Are you ready for a Pepsi in a carton?
Are you ready for a Pepsi in a carton?
17:06

Are you ready for a Pepsi in a carton?

Tech Industry
70% of the world's recyclable plastic used to go to China and then China said we're not taking that much of it that happened a couple of years ago. It really changed a lot of people's perception of what we do with plastics, typically plastic packaging. Now plastic bottles have usually been among the most recyclable of plastics are that rigid kind of plastic that usually is recycling friendly, but That doesn't necessarily mean consumers perceive it that way. Now what? [MUSIC] Ron Khan is going to have some interesting ideas for us because he is VP of beverage packaging at PepsiCo, a food and beverage giant. Are you approaching the issue of new packaging because current packaging is problematic? Because consumers perceive current packaging as problematic, there is a bit of a difference there. We do not bias against any packaging or packaging brings lots of value, be that glass bead or plastic be that aluminum cans or beat up paper. And the way we work is that we are looking for the most sustainable solution. So what we look as at the end of life, that how can we solve some of the challenges that they might bring? We will create a world where packaging need no longer be waste. So cuz it's all about the end of life, so what we're looking there is plastics. They obviously bring lots of great positives. They're lightweight, they're transparent. They're very hygienic. But then we need to manage the end of life Where did it go at the end of life? Similarly for glass similarly foul aluminium so the beauty now is that with these kinds of materials we're just looking at how can we make each one of them that we use the most sustainable at the end of life. So let's get into the so called paper bottle that we've been hearing about Pepsi co working within as I understand it. Something of a consortium you and a couple of other major food and beverage companies Unilever, I understand the ICAO are under this umbrella working with pullbacks on a so called paper bottle. If I If I have that right then describe to us what's a paper bottle? Paper is one of the most highly recycled materials around the world, over 70% across the world. So it's great to be able to collect that material Reuse it again.The only problem of course for beverage is,liquids and paper don't normally quite easily go together,you have to do things to them.So that's been the challenge for many many years. What we're looking at now is some technologies which enable you safely and securely to be able to put liquids into paper packaging. Now by paper what we're talking about is paper pulp, so pulp fibers coming from From trees, so we make sure first of all these what we call virgin fibers for the cleanliness and the hygiene and the food safety. And they're coming from well managed forests sustainably forest and sustainably managed forests. And then what we're doing is creating a molded bottle using that pulp. But then to be able to hold the liquids we need to we put some food additives in there to give it the paper strength. Very much like you would have would a tea bag. You know, tea bag is paper fibers, you put it in your cup of tea it doesn't fall apart. So that's the first thing we need to put to hold liquids and then to protect the products that we get these products to consumers in the best way We need to put some additives in there to also give us the shelf life the product protection. So but most of the material is pulp with these additives, and by the time we finished adding these additives, it gives us that security and hygiene. The ability to hold liquids so that's been the big, big breakthrough. So is there any kind of a plastic liner or sock inside this thing? Are you doing it all with chemistry applied to the fiber? The second so we actually did because we wanted this buckle to be able to recapture this bottle and reuse it and reuse the materials. Need to make sure it can go to the paper recycling system. And that's quite important. So the paper recycling system does allow some non pop material but at a very small percentage. So what we've done in this portal is design it in a way that that percentage is. Within the rounds of this. But therefore you cannot use a liner because that would then influence the ability to recycle it. So hence why we're using additives in the mix of the pulp. When the bottle is formed we then spray the inside with a very thin coating. Have a barrier material, but that allows us then to get all the functionality of the bottle, but still keep it within the parameters of being able to be recycled. So as it stands right now in your r&d and as I understand this is a product that is imminently going to be put into some degree of distribution. How's it working? There's a lot of work to be done. We had a very, very early stage of r&d on this. And I talked about some of the challenges we need to solve. How do you hold liquid? How do you get the barrier? How do you have the strength we need these packs to get to consumers not damaged. So we need to make sure these bottles are as strong as glass or PT. We just got delivery of the first samples of our design. So that's been great. But the next phase really is to prove that it works. So as we have a huge amount of testing for all the attributes, we talked about food safety, the product protection, district And distribution, and also to prove the recyclability of the bottles. So for the next six plus months, we'd be doing a lot of r&d testing. And then once we're through it that depending on how much work we then need, not often at an early r&d stage, it's very iterative. You learn things as you test, you go back and and redevelop. So depending on how many cycles may go take for that. Before we actually commercialize and put this on the market, so