MODULE 4
Evaluating the Opportunities and Benefits of Reuse & Refill in a Circular Economy
Circularity Concepts: Exploring key drivers of the plastic circular economy
At its heart, reuse and refill is about avoiding or eliminating plastic waste by extending the value of plastics, ultimately reducing the need for use of primary materials. It is an area that is ripe for innovation, with meaningful potential to disrupt linear models. It also relies heavily on a shift in consumer behaviors to succeed.
In this module, host Anne Johnson, Principal, and VP at Resource Recycling Systems (RRS), breaks down the different models of reuse and refill and looks at some interesting examples emerging in Asia and beyond.
Anne Johnson
Principal and VP, Resource Recycling Systems
What is behind the growth of reuse and refill?
Just like other solutions to tackle plastic waste, the growth of reuse and refill is fuelled by the growing awareness of the problem of mismanaged plastics and consumer backlash against single-use plastics. Additionally, regulatory pressures and corporate commitments to ensure all plastic packaging is reusable, recyclable, or compostable are seeing new models emerging from both established brands and startups. This year, Coca-Cola pledged to have at least 25% of all beverages globally across its portfolio sold in refillable/returnable glass or plastic bottles, or in refillable containers by 2030.
Indonesia and the Philippines are leading the charge in South and Southeast Asia, with many new models emerging in the last 4-5 years. In this module, we examine the ‘value shift’ inherent in the model. While economic value may be lost to manufacturing and production, retailers could potentially see greater returns; municipalities and logistics sectors seeing new business models emerge.
Opportunities and models for reuse and refill
Currently, most reuse and refill models are still in pilot and startup mode with few scaled businesses. As such, the commercial power of reuse and refill models is not yet known, but there is anticipation around their potential for growth, particularly in a post-Covid world. Anne explores the three factors essential to the economic success of a reuse/refill model: consumer behavior, reverse logistics (returning and cleaning of packages for reuse) and potential loss rates of reusable materials. We also explain the different opportunities along the value chain; while wholesalers may realize the economic and environmental benefits sooner, consumer packaging is where the real potential for impact, and the real challenges, lie.
Reuse and refill can largely be grouped into two broad categories: ‘from home’, where customers return the package for reuse, or refill the product at home; or ‘on the go’, essentially the use of refill stations or bulk goods stores. Weighing up the pros and cons of different models, Anne takes a look at some of the innovative startups on the market, from Loop - an e-commerce platform that uses refillable bottles delivered to and collected from your home - to Siklus, an Indonesian operation that delivers products to customers' houses for refills, partnering with global brands including P&G, Nestlè and MARS.
The importance of consumer behavior
Across the spectrum of business models, success often comes down to aligning the business model to appropriate products and service models, and importantly, managing consumer expectations around convenience. ‘Refill on the go’, such as a bulk store, requires dedicated consumers who are responsible for washing and bringing their containers back to the store. A ‘refill from home' model does not require such a behavior shift, but it does demand a high level of brand loyalty. This segment focuses on the models emerging across South and Southeast Asia and the factors that can impact their success, importantly the extent to which consumers are expected to play an active role in the service model.
In addition to a shift in consumer behavior, reuse and refill models require robust systems to deliver, track, collect, aggregate, clean, and prepare packaging. Equally important is to mitigate loss rates by implementing initiatives like deposits to drive return of packaging. Further, models that have been successful in densely populated urban areas may not be economically feasible, or environmentally friendly in rural locations
When it comes to sustainability, what are the trade-offs?
There are a number of considerations when it comes to assessing the life-cycle benefits of a reuse/refill model - and this will largely depend on the business model. The end of life of the packaging is also a critical factor. A robust package that is resource-intensive to create, coupled with a high loss rate, is not going to have a great environmental impact.
Anne poses important questions that business owners and investors should consider when assessing the sustainable viability of a model. How many life cycles are needed before we realize environmental impact? How energy-intensive is the process to collect, transport, and wash the packaging for reuse, and what is the potential loss rate?
Ultimately, reuse and refill is one step towards circularity, representing another opportunity to eliminate waste at the source and reduce reliance on single-use packaging.