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Reusable packaging and greenwashing with Muuse CEO Jonathan Tostevin
115 Plays2 years ago
Is reusability a way to reduce plastic waste and promote sustainability? Or is it just more greenwashing? Anthony, Karthik, and Mike discuss Starbucks' new reuse campaign and then talk to the CEO of Muuse, which is putting reuse into practice in Singapore.
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Transcript
Introduction to Innovation Matters Podcast
00:00:11
Speaker
Hello, and welcome to another episode of the Innovation Matters podcast. Innovation Matters is a production of Lux Research. I'm Anthony Schiavo, Senior Director at Lux Research. I'm joined by my two colleagues and co-hosts, Mike and Kartik. As always, Mike, how's it going?
Navigating NYC Traffic During UN Assembly
00:00:28
Speaker
It's UN General Assembly Week here in New York, so the traffic is completely effed everywhere, but I ride a bike, so it doesn't really affect me that much.
00:00:41
Speaker
The globalists really have it out for you. I have gotten, what have I gotten trapped up on the UN by, uh, you know, like when the Biden's caravan goes by or something to like shut down the street for, you know, 20 blocks in either direction. And now that people pass, I've gotten like trapped on the East side by that before trying to go like pick up my kids from school, but we'll survive.
00:01:12
Speaker
Yeah, I'm good.
Event Planning Challenges in Amsterdam's Rainy Season
00:01:14
Speaker
Amsterdam is back to normal. It's been raining the whole day, which is what the Netherlands is supposed to be. Traffic jams because of the rain, not because of the UN assembly, but yeah. Famously good weather in Amsterdam. Absolutely.
00:01:28
Speaker
Yeah, I feel like we, we, we really missed a trick because we're, we're doing our big event in Amsterdam in a couple, maybe month and a half or so. And, uh, yeah, November, not really like peak Amsterdam season. Nope. Probably should have done it in April or May, but, uh, maybe next year, maybe next year we'll learn, but I'll have to bring out the raincoats. Oh man.
00:01:58
Speaker
The first business trip I ever took to Europe, my sneakers ended up so soaked that I just threw them out at the end of the trip. They never dried out for a week. And yeah, that was that. RIP to that pair of sneakers. They were actually given to me by my college senior design partner because he was so despairing at the state of my shoes. And look at you now, Lux King of the Fits.
00:02:26
Speaker
And look at me now. Truly, the fashion journey has been truly completed.
Starbucks' Reusable Cup Program in Napa
00:02:34
Speaker
So we have some interesting news today. Um, a lot of sustainability and particularly, um, sort of consumer sustainability oriented news. And the, the big one or one of the big ones was Starbucks, um, piloting a reusable packaging program. And Starbucks has had a commitment to reusability for, for some years. I think they first sort of launched it or, or stated these ambitions in 2020.
00:03:05
Speaker
as part of their 2023 goals to reduce both plastic waste and I think single use waste in general. Part of that is packaging design innovation, but part of that is reusable packaging. So they just launched this reusable packaging cup program in Napa, California, 12 stores. So it's a pretty small trial soon.
00:03:30
Speaker
And it's quite intensive. You have basically a polypropylene or polyethylene cup. You have this sort of collection and return station which washes the cups. And there's some digital tracking involved in the cups.
00:03:51
Speaker
And the whole thing is basically to try and get the consumer to order, similar way as usual, and then bring back the cup, either, you know, the next time they visit or that same day, that type of thing. And there's, you know, there's all these little incentives. There's all these little, um, you know, I think you get like 10 cents off. I think you get some points on your Starbucks card.
00:04:16
Speaker
I don't know.
Consumer Behavior in Reusable Packaging Programs
00:04:17
Speaker
It seems to me that the big challenge for reusability is the consumer behavior side. We're going to be talking with our guest about this later.
00:04:33
Speaker
I don't know. I think there's kind of a limit on how much you can achieve with these little incentives and, you know, this need to make it a sort of, you know, it's an in-store ecosystem, right? Where the consumer ultimately has to come back to the store to manage this.
00:04:50
Speaker
I don't know. I think to me this is an interesting trial, but I'm climate Stalin. I think we have to get to the point of instituting this from a top down. Some more standardization across stores, across different types of organizations, different types of brands.
00:05:09
Speaker
And it's going to be really hard to do without that. But I don't know, what do you guys think about this? Yeah, I mean, I think that's sort of what Starbucks is. One of the things that they're looking at here is the prospect of single use products getting banned, right? And so they're trying to get ahead of that because it is going to take a lot of time and effort to kind of figure out the right
00:05:35
Speaker
model for this to develop the consumer behavior, to get the right infrastructure and stuff in place for that.
