Innovative Packaging: Redefining Disposable
Contents
Introduction
Films and wraps endure in the environment
Market forces
Bioplastics production set to increase
Investment opportunities
Seaweed, Blockchain and more
Segments
Healthcare, consumer, industrial
Market movers
Leaders & fast followers
Investors
VC / PE / Funds
Final Thoughts
The search for alternatives
Shrink wrap, bubble wrap, film linger long
Plant-based materials make inroads into packaging
We prefer to think of plastic packaging as ephemeral, temporary. Use it, toss it, and it’s gone.
Scratch the surface and you see it’s none of those things. It’s awfully close to permanent, with plastic packaging as durable as any manmade substance.
We can’t seem to live without it. In many ways, it truly is a marvelous substance that’s helped us enjoy a safer, more comfortable, convenient life. Packaging contains, protects, preserves, reduces damage, and prevents contamination of products. It entices consumers and is found in construction, transportation, healthcare and electronics.
The packaging industry generates $900 billion in annual revenues worldwide, according to McKinsey & Co. The use of plastic has increased twenty-fold in the past half-century and is expected to double again in the next 20 years.
“We prefer to think of plastic packaging as ephemeral, temporary. Use it, toss it, and it’s gone.
“Scratch the surface and you see it’s none of those things. It’s awfully close to permanent, with plastic packaging as durable as any manmade substance.”
In Europe, waste management regulations are increasing demand for alternatives to the plastic packaging we know. While efforts to regulate packaging in the U.S. have stagnated, the market for bioplastics continues to grow as governments, businesses and individuals seek to find alternatives to plastic packaging.
Bioplastics, or bio-based plastics, are made from renewable plant or biological materials like cornstarch, sugars, cellulose, vegetable fats and oils, or recycled food waste. Petroleum-based ingredients are avoided, although fossil fuels are certainly used during production processes such as powering factories.
“Plastics production has surged over the past 50 years and is expected to double again over the next 20 years. Plastic packaging represents 26% of the total volume of plastics used.”
World Economic Forum: The New Plastics Economy
Market Trends: Facts, Figures, Forces
Market Facts & figures
“The estimated annual loss in the value of plastic packaging waste during sorting and processing alone is $80 billion-$120 billion USD”. - United Nations Environmental Programme
Production capacity of bioplastics is set to increase to 8.38 million tons in 2026 from 2.65 million tons in 2021. The market is expected to grow faster, at 8.71 million tons annually.
Asia is expected to produce 70% of all bioplastics in 2026, up from almost half at present.
Source: Global Alliance for Buildings and Construction
Awareness of packaging waste is growing among consumers, governments and big business.
Of the 7.72 billion tons of plastic generated globally so far, only 10% has been recycled.
About 26.5 million tons of plastic end up in aquatic ecosystems every year, according to a 2020 study.
Globally, one million plastic drinking bottles are purchased every minute, and five trillion single-use plastic bags are used every year. Half of all plastic is designed to be used only once, and then thrown away.
market forces
Industries aim to pursue either recyclability and composability in their products due to the worrying amount of plastic in the planet.
Recyclability
Plastic’s recycling numbers are not impressive: about 14% of plastic packaging is recycled. When factoring in things like sorting and reprocessing, according to the World Economic Forum, “only 5% of the value of the material is retained for subsequent use.”
About 36% of single-use plastics are used for packaging, out of which 85% end up in landfills.
About 12% of all plastic is incinerated.
Compostability
The biodegradability of a material refers to a chemical process that depends on the surrounding environmental conditions such as temperature, moisture, oxygen level, pH, and the chemical structure of the polymer.
Scientists at Berkeley Lab claim to have developed a self-consuming biodegradable plastic that might revolutionize single-use plastic packaging. However, biodegradable plastics often get missorted and do not biodegrade in landfills.