we do have some years of R & D work still to be done. As we look at this,we know that there's this concept of reduce, reuse, recycle or reduce, reuse, replace. Let me get the three R's right. Where does this fit most in terms of reduce, reuse, replace, is this one of those levers that this technology pulls more than others? Yes, I mean, we would very much fall under the replace bucket. Because what we're looking at here is we have a portfolio of of different types of packaging and all the different packaging types. And what we want to do is make sure we have the right type for the right kind of market channels to make the right type of consumer needs. So hence why we have things like glass, we have things like aluminium, we have things like even liquid paper cartons, The type of tetra pack type of packs. So this then gives us an extra level in our extra lever to be able to achieve our sustainability goals probably for channels or for consumers or for brands that need to get the benefit of paper.>> In the language I'm hearing from you in our conversation so far, I'm hearing about a hybridized approach where there are still a lot of different packaging types. For beverages, I'm thinking soft drinks in this conversation, as opposed to a wholesale move away from what we have solely to paper bottles. Is that about what the roadmap looks like so far? That's where we are at the moment, because it's a brand new technology and we want to see it as part of the portfolio. I'm a little worried about the packaging. It's all about scale. So how can we get? We've had a lot of years of PT bottles and glass jars, to be able to optimize it, to be able to run faster on lines, to get it at the lightest weight, but still keep the functionality to get it to the right level, of course. And we're now about to start that journey with paper. You know, glass also has it's great advantages. So it's also transparent as BET. Of course, it's, it gives you a great barrier. But then there's also some challenges with the weight and the GHG. So we're still using that material but working to improve that footprint. I wanna ask you about glass while we're on that this is kind of a fun angle to what we're talking about here, which is There's a cult following as you and your company know well around. In this country Mexican imports soft drinks because of, I think some cachet the fact that they have a cane sugar sweetener, and they come in glass bottles often that look like they've been around the block a number of times, which is I think part of this sort of charm as well as perception are some markets near the US glass beverage. Container markets, or is that just what we get exported here as part of their packaging charm. So particularly with Latin America, one of the big advantage with Latin America is that in addition to doing single use plastics, They have a very well developed market on returnable packaging. And most of the other developed markets we've moved away from that more into the single use for convenience point of view in Latin America and other geographies around the world. There's still the returnable system. Stones. So you have and glass works brilliantly in that because of the durability and the strength. So in a lot of countries Mexico Brazil as well developed systems for returnable glass, and I think what your experiences and so for them, it's a great part of their portfolio of packaging. And whereas in most of the other markets. Glass has become a bit more focused in certain areas, but then it's a daily use pack. That's interesting. Yeah, we're a little more, I guess because we can afford to be we're a little more convenience oriented. I don't know many people that worry about getting their bottle deposit back to be honest. They just want to say I'll just recycle that piece of glass. And I guess that's why we see again some of these import colors when they come up, [LAUGH] looks the labels half worn off. It's been through the bottling system so many times but that almost adds a patina to their Appeal. Give us a little insight into how bottling is done so we can understand who has to adopt and embrace these paper bottles. I understand that Pepsi co has recently consolidated some of its operations so you do more of your product bottling but also have a network of bottlers. Is that right? Yes, correct so that we do have that model and it depends across the world. But it's a mixture of what we call a company owned bottling operations, as well as external franchise bottlers. So, when a bottle is produced to be Holding a Pepsi Cola, let's say are those delivered to the bottling plant pre molded and ready to be filled or is that something that is molded and created on site at the bottling plant? It depends on the material. So some of the well established packaging materials like glass Aluminum cans and so on. Those would be made by a manufacturer. They will be decorated and then delivered to the plant just fulfilling plastic. Because of the high speed operation of these. We can use a mix of both so we can have vendors who supply the finished bottles, but also then in some of our factories, were able to blow those bottles. Online and fill at the same time.