Sustainability of Reusable Cups Compared to Plastic Bags
00:05:43
Speaker
Because, you know, maybe needless to say, right, but the cups, they kind of look like the regular Starbucks cups, but they're probably propylene. They're a little bit more robust, it looks like, as they need to be.
00:05:57
Speaker
So I haven't seen the numbers on it, but I'm sure these cups contain more plastic. And because they're polypropylene, they're harder instead of PET, they're harder to recycle than your regular Starbucks, you know, paper or plastic cups. So if these things are not in fact being reused at very high rates, then it's going to be worse from a sustainability perspective.
00:06:20
Speaker
And so I think that I'm sure that's what they're trying to figure out. I'm sure a key figure of merit or metric for this program is going to be what reuse percentage that they can really achieve. But that is hard.
00:06:34
Speaker
I mean, there's a part of me that just says like, if you just banned single use cups at the stars, you know, people would like figure it out within like a couple weeks. You know what I mean? Like, you just just get rid of it. And like the first time someone walks into a Starbucks and there's no cups, they're gonna feel bad or whatever. But then like after that, you know, they'll be fine.
00:06:56
Speaker
Yeah, I mean, that's what we've done with plastic bags, right? And how well has it worked? I mean, first of all, we haven't really done this with plastic bags. Noah, if you go to a grocery store and you don't have bags with you, they will give you bags. Like maybe in New York, they're true. They'll charge you five cents and they'll give you one that's not like the thin polyethylene. It's like a little woven polyethylene. I think it's polyethylene.
00:07:24
Speaker
you know, it's a little fabric-y sort of thing that is more, it is intended to be reusable, and I do reuse them. But yeah, that happens all the time. I forget my bag, and then it's like, oh, I'll buy another one for 10 cents, and now I've got all these, you know, bags, which again, use more plastic than the really cheap single-use ones we just banned.
00:07:45
Speaker
What they should do is they should just open a Starbucks where they just won't sell you a coffee if you don't have a reusable cup with you. It's just like premium Starbucks. Yeah, but I'm not sure if I would go to a Starbucks in general. The coffee is just too expensive and I'm not a coffee drinker and I know a lot of people crib about that. Having an extra cup, that's also going to add to the cost. I actually welcome the move. I think it's a good thing to start, but how do you dictate consumer behavior?
00:08:14
Speaker
What should that fine be for not bringing the reusable cup back? It sort of goes back to something I learned during my economics course in university where they have this big oovian tax for carbon. So what's the right amount of tax that you should have to incentivize people to jump onto the program? If it's too high, then people are like, oh, it's too expensive. And they look for alternative sources. If it's too low, then people will continue using it because the penalty isn't high enough.
00:08:44
Speaker
So how how will Starbucks strike that balance? I think that'll be quite interesting to see but if I were a coffee drinker and I liked Starbucks coffee and Was willing to forego the fact that it's expensive. I will subscribe to the program
00:08:58
Speaker
Yeah, I'm not convinced that that's the right way to think about it because like in crime prevention, right, is kind of a good example.
Penalizing Consumers for Behavioral Change
00:09:08
Speaker
People are highly sensitive to the risk, the perceived risk of getting caught. Like if you think you're going to get caught, that deters crime.
00:09:17
Speaker
But they're not very sensitive, or they're much, much less sensitive to the risk of the penalty itself. People don't think, oh, well, you know, my risk of getting caught is 5%. But this carries, this is like a felony, and it carries a 25 to life sentence. And so my risk adjusted weighting of getting caught is actually much higher than that, because if I do get caught, it's a big deal. That's not how people think about crime, right? They just think, am I going to get caught, yes or no?
00:09:46
Speaker
And so like the penalty is like, oh, like, is it like, should we give him a $1 off or like 10 cents off plus 25 points? And it's like, I don't know if that really matters. Like, I feel like once you're, you know, to use the grocery store example, once you're in the grocery store and you don't have bags, you're going to pay almost any price for that.
00:10:08
Speaker
If the bag was $1, you would still pay $1 to get the bag. It would have to be like $100 or I don't know, $10. You really have to move up the cost curve dramatically to change consumer behavior in that way.
00:10:27
Speaker
To me, it's the physical elements of the system and just the lack of alternatives or the making it a habit to sort of build in an ecosystem around it. That's going to be way more important than like, oh, what's the optimal price discount that we give to get people to get in the store with reusable cups? I just don't think it works that way.
