John

Devising a viable reuse system that would work well in India is hard.

Our first reuse service in the UK is a twist on the traditional milk round – we deliver personal care and household care products in ready to use containers, supplying replenished bottles when needed and collecting empties to reprocess.

This works well in the UK and consumers like it. They get a range of products without plastic waste, conveniently delivered, and everything gets reprocessed for them.

But it’s a nonstarter for much of India. Each bottle we collect must be given an industrial wash, dried, refilled, relabelled, recapped and redelivered, all of which makes for a labour-intensive and costly service.

Wealthy consumers in India might be able to afford this, but not the vast majority. A truly mass solution would need to do without these bottle processing costs… so no bottle collecting or washing or labelling… - which means consumers must use their own bottles.

But would consumers be prepared to buy their own bottles? Probably not

We wondered too whether refilling liquid was the best approach.

Some reuse services remove the water and send out dry powder or concentrates that consumers dilute themselves. This is a great idea and can be one of the better environmental solutions, but consumers like their liquid products and are often reluctant to switch to different formats. And for some products, like hair oil or body lotions etc, they're just not viable.

Some services mail pouches full of liquid, but these are too bulky and costly for most Indian consumers. They also mostly use flexible plastics that are problematic since they can’t be recycled.

One way of delivering liquid cheaply is to use mobile refill trucks. This is done in several countries and can help lower-income communities get product cheap. But it’s hard to scale this. Vans cost a lot and consumers don’t like to wait to get their product at specific van-visiting times.

Nothing seemed obvious.

All we knew was that everything across the supply chain had to be reusable. From the highest level to the lowest, loops and returns had to mesh to prevent single use plastic and reliably deliver product consumers wanted and in a way they wanted it. And then there was that penny price point too.

We need everything to go around in circles but too often it feels like that’s what we were doing!

On World Refill Day, City to Sea and its Refill campaign sent an open letter to CEOs of the world’s five biggest plastic polluters, including two that work in our space, Mr. Jope, CEO of Unilever and Mr. Moeller, CEO of Procter and Gamble.

Signed by over 400 organizations, the letter asked for the CEOs’ commitment to “transparent, ambitious and accountable reuse and refill systems as part of wider commitments to reduce the amount of plastic that you produce.”

It mentioned how plastic production is set to rise by 40% over the next decade and the ‘devastating’ impact plastic pollution is having on the oceans, terrestrial environment, wildlife and human health.

The letter proposed three simple steps:

• REVEAL the full extent of their plastic footprint
• REDUCE the amount of plastic used driven by setting ambitious, transparent targets and supporting action plans on how to achieve them. Then prioritizing achieving those targets

And one close to our heart…

• REINVENT packaging to ensure refill and reuse

You can read the full letter here.

I talk about plastic waste (too much my friends would say!) and notice that people are universally fed up with it, and frankly pissed off that they can't buy the products they want without single use plastic.

People are motivated to help us and it's very heartening.

Our insurance broker removed his commission because he likes what we're trying to do, our graphic designers and IT consultants work at reduced rates because they believe in our goals. It's all very humbling and encouraging.

Sometimes the generosity is surprising. Here's one example.

In our work we use refill machines to transfer liquid from bulk containers into smaller, consumer usable bottles. We've already bought two of them, and our favourite comes from a family company in England called Adelphi Manufacturing.

A few months back, when we were being trained on how to use one of their machines, conversations started about our India project and how we were working (to at least try) to combat the sachet waste problem.

We were told that Adelphi was very motivated to give back where it could, and after some internal discussions they offered to provide on loan, free of charge, a refill machine for the duration of our pilot in India. Buying a new one would be around £10,000.

Isn’t that great?

Problems sachets cause in lower-income countries have been recognised for years, but finding a solution isn’t easy.

Consumers there have for decades been educated to use disposable sachets and now have an ingrained buy and dispose culture.

Traditional refill-reuse habits have faded and there are now precious few circular systems to build on.

Consumers also now have their preferred brands and sachets are the only affordable way to buy them.

On top of it all, we have the daunting 1 penny price point.

But linear supply chains can be inefficient. For example, some products sold in UK supermarkets are made deep in eastern Europe. Ready-to-use plastic containers are shipped perhaps 1000 miles on trucks and the packaging is used once then dumped. Perhaps similar inefficiencies exist in low-income countries?