Investment Opportunities
The adverse environmental impacts of packaging present opportunities for innovators and investors. There are several ways to enhance after-use properties of packaging by making them home-compostable, water-soluble or edible, while maintaining the same performance as plastics during use.
The European Union’s decision to ban all single-use plastics with alternatives available will create huge growth opportunities for the manufacturers of biodegradable plastics in the next five years.
Examples of innovative packaging materials and companies to watch include:
MonoSol developed a range of Polyvinyl based-based films with many applications as an alternative to plastic packaging. Examples include dishwasher and laundry detergent tablets that are individually wrapped in the water-soluble film.
A mushroom-based solution provides an alternative to polystyrene and is 100% home compostable. Produced by Ecovative, the mushroom packaging is grown using a crop waste feedstock. It is low energy and has no residue or waste. Edible substitutes for items such as food wrappers, disposable dishware, and cutlery are being developed in the food packaging market. Recovery associated with food-service plastic packaging might represent earnings before interests and taxes of $2 to $4 billion per year.
WikiFoods developed WikiCell, a skin-like membrane made of binding molecules sourced from organic feedstock. WikiCell maintains freshness equivalent to current plastic packaging and is edible.
Using seaweed feedstock, Loliware has developed biodegradable alternatives to plastic cups.
Lignin is a promising bioplastic manufactured from a by-product of paper manufacturing. It can be used for 3D printing, adhesives, or to reinforce other bioplastics.
Companies are also seeking to integrate digital technology into their packaging, such as quick-response codes or smart packaging that include sensors. This allows traceability of food products along a supply chain and provides information to consumers about the source of their food.
Blockchain technology also guarantees transparency and traceability of food along the supply chain including when and where a product was harvested. This can assist with product recalls and quality management.
Market Segments: Healthcare, consumer, industrial
Kaffeeform cup made from recycled wood fiber
The market segmentation of the global packaging industry is determined by geography, product, material and application. Packaging is an integral factor of the economy; it is used across all sectors in which a product needs to be protected, preserved or transported. Following are several segments of the packaging industry:
Processed foods
Healthcare products
Consumer electronics
Industrial products
Household appliances
Innovative Packaging's Impact
When compared to conventional plastic packaging, bioplastics and biodegradables have a lower environmental impact.
Bioplastics can reduce carbon emissions by 30% to 70% compared to conventional plastics.
One metric ton of bioplastics generates between 0.88 and 3.5 fewer metric tons of carbon dioxide compared to one metric ton of petroleum-based plastics.
Switching to bioplastics from traditional plastic cut GHG emissions by 25% in the United States.
While plastic packaging contributes to global warming, paper and cotton bags need to be reused at least 43 and 7,100 times, respectively, in order to ensure global warming potential is lower than a typical plastic grocery bag.
Production of 99% of plastic draws on the burning of fossil feedstocks. If current trends continue, by 2050 the plastic industry could account for 20% of the world’s total oil consumption and 15% of the global annual carbon budget.
Most calculations of the energy used and GHGs created in the production of conventional plastics produce much higher numbers. For example, oil-based polypropylene produces 3.14 kg of carbon emissions per kilogram of plastic compared to wheat polymers, which release 1.2 kg of carbon emissions.
Market Movers: Current and Future Heavy Hitters
Market leaders:
Although not compostable and not necessarily biodegradable, bioplastics are manufactured with biomass polymers from renewable resources, and thus are significantly more sustainable compared to plastic produced conventionally. Some promising bioplastics include:
Full Cycle Bioplastics produces PHA from organic waste such as food waste, crop residue, and not recycled paper or cardboard. This bioplastic is compostable, marine degradable, and has no toxic effects. At the end of life, it can be processed and reused in virgin plastic.
Mango Materials transforms methane gas from wastewater treatment plants and landfills into bioplastic. Often used for plastic caps and shampoo bottles and even injection molding.
AMAM produces packaging materials made from agar, a red marine algae, which is 500 times better at keeping food fresher for longer compared to traditional packaging materials.