00:10:49
Speaker
Maybe I'm from a very price sensitive market in India because we are pretty price sensitive in India. So I guess that's what sort
Cost Sensitivity and Reusability in Different Markets
00:10:57
Speaker
of shaped my thinking when I was making that argument. No, it's a good point too, because I do think that if this does lead to increased costs, that is going to have an impact. Like you said, more price sensitive markets and what works in Napa is not going to be the same as what works in Delhi or whatever.
00:11:14
Speaker
a lot of places around the world. Well, presumably. And I mean, that's one of the big questions to this. And again, we have a fantastic guest on the second half of this podcast. So stick around. But one of the big questions is, what is the ultimate cost impact of reusability, right?
00:11:30
Speaker
Is it going to be cheaper? How cheap can it be? For whom will it be cheaper? Is it just going to be something that is ultimately subsidized by a forgetful population of people buying new cups every once in a while? Who is actually going to bear the cost of this? Is it interesting?
00:11:54
Speaker
I don't know, an interesting wrinkle, especially in the context of expanding this out and eliminating single-use packaging. Because the growth markets for single-use packaging are all Southeast Asia, Vietnam, Thailand, India, those types of nations. And like you said, Karthik, the cost sensitivity is, I think, a fairly substantive issue there.
00:12:21
Speaker
Although in some ways, I mean like in Singapore, right? The hawker centers are, they're using reusable cups pretty regularly, right? It's not that big of a deal. So maybe it's, maybe it'll be a much easier transition.
00:12:35
Speaker
Okay. Speaking of easy transitions, we're going to easily transition to our next topic through the magic of editing. We're going to cut out the long pause. We're going to talk about the other big sustainability sort of packaging related news, which is the EU is cracking down on
EU's Crackdown on Misleading Sustainability Claims
00:12:56
Speaker
kind of a pretty wide range of things, but basically greenwashing claims. And these sort of seem to fall in a couple, a couple categories.
00:13:05
Speaker
One is just like BS claims like, hey, this is an eco product. It's like, what does that mean? It means nothing. You can't make that kind of claim. So there's a number of things about here, sort of about like, oh, like unapproved sustainability labels, unapproved certifications, you know, that type of thing.
00:13:27
Speaker
The second is specifically offsetting schemes, and it seems like there's a substantial crackdown or reduction in the legality of basically carbon offsetting or certain offsetting schemes.
00:13:43
Speaker
And this isn't necessarily, I think we go to carbon offsetting, but every time, we touched on this last time, but every time I book a flight with my credit card, I said, oh, we're going to plant two trees for this flight. And that's an offsetting scheme, even though it's a very stupid offsetting scheme. So it's not extremely clear to me what kind of offsetting schemes are going to be banned. And we can kind of dig into it a bit more.
00:14:09
Speaker
But then there's also a lot of consumer protection oriented stuff, so basically restrictions on sort of durability claims that aren't backed up, representation of goods being repairable if they're not repairable,
00:14:31
Speaker
some crackdown on like basically prompting consumers to replace your ink cartridges earlier than necessary or any sort of you know replacement earlier than necessary and limitations on um like sort of forced obsolescence or or planned obsolescence right um
00:14:52
Speaker
So it's pretty wide ranging and pretty interesting. It sort of reflects a philosophy, again, that I'm not sure I completely agree with, which is that consumer choice being an important thing or a driving factor in the sustainable transition.
00:15:13
Speaker
where it's like, look, we're going to have products out there. People need to disclose faithfully what's in those products or what the attributes of those products are. And then consumers who value sustainability can choose those products.
00:15:25
Speaker
It's good, obviously, just lying to consumers is not great as far as an economic theory goes, but I'm not really convinced that just opening this one up to the free market is really going to get us anywhere. If you're a climate activist, then the fact that people are claiming some product is carbon neutral when it's not is infuriating and justifiably so, but punishing that company for that or
00:15:55
Speaker
How much does that really drive actual more positive behavior is a little bit up in the air. But I think this proposal is interesting because they're not just, which I think some of the NGOs, it sounds like, wanted them to do. They haven't just banned carbon neutral claims.
00:16:19
Speaker
they've banned carbon neutral claims unless you can prove they're legitimate. So I think the hope is that if companies want to start making these, you know, we've seen this, right? We've, you know, Ari van Berkel on our, and Makundi Kashuk on our team wrote a really interesting report about carbon, a couple of really interesting reports about carbon credits, where they really get into thinking about these things, you know, have to think about carbon credits, not just in terms of
00:16:48
Speaker
the cost of them and how much carbon you can sequester with them, the sort of scalability, but also in terms of the risk, right? What's the risk that that credit is going to turn out to not have sequestered as much carbon as it?