In recent years Less has operated a refill-reuse system, and we started to wonder if reuse could be part of the solution to sachets.

Perhaps by shipping bulk close to consumers and refilling locally, you could avoid shipping ready-to-use containers from distant factories and save on transport and inventory costs?

Maybe a robust reuse system could enable packaging costs to be spread over hundreds of uses such that unit packaging costs would largely melt away.

And if we could hit or beat the sachet price point, maybe consumers would switch. After all, they’re concerned about plastic waste too, it’s just that their suppliers don’t give them a choice to purchase more responsibly.

The more we thought about it, the more it seemed feasible.

Beating the sachet became our goal and this blog is our story of how well we’re doing (or not!).

We did a little research into how dependant consumer goods companies like Unilever and Procter & Gamble are on sachets.

We learnt…

SACHETS HAVE BEEN THE PREFERRED FORM OF PACKAGING FOR OVER A DECADE

Euromonitor (2013):

Small sachets of brands like Sunsilk, Clinic Plus and Head & Shoulders continue to be extremely popular in India. Small sachets of flexible plastic up to 10ml account for 98% of unit sales of standard shampoo in 2013…

SACHETS CONTINUE TO DOMINATE

GlobalData (2021) estimated:

Flexible Packaging accounted for a share of 81.7% in the Indian haircare sector, in 2020

(Note, this is a broader measure than just shampoos and includes hair oil, conditioner, hair colourants, hair loss treatments etc)

IN INDIA, UNILEVER RELIES ON SACHETS FOR ABOUT 30% OF ITS BUSINESS

Times of India (May 27, 2022) talked about the ‘magic price points’ that sachets cluster around and said:

For HUL (Hindustan Unilever), almost 30% of its business comes from packs that operate at these ‘magic price points’. Also, roughly 30% of its portfolio is price-locked.

UNILEVER SELLS BILLIONS OF SACHETS A YEAR IN INDIA

Harvard Business Review (2016) said:

HUL itself sells 27 billion sachets a year

SACHETS REMAIN A KEY GROWTH STRATEGY FOR UNILEVER

Unilever management still openly talks about the importance of sachets and how they are using them to gain market penetration in various categories.

Some quotes from recent earnings call discussions:

Srinivas Phatak, CFO and Executive Director, Finance and IT at Hindustan Unilever

In foods and refreshments, our strategy to unlock growth in HFD (Health Food Drinks) portfolio is to drive category penetration. To this extent, we have doubled on our actions to improve accessibility in the HFD through the sachet portfolio. We launched the INR 2 sachet in Horlicks and Boost

…Again, from a penetration perspective, we are gaining more users, especially through the sachet portfolio and now as we have gone and introduced the rupee 2 sachet.

Source: March Quarter 2021 Earnings Call of Hindustan Unilever Limited (29th April 2021)

Ritesh Tiwari , Executive Director, Finance and Chief Financial Officer at Hindustan Unilever

And within that, to the point which you mentioned on the sachets, yes, both the INR 2 and INR 5 sachets, they are very critical for us to gain penetration. I mentioned earlier that the penetration of category of health food drinks is more like c. 25%, and it is lower in rural areas. There's a big job to be done for us, hence, the 3 role of INR 2, INR 5 sachet in enrolling new consumers with more trials is extremely critical, and we are exactly focusing on that.

Source: June Quarter 2021 Earnings Call of Hindustan Unilever Limited (22nd July 2021)

Why do companies sell products in sachets?

That's easy. There's good money in it. Only by selling such small amount of product can lower income consumers afford to buy, and sachets are the easiest way to do this.

In low-income countries, the ‘bottom of the pyramid’ is a vast and lucrative market.

In India along with many Asia countries, about 70% of some products, like shampoo, are sold in sachets. If you’re not selling in sachets, you’re missing out.

It’s hard to get good data for companies, but this 2018 reference about Unilever Philippines is revealing:

“…more than 50 percent of products produced by Unilever are sold in plastic sachets”.

Unilever Philippines is heavily dependent on sachets. It’s likely similar in other emerging economies.

We will conduct some further research on this and let you know what we find.

In a separate view, Future Market Insights (July 2021) sees increasing demand for small-sized and convenient packaging solutions. It says “…the sachet packaging market is set to experience a year-on-year (YoY) growth rate of 5.4% in 2021.

