Why reusable packaging is a commercial priority for brands

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As a reusable packaging industry we spend most of our time discussing the environmental benefits of reuse and the absurdity of the wasteful, down-cycling dominated, linear economy. 

While the environmental & climate benefits of reuse are important and exciting, most stakeholders understand these benefits but are yet to achieve mainstream scale. Why is this? It’s because we are not addressing the elephant in the room - economics

To truly scale reusable packaging it is critical that reusable packaging competes with single use on a cost basis. Whilst working inside some of the world’s largest FMCG brands, I’ve seen first hand how brands are able to make radical changes to packaging and supply chains, investing £100m’s to make incremental gains to their Profit & Loss account. In truth, the FMCG industry’s addiction to making decisions based purely on economics has led to the waste crisis that we are trying to solve today! 

But what if reusable packaging was lower in Cost Of Goods than single use? What if any economist could look at the P&L of reuse and advocate for change?

This is not a pipedream. The macro-economics of the packaging industry are changing wildly, allowing us to undercut single use by 2024. Here’s how...

‍Single use packaging is no longer cheap.

Over the last 50 years packaging has been so cheap that reuse models could not possibly compete financially, but this is changing very quickly. 

Material prices have risen by 23% in two years.

The cost of all materials have been steadily increasing since 2004 (averaging at about 7% year on year for glass), however over the last two years we've seen a 23% spike in the cost of material alone. When added to the rising cost of energy, labour shortages and material scarcity, some of our customers have seen 80% increases in the price of packaging.

I often get asked "do you think prices will continue to rise?". Whilst a fair amount of crystal ball gazing is required, it seems clear that the supply of energy, raw materials and labour will only continue to become more scarce. Demand for packaging will only increase as a result of growing population and accelerating consumption. So yes, in my view it will continue to rise at the same rate or above.

Producer Price Index: Glass and Glass Product Manufacturing.

Packaging Recovery Notes are up by 660%. 

Producers which turnover more than £2 million and place more than 50 tonnes of packaging on the UK market need to buy Packaging Recovery Notes (PRNs). PRNs are proof of the material being successfully recovered from the market and the fees generated subsidises the collection activity. The price per tonne paid by producers varies across material type and on a monthly basis.

PRNs have changed dramatically in cost over the last 3 years! Back in January 2020, a PRN cost £16 per tonne for glass remelt. When we fast forward to January 2023, the same PRN costs £100 per tonne. This change has been driven by the increasing cost of waste collection and demand from brands for the PRNs.

Cost of Glass Recycling Notes.

A new 'eco-tax' is adding to the cost of single use.

Extended Producer Responsibility (EPR) is a regulatory tool ("eco-tax") that will be introduced in 2024. It requires producers to be significantly more responsible for their post-consumer product by paying an additional fee as an incentive for sustainable product design, to encourage adoption of refill and reuse models, and boost collection of their waste.

Ecosurety provide compliance advice to the industry and are predicting the new legislation will cost the UK glass industry £205 million in 2024, equating to an additional £106 per tonne of packaging placed on the market.

Eco-taxes on Glass Packaging.

Reusable packaging will undercut single use in 2024.

Yes, you read correctly. Reusable packaging will have a lower cost per unit than single use in 2024. How is this possible?

  1. Reused packaging is exempt from PRNs and EPR! Producers only pay for new containers placed on the market. Every subsequent reuse is exempt so the more times a container is reused, the bigger the saving.
  2. Reusable packaging doesn't need to be more expensive to manufacture. Using our supply chain data and testing laboratory, we've been able to show that many containers can be safely reused with only minor design tweaks.

Let's have a look at an example, considering a 1L glass bottle sold in the UK in 2024. Note, for reuse, manufacturing cost, PRN and EPR are charged on the first use only.

It's time to accelerate transition to reusable packaging.

Single use packaging is not as cheap as it used to be. With rising commodity prices and inevitable increasing legislation, brands should be accelerating their transition to reusable packaging. The adoption of reusable packaging is no longer just an environmental imperative but a necessity to maintain profitable business for brands. The question is becoming... can you afford not to?

Reuse your packaging today!