00:17:05
Speaker
is supposed to. And if you're doing something like forest-based, then they're really cheap, but they're really high risk because the odds that if that forest is not properly managed or burns down or whatever, that the carbon is not actually going to be sequestered is pretty high. And something like this EU regulation
00:17:25
Speaker
put some actual financial teeth behind that risk. It's not just like people are going to know your claim is BS, but you could actually be banned from making it. I think it could also even provide a platform for people to sue these companies for making misleading claims.
00:17:48
Speaker
you know, put some financial teeth behind that risk aspect of the carbon offset market. And, and I think the service something else that's going to be driving it towards higher quality carbon credits and better monitoring reporting and verification behind carbon credits.
Challenges in Proving Green Certificates' Legitimacy
00:18:09
Speaker
Yeah, just a couple of thoughts on this for me. I guess, again, I'm going to sound like a broken record when I say this, but I think one of the objectives is to prevent consumers from overpaying for a product.
00:18:21
Speaker
When I go to the supermarket and I see something that says bio or organic on the label, it's usually priced more than something that does not say that. I guess that's the first thing they want to prevent. Now, the word bio is not specifically mentioned in this policy, in the press release.
00:18:42
Speaker
So, you know, but I guess that's how they're thinking about this. And the second thing, and going back to proving, you know, what offset systems and stuff they're using, and please correct me if I'm not mistaken, if I am mistaken, sorry. Isn't proving the legitimacy of these green certificates still quite murky?
00:19:13
Speaker
Yeah, it's it's pretty rough like even beyond the legitimacy. I mean there's
00:19:20
Speaker
there's proving the legitimacy of the actual thing. Like, are you just straight applying? Did you actually plant 100 trees or whatever? And then there's the much, which is difficult by itself, right? And then there's the even much more difficult question of proving like, if planting 100 trees is even good for the environment and over what time scale, right? So there's a ton of issues at present with all these different approaches.
00:19:46
Speaker
And I think that's why when we see these crackdowns, they're going to be focusing on these credits. But there is a risk here. I mean, in the plastic space, we're beginning to see the exploration of plastic recycling credits where you can separate the content from the recycled claim in a sort of similar way that you separate the carbon reduction from the product or the actual activity and attach it to a product.
00:20:16
Speaker
And, you know, this is done for practical reasons. It's very hard to recycle certain types of products. We need to build certain types of recycling capacity. And downcycling is kind of a scare word for activists, but really it's an economically beneficial activity in most situations. So there are these big mismatches between the groups who are willing to pay.
00:20:41
Speaker
for recycled content and the kinds and types of recycled content that are available to them and the usability and all these issues, right? You have these big markets that could consume a lot of recycled content, like carpeting, like automotive, building materials that aren't really willing to pay. And then you have these groups that really want things to be recycled and have a willingness to pay, but it's actually very difficult to get the physical material that's compatible with the application.
00:21:12
Speaker
I mean, there is a risk here of crimping certain types of claims that would be valuable for the economy overall and valuable for sustainability, more to the point.
Recycling Claims and Economic Benefits
00:21:24
Speaker
But I get where the EU is coming from. I think the pendulum is definitely pretty far on the side of people lying and pretty not so far on the side of like, oh, legitimate recycling activities or whatever are being slowed down by this.
00:21:40
Speaker
uh by uh by red tape i don't think that's a particular issue too far but knowing it it could be in the future
00:21:51
Speaker
Okay, I want to leave you guys with one last question.
Starbucks Latte Variations Trivia
00:21:54
Speaker
There's this incredible Bloomberg article, why Starbucks is trying to cut wait times. And they have done an analysis of how many possible variations there are of a Starbucks cafe latte. How many possible variations including all the different
00:22:13
Speaker
pumps of syrup and the sweeteners, the types of milk, everything else, all the extras. How many possible combinations do you think there are of the Starbucks cafe latte? Mike, I'm putting you on the spot first. 1,278.
00:22:35
Speaker
That is so, so low. That is insanely low. Multiple orders of magnitude off. Karthik, can you do any better?
00:22:49
Speaker
I don't know, 100,000 combinations? Just because you said Mike's option was low, I mean, you made it easy for me. According to Bloomberg, I mean, you are certainly closer. They have come up with the number 383 billion combinations. It's an incredible graphic I'll send to you guys.