The market is forecast to reach a volume of around 999 Bn Units by the end of 2021. FMI projects healthy growth for sachet packaging market at an overall compound annual growth rate (CAGR) of 5.8% between 2021 and 2031.”

So FMI estimates we have about a trillion sachets a year now to approaching 2 trillion in 10 years.

Nice!

Sachets are a technological marvel. Flexible, light, waterproof, colourful, sterile and cheap, they’re perfect for storing and selling small amounts of food or liquid.

Most sachets are a sophisticated multi layered composite of aluminium, adhesives, and various plastics (such as PVC or polystyrene).

Multi-layering brings great properties but makes sachets almost impossible to recycle. Even if they were captured from the waste stream, very few facilities worldwide could recycle them, and fewer still could do it economically.

This isn’t news. Recycling never was a viable option for sachets and won’t be for decades, if ever. But you wouldn’t know this from the sachet itself. Here’s the back of a Dove sachet I purchased in India earlier this month with the recycling mark nice and clear. Right by the Unilever logo it has the recyclable triangle with the number 7 in the centre, suggesting it’s recyclable.

But Category 7 plastic is rarely recyclable in the UK or other developed economies. In India, it’s pure garbage. The best end of life scenario for a sachet is incineration, but most end up in landfill or the oceans.

Unilever knows this, of course, but it remains its preferred packaging for many of its market leading products, which includes Sunsilk, Dove and Clinic Plus.

Rahul gave me a challenge – Chuck a water bottle on the ground and see how long it stays there.

So I did.

In Amritsar I kicked an empty water bottle 10 feet from me and waited. Rahul thought I might have to wait 30 minutes, but in less than five a small boy, probably around 10, with a large white plastic sack on his back came by, scooped it up and walked off.

I doubt it would be faster anywhere.

Waste collection in India is phenomenally efficient.

Waste processing businesses are dotted throughout the country and do a remarkable job of capturing hard plastics. Hard plastic’s small residual post-use value is not much, but it’s enough to motivate businesses to collect, sort and clean plastics then sell them to companies that can reuse it.

I visited a few plastic waste processing plants in India to see how waste is gathered, sorted, cleaned and repurposed.

It’s slow, dirty and repetitive work that pays a £1-2 day. It's not clean or pretty but it is effective and prevents an enormous volume of plastic waste seeping into the environment and waterways.

Of course, collectors only capture plastic waste that has value. This includes water bottles, shampoo bottles etc - and excludes flexible plastics and sachets.

Sachets, a primary packaging material for companies like Unilever, Procter & Gamble and Nestlé, hold no residual value, and aren’t collected. Instead, they slip through India’s vast waste reprocessing infrastructure and mostly head to dumps or waterways.

Plastic waste is a problem here in the UK, but a far bigger problem in Asia where plastic capture is more sporadic. Instead of making it to landfill or incinerators (neither of which are great options) much of it gets into waterways and ultimately into the oceans.

According to research by German scientists, eight rivers in Asia are among the top ten sources of plastics pollution in the world’s oceans.

…More than 8 million tonnes of plastic leak into the oceans every year, of which more than 80% of marine plastic waste comes from land-based sources as discarded plastic that has been improperly managed leaks into the oceans. Two thirds of land-based plastic waste that ends up in the oceans originates from waste that has been left uncollected (that is, disposed of into the environment), while the remaining one third constitutes leakage from improper waste management systems.

Source

The primary culprit for this pollution is not hard plastic (water and shampoo bottles etc.) but small flexible plastic sachets that in Asia are used for a wide variety of consumer goods. In the West we’re familiar with them for holding tomato ketchup, but in many lower income countries they’re used for shampoo, laundry detergent, many foods and other household essentials.

Each year, a vast number of sachets are used.

…In 2018 some 855 billion sachets were used worldwide, over 100 per year for each human alive. Only 10 percent of all plastics are ever collected and recycled, and the number for sachets is close to zero

Source

FMI estimates that about a trillion are used each year.

Because sachets have no residual value and cannot be recycled, they’re discarded. I was in India earlier this month and you see empty sachets everywhere. You don’t even notice until you look…

Sachets and other forms of flexible plastic get dumped and accumulate in numerous places, often in waterways and on beaches.

Here's a picture I took in Mumbai the other week...