Bioplastics:
The global bioplastic market is projected to grow to almost $44 billion in 2022, according to Columbia Climate School.
Fast Followers: Emerging Companies and Technologies
Loliware is a New York City-based company that created a plastic alternative through the use of seaweed. Currently it manufactures straws, but is designing seaweed alternatives for cups, lids, utensils, and packaging made completely from seaweed.In January 2020, it raised $6 million in seed-round funding.
AeroFlexx is an Orlando-based company that developed a bottle which uses 50%-to-60% less plastic than a traditional bottle. Their bottles can be used as a storage tool for shampoo, condiments, and cleaning supplies. The product weighs less, reducing both shipping costs and carbon emissions from transit. Aeroflexx has raised $14.5 million in funding over 2 rounds, most recently being backed by venture capital firm, Innventure.
Ecovative Design, a New York State-based company, developed a mycelium alternative to polystyrene. While Ecovative designs its packaging, most of the production is licensed producers who grow the mushrooms. Ecovative has undergone four rounds of venture funding, most recently receiving $65 million in series D funding in 2021.
Notpla is a company in London that created a seaweed and plant-based alternative to plastic. Notpla produces biodegradable bags, takeaway boxes, ketchup packets, coffee film, papers, and more. In January 2020, it raised £4 million in seed-round funding.
Full Cycle Bioplastics is a company in San Francisco whose technology transforms organic waste into PHA, a high-performing, compostable alternative to oil-based plastics. Its products are food contact safe. In a 2014 seed-funding round, it raised $2 million.
Vessl makes screw-on caps with the goal of eliminating single-use plastic bottles. Vessl tops can be used to allow for agriculture liquids, beverages, and cosmetics to last longer without the need for a plethora of preservatives. The Arizona company raised $10 million in series B funding from Beacon Hill.
Ecoshell is a Corning, California-based company that uses walnut shells for a variety of purposes, one of which is the creation of molded plastics.
Venture Capital/PE and Other Fund Investors
BOLD, venture capital fund of L’Oréal, invests in disruptive businesses in marketing, digital, R&D, communication, supply chain, and packaging. Interests lay on fighting major issues, including plastic pollution, water savings, and energy consumption.
Closed Loop Partners is devoted to the circular economy and supports sectors including plastics, packaging, food, agriculture, fashion, and technology.
Circulate Capital provides debt and equity financing to waste management and recycling start-ups located in India, Indonesia, Thailand, Vietnam, and the Philippines. Its current 13 investments are all devoted towards building a circular economy.
Plug and Play is a seed and early-stage investor for an array of industries, including new materials and packaging, energy, and fintech. Its average investments range from $100,000 to $150,000 USD.
Dow Venture Capital invests in consumer, packaging, and industrial and infrastructure industries.
Rethink Capital Partners seeks to minimize environmental impacts and provide social benefits through investments in companies in industries including gender equity, education, health, environmental sustainability, economic empowerment and community development.
Final Thoughts
With the increase in sensitivity to the packaging industry’s impact on the ocean, air, environment, and human health, consumers are seeking alternatives to plastic. Governments have also started to become more aware of plastic pollution, and more than 127 countries have implemented plastic bag bans.
Companies such as Coca-Cola are responding to this trend. In February of 2022, Coca-Cola announced plans to make all of their primary consumer packaging recyclable by 2025, and to use 50% recycled material in their packaging by 2030. Increasingly, companies are also using bio-based plastics and announcing their bottles will contain 100% of bio-PET in the future.
There is scope for significant growth and investment in packaging. Companies that take an innovative approach to their packaging designs will benefit from this environmentally beneficial trend. Industry growth will need to be tempered with communication to consumers about the after-use externalities and treatment of packaging, such as how and where the bioplastic material is disposed, the volume of carbon dioxide emissions saved, and whether the biomass was grown sustainably.