The Circular Economy - 2013 Report - State of Texas Alliance for ...

68 | TOWARDS THE CIRCULAR ECONOMY
3. How it works up close
Continued
139 Interview with Peter
Koegler, Senior Manager
Environmental Value, SABMiller
140 Interview with Peter
Koegler, Senior Manager
Environmental Value, SABMiller
141 Interview with Dr Klaus
Stadler, Director Environment
& Water Resources Europe, The
Coca Cola Company
142 Coca Cola micro distribution
model- Coca-Cola website
‘How Coca Cola is helping
entrepreneurs in Africa to
set up their own businesses
http://www.coca-cola.co.uk/
community/micro-distributioncentres.html
143 Canadean beer report 2012
144 Growth of soft drinks in
Western Europe between
2001 and 2010 was 14% for
off-trade and only 6% growth
for on-trade, while for beer the
difference was even greater:
24% for off-trade and only 5%
for on-trade; Euromonitor value
sales, 2001-2010
145 Interview with Jon Wilde,
Global Packaging Sustainability
Manager, Trinity Procurement
GmbH, subsidiary of SABMiller
plc, December 2012
146 Assumptions include 30
reuses per bottle, 95% return
rate, 34% weight increase for
reusable vs. one-way, 300
km average road miles from
brewery to store and vice versa,
USD 1.73/km transport costs,
1.14 reusable bottles required
for each single-use bottle
(bottle float requirement),
USD 0.79 retailer handling
costs per bottle
147 SABMiller carbon-intensity
sensitivity analysis, July
2012, shows that returnable
bottles deliver lower CO 2 e
than PET, cans, and one-way
glass bottles (not publicly
available information);
PricewaterhouseCoopers,
‘Reuse and Recycling Systems
for Selected Beverage
Packaging from a Sustainability
Perspective’, 2011, determined
that unless transport distances
exceed 600 km, reusables
are more profitable and
environmentally beneficial than
one-way; The Beverage Industry
Environmental Roundtable,
June 2012, concluded that
returnable bottles accounted
for 13% of total footprint,
versus 65% of total footprint
for one-way bottles.
What works well today?
Circular business models are in use today and
deliver lower costs for manufacturers and
consumers in both emerging markets and
in ultramodern high-volume operations. In
many markets, beverages are sold in refillable
packaging, mainly glass. Depending on the
market environment, refillables are a preferred
packaging solution for many beverage
manufacturers due to their generally lower
carbon footprint and higher profit margins
when compared to one-way packaging. 139
47% of SABMiller’s current global business
for example, is in refillable bottles. 140 This is
driven not only by the emerging markets of
Africa, Latin American and Asian, but also by
European markets.
The success of reuse schemes relies on a
number of factors. First of all, a high cost of
raw materials relative to other input costs
encourages reuse as new materials are not
required every time a beverage is consumed.
Coca-Cola is typically able to cycle its glass
bottles 35 – 45 times. 141 A second factor
is low-cost collection and redistribution
infrastructure, typically built on either efficient
back-hauling in developed economies, or on
low-cost labour and relatively short transport
distances in traditional retail markets. 142
MYTH
Consumer goods companies prefer to
make large volumes of products in oneway
packaging, selling them directly
through big supermarkets
Reality: Some consumer goods
companies would much rather use
returnable packaging; they make
money, save more material and have a
lower total carbon footprint
Gabor Garamszegi, SVP Corporate
Affairs for SABMiller Europe, says: ‘We
would generally prefer reusable glass
bottles from both a cost perspective, as
they may provide better margins, and a
sustainability angle, given the material
savings and associated lower carbon
footprint [vs. one-way bottles]’
Previous investment in reuse infrastructure
and the relatively low bargaining power of
retailers, who tend to prefer the simplicity of
one-way containers, are also factors likely to
promote reuse systems. Finally, it also helps
to have relatively undifferentiated packaging
types (often with the same package used
across different brands), as this reduces
handling and processing costs of used bottles
for both retailers and manufacturers.
In order to maximise the use of every bottle,
high collection rates are required. In emerging
markets, the relative value of the bottles
provides a sufficient incentive for collection,
further enabled by greater consumption of
beverages on premises where vendors can
retain possession of the bottles. In Africa, for
instance, over 80% of beer is consumed on
premises. 143 In developed markets, refillable
systems are well established in high-volume,
on-trade food and beverage settings where
collection can be ensured (e.g., bars and
restaurants with supply chains for reusable
beer kegs and local brewer-bottled beer).
While recent trends in developed markets
have seen a significant move to consumption
away from bars and restaurants for both beer
and soft drinks, 144 opportunities still
exist in the on-trade for companies to
provide a better product experience and
higher value for consumers via a closed-loop
collection system. 145
Expanding these solutions more widely
represents an opportunity for manufacturers,
distributors and collectors, and consumers.
This can be illustrated by the case for reusable
beer packaging (Figure 18). Our modelling
of beer containers shows that shifting from
a model of one-way glass to reusable glass
beverage packaging would lower the cost of
the packaging and all associated processing
and distribution by approximately 20% per
hectolitre of beer sold to consumers. 146 It has
also been shown in various recent studies
that not only can refillable bottles deliver
a higher profit than one-way alternatives,
they also have a considerably lower carbon
(CO2e) footprint. 147 Although refillables are
often resisted by retailers, some studies
have shown higher footfall due to providing
collection facilities for used bottles, and even
higher basket spend per trip due to capturing
consumers on their bigger shopping
trips (e.g., superstore chosen for weekly