>> Interesting. Okay, so there are a couple of different streams through which tomorrow's paper bottle is going to have to make friends both with the bottling side of the house as well as the package manufacturing vendors side of your business. Yes, that's right. And that'll be one of the criteria of the list of things that we have to test. So I talked about its iterative testing procedure in R&D. The first phase we'll be looking at the main criteria of the bottle. The strength, and the performance, and the barrier, and the recyclability. But once we get past that, the next stage will be to look at exactly that, the operational efficiency. This bottle. And as a first phase we will get somebody to make these bottles and run them on our lines. But hopefully somewhere in the future we can see a world where if we can get this to real scale, we can even hopefully make these bottles in house. So you must have had some interesting and are having some interesting conversations I would guess with the product people who say wait a minute. We love these clear packages because our product can show. And that's the people that are used to seeing cans as well, but the clear packaging I have to believe is near and dear to the product people's hearts. What's that conversation been like as you've warmed them up to an increasing potential future of opaque packaging? So first of all, we do have opaque packaging in our portfolio. So rightly as you said we have aluminum cans and we also have liquid cartons, and they serve a purpose, and they're well accepted by consumers on our brands. But you're perfectly right, this is a bottle format and bottles tend to be transparent We do have the opacity of the bottle, but we think we can make that a feature. So first of all, it's paper so the material then gives you a certain brand feel, and for consumers then conveys something a little bit more natural And it would appeal to certain customers who are looking for that. So, that's the first thing, the second thing is this paper, you can almost imagine egg cartons. It's infinitely moldable, and we can mold them in a huge amount of variety of shapes. So, that gives another expression for the brand and product teams. And then finally, the way we can decorate this, we can actually put embossing when it's in the mall. So you can actually get some 3D features for the decorating. So it looks a bit more artisanal. So paper allows us a huge amount of opportunity. Need to be able to convey what the brands are about and also to convey the message of the Brands that they are trying to be responsible for an Environmental point of view and starting to help look for solutions to some of the challenges. We have Another problem for the Plastic Industry, Those who Supply you with Materials and or Pre-made bottle, A plastic container will say hey We've got the best product going. It's got the best, it's highly refined. It looks great, it's clear, it's strong. It's actually very recyclable and we can do more to make it better just stay with us. They always shift the emphasis to let's go work on the recycling side and stay with the plastic bottle we know. And yet Pepsi CO is taking on a pretty big r&d lift saying no, let's work on the packaging. Does that mean that you believe the recycling side is not the answer and that packaging has to change or or am I reading too much into that? I don't think it's an instead of it's an island, because the challenges we have on environmental sustainability are so key. Huge. We're going to need multiple levers to be able to solve these challenges. So when it comes to plastic, we talked about all the advantages of plastic that they're lightweight, hygienic, transparent, the challenges at the end of life The recycling rates are not extremely high, so we want to get that material back. So a lot of our work on plastics is exactly referring to that, first of all make sure we can go through the recycling system So we set ourselves target of about make sure all our packaging is 100% recyclable by 2025 and we are well on the way to that in [UNKNOWN] were over 90%. Second is how to promote recycling to be able to get those bottles back. So over the last few years our [UNKNOWN] foundation has actually invested oover 65 million in setting up search systems and helping to support That collection and recycling system. And then thirdly, we need to use that material if it's collected, bring it back into our packaging. And again, we've set big targets that by 2025 35% of our package our plastics will be from non virgin sources, and then paper because of the high recycling rate. Offers us an extra lever in that system to be able to tackle some of these challenges. What do you think are the next exciting opportunities? Are you looking for some new fibers that might unlock new opportunities as you work through the next bit of R&D? Or are you looking for new processes? Which of those do you think is a bigger pain point? Where you stand so far on paper bottles, We're at the very early stage in the r&d and the next phase, it's to do all the testing. And that testing then we'll unlock. That's typical with r&d have done lots where the issue areas and then we go looking for solutions. So very much depends on the next level of testing. We've got many opportunities for us. So exactly as you talked about with fibres We're actually using virgin fibers and good quality fibers to give us the strength. They're coming from well managed forest and they give us the food safety. But if then we need a different set of properties on the bottle that encouraged us to go look for other types of fibers. As we uncover those challenges, we go find those solutions. If we find challenges on different properties of the bottles that we need to go find different additives, different vireo materials, that's where we go. So it's a wide open area. This can be a A game changer because it brings a different material into the beverage portfolio that has never really been used before. We do use paper with liquid cartons, but then to get around the issues I talked about with Liquid containment and protection. It's multi material, which then gives a problem with recycling liquid cartons. I think this is really novel that we are able to develop a technology here with pullbacks to be able to give us all the properties of packaging that we need and build it into the material but still maintain the recyclability of the bottle. Ron Cohen is VP of beverage packaging at Pepsi Co. [BLANK_AUDIO]

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