The case of Reusable Food Packaging: a Circular Analysis
Hi all and welcome the 14th blogpost of a Circular Victory! Last week we talked about the importance of Renewable Energy for the Circular Economy. When moving to the Circular Economy, it is important that every single part of the economy becomes Circular. That includes energy production.
Today, we are going to analyse a business case. In order to do so, we are going to use the five Circular business models as well as the possible Circular strategies (the “5 Rs”). We will quickly re-explain those topics in today’s episode, but if you wanted a better explanation, go check out episode 2 for the Circular strategies (aka the 5 Rs) and episode 3 for the Circular business models.
The Circular Strategies
The Circular strategies are five actions that companies or individuals can apply in order to become more Circular and evolve towards a real closed loop system. We also call these five strategies the “five Rs” of the Circular Economy. They are the following actions:
This is the first strategy to employ in order to evolve to a Circular Economy. In order to make sure we do not use more than the finite amount of resources that Mother Earth has to offer, we should reduce consumption and waste.
This strategy is quite straightforward, but it really helps us to reduce consumption. Instead of getting rid of a product when we are done using it or when we upgrade to the next version, we should aim to give products a second life.
If a product is not in a good enough state anymore to be simply reused, we still shouldn’t throw it away yet. The product is not yet ready to enter the cycle again. It can still be refurbished! Companies can really take advantage of refurbishment. By making some minor tweaks and upgrade to the product, companies have something that is as good as new and can be brought to the market again. This approach needs a lot less raw materials and can therefore be a lot more cost efficient for companies.
Repairing products is a strategy that was very common not so long ago, but has lost a lot of popularity. The Circular Economy aims to bring that practice back. Just because a product stops working, doesn’t mean the complete product is broken. Often it is one or a few components that no longer work. By repairing those few components, a product can be restored to full functionality. This can significantly increase the lifetime of a product and in turn decrease consumption and waste.
Recycling should always be the very last option of the cycle. In today’s world, it often seems like recycling is the first and most important step. However, many products aren’t designed to be recycled and therefore aren’t recycled very effectively or efficiently.
In a truly Circular Economy, recycling connects the end of one products lifetime with the beginning of a new products life. It does so by breaking down the product into raw materials. We then need to clean, check and process the raw material so that it will be ready to be used again in a new product.
The Five Circular Business Models
When companies are applying these strategies, it will lead to them working on five types of business models. These business models are spread all throughout the supply chain, as you can see on the image below.
These five business models are:
- Circular Inputs
- Resource Recovery
- Sharing Platforms
- Product as a Service
- Product Use Extension
“Circular Inputs” is found at the very beginning of the supply chain. Here companies will aim to base their production in renewable, recyclable and biodegradable resources. It is often important to already keep these types of resources in mind during the design phase so that companies can easily incorporate these sustainable materials.
In this model the goal is to recover the value and resources that are still part of a product and the end of its lifecycle. Once these materials are recovered, they can become part of a new product. This is the idea of the cradle-to-cradle concept. This already exists to a certain degree in traditional recycling, but with the advent of new capabilities and technologies more and more resources can be recovered.
Product Use Extension
The Product Use Extension category is quite self-explanatory. The intent is to prolong the amount of time a product can spend on the market. Products are improved and maintained throughout their lifecylce through repairs, upgrades, remanufacturing and remarketing.
This is a model we already see in the street quite often, with ride-sharing and bike-sharing companies. These platforms allow collaborative use between consumers. These platforms can redistribute overcapacity or underutilization, which maximises the utilisation per product and the value it creates for the consumer. This is ideal for companies whose products sit idle for a lot of the time.
Product as a Service
In a Product as a Service system, there is a complete shift away from ownership. Instead, the role of the product becomes fulfilling a need. Companies offer lease or pay-per-use arrangements and essentially promise to carry out a certain task, rather than offer a specific product. For example, Philips has a system where they guarantee light in a building and that’s what the customer pays for. Philips promises to take care of installing the lamps and maintaining the hardware.
One aspect of business that has seen a sharp rise in popularity due to Covid-19 is the takeaway and delivery business of restaurants. Since it has become increasingly impossible to go to restaurants, restaurants have had to come to our homes. And when they do come to our homes, the food, of course, has to come in containers. These containers are the topic of discussion today. In the vast majority of the cases, these containers are designed to be single use. So once we have eaten the food, we throw away the container and create waste.
Now, we are seeing a push towards more Circularity in this industry. We are seeing a trend of reusable and recyclable packaging for takeaway and food delivery. Let’s analyse the business that manufacture these products through the strategies and business models we just discussed.
We mainly see two strategies here: reusing and recycling. The first focus of these products is reusability. The issue with the current takeaway containers is that they are designed to be single use and therefore create a lot of waste. By making the containers reusable, we cut out a lot of waste. The reusability also means we need less resources in the first place, since one reusable container can fulfil a lot more uses than the usual singe use ones.
Additionally, we are seeing an effort to make the product 100% recyclable. In this strategy, we are seeing two types of recyclable containers. One is biodegradable and the other is easily and qualitatively recyclable. For the compostable one, the materials are all natural and will be composted. The advantage here is that the container can be discarded in compost with the food scraps still inside. No need to clean them out! The recyclable ones focus on materials that are easy to disassemble and then reuse in new products.
These are two distinct ways to achieve the same looped system. The raw materials either go into new products or will serve as nutrients for plants to grow. They effectively close the cycle.
Circular business models
Now it’s time to look at which Circular business models these projects employ. By looking at the two Circular strategies (reusable and recyclable) that are being used for this product, we can quickly see that there is a focus on Circular Inputs and Product Use Extension.
Let’s talk about Circular Inputs first. For the purpose of recyclability, it is important to use the right inputs when manufacturing the product. A big part of the activities of these businesses will be to source the right materials for their product. In order to ensure the quality of the materials, close cooperation with other players in the supply chain will be needed.
Next, we also have the Product Use Extension. It is clear that compared to single use packaging, this product will be in rotation for a lot longer. Rather than being used once, it can be used, cleaned and then reused several times before being recycled. This results in a lot less waste and less required resources in the first place.
Your experience with takeaway
I loved reading about this business model, but I have not actually experienced it myself. I would therefore love to hear from you! Have you ever ordered takeaway or delivery food and received it in a reusable container? Did you keep the container yourself or could you return it to the restaurant?
You can share your experience with me on LinkedIn at Victor Lanckriet or through firstname.lastname@example.org.