business news in context, analysis with attitude

The Wall Street Journal reports that some CPG manufacturers - including Procter & Gamble, PepsiCo, Nestlé and Unilever - plan to “test selling their products in reusable containers, adopting a milkman-style model to address mounting concerns about plastic waste.” There are, in fact, some 25 CPG companies that this summer “will start selling some products in glass, steel and other containers designed to be returned, cleaned and refilled.”

Unilever, for example, "estimates a refillable steel container for its Axe and Dove stick deodorants will last eight years - long enough to prevent the disposal of as many as 100 traditional deodorant packages … PepsiCo will sell its Tropicana orange juice in a glass bottle and Quaker Chocolate Cruesli cereal in a stainless-steel container as part of the trial.” And, “P&G will sell 10 brands, including Pantene shampoo in an aluminum bottle, Tide laundry detergent in a stainless-steel container and an Oral B toothbrush with a durable handle and a replaceable head.”

The Journal writes that "shoppers who the companies select for the trial will be able to order hundreds of products - including Nestlé’s Häagen-Dazs ice cream and Clorox Co.’s wet wipes - from a website for home delivery. Products arrive in a reusable tote with no extra packaging. Once finished, users schedule a pickup for empty containers to be cleaned and refilled. They can sign up for a subscription-based service that replenishes products once empty containers are returned.”

The program - which will start in New York and Paris - will be run by recycling company TerraCycle, which will “handle delivery, returns and cleaning.”
KC's View:
This won’t be an easy sell. People dubious about the impact of switching from single-use disposable bags to a more sustainable version may not see getting their shampoo bottles and deodorant containers refilled as wildly attractive options.

But .,.. it seems to me that this is an initiative that - even though it will take a long time to get the kind of scale that will allow it to break even, much less see any sort of profitability - could point the way to a different approach to waste, which most people would agree has become an growing problem affecting our fragile planet.

That’s great … but as I read the Journal story, it seems to me that there are a couple of other things going on here.

First, there is the fact that if reusable containers are being refilled on a regular basis, it means that the companies have achieved some level of automatic replenishment of their own brands. It is some equivalent of Amazon’s Subscribe & Save, which locks participants into a never-ending replenishment cycle for consumables that they use regularly … which is extraordinarily powerful for both Amazon and the growing list of participating brands.

At the same time, the program as described also seems to offer manufacturers the potential ability to disenfranchise the retailers that traditionally have sold their products. If P&G and Unilever are showing up at a shopper’s home to refill these items, that means the shopper isn’t going to the store to buy them. This would strike me as something retailers ought to be concerned about.

Now, let’s be clear. The Journal story makes the point that “TerraCycle hopes to bring big retailers on board so that customers eventually buy and return most of the products in store or online via retailers, lowering the project’s costs and expanding its reach. So far, French supermarket giant Carrefour SA has signed up. TerraCycle said it is negotiating with potential partners in the U.S., Canada and the U.K.”

This tells me a few things. One, while the program may be tested in New York and Paris, the fact that TerraCycle is negotiating with retailers in all those places suggests that it already has plans to expand the test. And, it tells me that if this initiative takes off, the retailers that are part of it will have an advantage over those that do not … if for no other reason than it creates an ecosystem in which the store becomes more relevant to the brands’ value proposition and customers’ declared priorities.