How do you get people to totally rethink the way they’re consuming products?
Tom: Consumers are really focused on convenience and affordability, first and foremost. You’ve got to play into that. So a big part of it is use everyone for what they’re great at. Let’s use the best fleet out there and make sure the item will show up on your doorstep, on time, perfectly.
This is where UPS comes into the equation. There’s the personal delivery, but also my favorite part is they’re effectively your garbage company as well.
So instead of waste management picking up your trash once in a while, you simply go online and book your appointment. There’s still work to do, but that’s how we start acquiring consumers, convincing consumers and getting them to adopt it.
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KEYWORDS: UPS, Loop, TerraCycle, Nestle, NYSE:UPS, GreenBiz 19