Analysis

Why the soft drinks category is trapped in a plastic corner - Sustainability Spotlight

Most popular

The just-drinks Analyst returns

just-drinks speaks to Distill Ventures' CEO

"Too many tuxedos, too much bling" - BrewDog

just-drinks speaks to Diageo CEO Ivan Menezes

The just-drinks Analyst returns

MORE

Faced with relentless campaigning and mounting public concern about plastic pollution, soft drinks companies have no choice but to act to mitigate the environmental impact of their packaging. As new research is published underlining the increasing importance of sustainable packaging to consumers, Ben Cooper assesses the soft drinks sector's engagement with a recently-launched global initiative on plastic use.

The soft drinks category is viewed by consumers as the biggest plastic waste culprit

The soft drinks category is viewed by consumers as the biggest plastic waste culprit

Strong support among soft drinks producers for a new joint commitment to eradicate plastic waste and pollution at its source and establish a circular economy for plastic can be spun as testament to their commitment to sustainability. Chiefly, however, it serves to underline the sector's huge exposure to an issue that is now attracting unprecedented levels of public concern.

The New Plastics Economy Global Commitment was launched in October by UK-based campaign group the Ellen MacArthur Foundation (EMF) and UN Environment. Among the 250 corporate signatories were The Coca-Cola Co, PepsiCo, Danone, Nestle, Coca-Cola FEMSA, Swire Beverages and Unilever.

Pressure from campaigners and public concern about plastic use has increased hugely over the past couple of years, as growing evidence of the extent of marine plastic pollution has come to light. Soft drinks manufacturers have been relentlessly targeted, with Greenpeace setting the tone in March last year, when it published its Bottling It report.

While soft drinks companies have made some significant announcements since then, the EMF Global Commitment promises to take industry engagement in the drinks sector and across the consumer goods market to another level.

Meeting enhanced environmental commitments is clearly going to be a costly business for companies

Under the Global Commitment, companies pledge to:

  • take action to eliminate problematic or unnecessary plastic packaging by 2025
  • take action to move from single-use towards reuse models where relevant by 2025
  • make 100% of their plastic packaging reusable, recyclable or compostable by 2025, and
  • set an ambitious 2025 target for use of recycled content in all their plastic packaging

EMF says it intends to publish companies' progress towards realising their commitments on an annual basis.

Conrad MacKerron, senior VP at US-based campaign group As You Sow, sees the commitment by all signatory companies to make 100% of their plastic packaging reusable, recyclable or compostable by 2025 as a "strong positive", but stresses the need for "very zealous monitoring and follow-up" to monitor progress. "There have been so many broken promises over the last 20 years from the soft drinks industry," Mackerron says. "There needs to be some mechanism that keeps this on track."

Another strength of the initiative, MacKerron believes, is the tighter definition of what constitutes recycling that it will hold companies to, notably excluding energy recovery and the use of the product as a fuel. "There's strong language in their saying that incineration and waste-to-energy cannot be considered recycling and cannot be considered part of a circular economy," he says. "We are totally in agreement that that is not genuine recycling because it does not keep the materials in a circular path and maintain the materials at their highest value."

While MacKerron regrets the Global Commitment has not included a specific endorsement of extended producer responsibility (EPR) policies as a means of raising finance for expanding recycling infrastructures, he concedes this may have deterred some companies from engaging.

Research just published by European carton and cartonboard industry body Pro Carton provides yet more evidence that rising concern about the sustainability of packaging is affecting consumer behaviour.

75% of European consumers say the environmental impact of a product's packaging affects their purchasing decisions

According to the Pro Carton report, based on a survey of 7,000 consumers across seven European countries, 75% of European consumers say the environmental impact of a product's packaging affects their purchasing decisions, with 74% of respondents stating that recent media coverage of marine pollution caused by packaging has led them to alter their shopping habits.

Earlier this month, market research provider IRI published similar findings from its European Shopper Survey 2018. Some 72% of the 3,334 consumers polled by IRI across seven European countries say they prefer to buy products with environmentally-friendly packaging.

Only 36% of respondents in the Pro Carton survey believe brands and retailers are doing enough on sustainable packaging, with 58% voicing support for a tax or levy to spur companies to adopt more environmentally-friendly packaging.

The most striking statistic in the Pro Carton survey is that 77% of respondents say they are prepared to pay more for a product with packaging that has less impact on the environment.

This is an encouraging sign for brands. If companies are expected to contribute to the costs of building recycling infrastructures through voluntary programmes such as the Closed Loop Fund or mandatory EPR policies, it is vital their consumers see more sustainable packaging as adding to a brand's value and something worth paying for.

While changing consumer attitudes may offer FMCG brands greater potential to recoup costs associated with a transition to a circular plastics economy through pricing, meeting enhanced environmental commitments and neutralising the threat the plastics issue poses is clearly going to be a costly business for companies. With that in mind, it is interesting to note that newly-merged beverage group Keurig Dr Pepper (KDP), which brings together Keurig Green Mountain (KGM) and Dr Pepper Snapple Group (DPSG), has not signed up to the Global Commitment.

Historically, DPSG had moved relatively slowly on sustainability issues, not least because Coca-Cola and PepsiCo have always been the prime targets for campaigners. Few will have expected its takeover in January by Luxembourg-based private equity firm JAB Holding, which acquired Keurig Green Mountain in 2016, to lead to a higher prioritisation for sustainability.

When asked by just-drinks why it had not signed up, a KDP spokesperson responded: "The Keurig Dr Pepper merger was completed in July 2018. The timing of this commitment overlapped with the work we're doing to assess and set sustainability plans that take into account our full product portfolio and footprint.

"We are committed to driving sustainable solutions for our products, packages and operations and expect to announce our integrated plans and new commitments in 2019. We're considering a number of initiatives, including the EMF Global Commitment, as we evaluate our sustainability strategies as a combined company."

As DPSG was able to lag behind Coca-Cola and PepsiCo when it was a single publicly-traded company - and private-equity owners are generally less susceptible to external pressure on sustainability - it wouldn't be surprising to see KDP stop short of joining the Global Commitment.

On the other hand, as both Coca-Cola and PepsiCo signed up at the commitment's inception, pressure on DPSG from environmental campaigners, if only on the plastics issue, could well intensify. After all, a brand controlled by private equity is no less vulnerable to brand switching than any other. Furthermore, Keurig's involvement in the single-serve coffee market gives the merged entity a greater exposure to the plastics issue than either KGM or DPSG had as standalone companies.

If KDP's private-equity owners decide they must sign the group up to the EMF Global Commitment, it would arguably represent stark confirmation of the soft drinks sector's exposure on plastic packaging, indicating that brands have little choice but to engage fully in the collective drive to address this issue.


Related Content

Company plastic pledges - reason to be positive or time to panic? - Sustainability Spotlight

Company plastic pledges - reason to be positive or time to panic? - Sustainability Spotlight...

Will 2018 be the year we solve the plastic problem? – Sustainability Spotlight

Will 2018 be the year we solve the plastic problem? – Sustainability Spotlight...

Why is the soft drinks sector losing the recycling game? - Sustainability Spotlight

Why is the soft drinks sector losing the recycling game? - Sustainability Spotlight...

Coca-Cola Co's plastic packaging output dwarfs FMCG rivals

Coca-Cola Co's plastic packaging output dwarfs FMCG rivals...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?