00:23:15
Speaker
Oh, wow. And they could all go in a reusable cup. So, yeah. You don't agree. And there's actually a great picture of Schultz in the US Senate drinking from what appears to be a reusable, or at least certainly not a single-use plastic cup there.
00:23:33
Speaker
One combination I certainly want to agree with is chai tea latte, because as an Indian, it pains me to say they use tea and chai in the same sentence. And then it already has milk in it, so you also have latte in it. I'm like, what? Did you know that you could get your cup lined with caramel sauce at Starbucks? That's one of the options. There's just so much stuff here. There's a chai pump. Do you know what a chai pump is, Karthik?
00:24:02
Speaker
know and it's uh i don't want to know at this point yeah sounds just as offensive i'm glad that we've we've taken this episode to radicalize karkak against uh starbucks i think we'll leave it there um we have a great interview coming up and we'll see you guys on the next segment
00:24:29
Speaker
Okay, we're back with Jonathan Tostevan.
Jonathan Tostevan on Circular Economy Packaging
00:24:32
Speaker
He is the CEO of Muse. They're a company that is rethinking takeaway packaging for the circular economy. And we're really delighted to have him here to talk about, of course, everything circular, the state of packaging, but also the overall process of sustainable innovation within the circular economy, because I think this is one of the most
00:24:55
Speaker
fascinating areas and certainly something that I've really enjoyed working on at Lux. Jonathan, how are you doing? I'm good. Thank you. We have a pleasure to be with you guys. Yeah, lovely to be on the podcast. Thank you.
00:25:08
Speaker
It's our pleasure to have you. Can you just start by telling us a little bit more about yourself and also Muse, what you do and why you do it? Sure, sure. So I'm Jonathan, I'm the CEO at Muse. I'm based down in Singapore. I've lived here for six years now. I'm originally from the UK.
00:25:29
Speaker
I started off my career actually in government as a civil servant. I've always kind of wanted to work on impact and literally social impact. And that's where I thought, that's where my journey started off and where I thought I could do that. I focused on international development, ended up working in ministry in the UK, specialized in that, including on the Ebola crisis in Sierra Leone.
00:25:56
Speaker
But after about nine or ten years in government, I realised that I preferred, I wanted to be a bit closer to the action, I wanted to, I enjoyed the kind of operation roles, like getting my hands a bit dirtier.
00:26:09
Speaker
led me to social enterprise and I joined a program called On Purpose in the UK which helps professionals transition into social impact, into the social enterprise sector from either the private or public sectors. It's like a year-long program with work placements, coaching, mentorship, it's sort of like a mini MBA.
00:26:28
Speaker
And that got me to the world of social impact, social enterprise. And it led me to a company called Baloo in the UK that make ethical mineral water for the Horica sector, which is the hotel restaurant catering sector in the UK. So they partner with guys like Jamie's Italian, Strada Zizzi. They're quite household UK names, apologies, from the international audience. I'm very aware of Jamie Oliver.
00:26:55
Speaker
They were pioneering, I think at that time, they were already donating their profits to water aid, to a water salutation charity, but they were going further and measuring their carbon impacts and reducing it by 5% every year. This was about seven or eight years ago before a lot of guys were doing that. That was my first taste of actual business, but also ethical business.
00:27:19
Speaker
plastics packaging, FMB, that whole space. And I always thought that I'd been quite sustainable and environmentally friendly. I did my recycling, that sort of thing. I hadn't really ever thought what happened beyond that. Where does the material go once it's collected, whether it's for recycling or for trash.
00:27:39
Speaker
It's kind of stupid when you say it out loud, but you know, that's what you do, right? And so that kind of job really opened that whole world up to me. And at that time, we also then just moved out to Singapore.
00:27:54
Speaker
There are some beautiful places out here, but you also see the impact of ocean plastic and plastic trash more prevalently out here. It's easier to see it in some of the less developed economies. And then also come inside, you would like 2018, which was the year of ocean plastic waste, where everyone crazy about straws. And I kind of came together and just was a bit of a
00:28:16
Speaker
kind of new recommindment for around, oh, this, like, not only do we not have any control of where this stuff goes once we use it, but there's also like billions and billions of these materials that we use every day without thinking about it, they're just going somewhere. And I, you know, in best case scenario, they're being burned, and then we put landfill, and that's like not a great best case scenario. So that's, I guess that's how I end up here.
The Muse Journey: Idea to Circular Economy Execution
00:28:41
Speaker
When I got here, I wanted to do something just to start trying to tackle the problem. So I set my own business called Defilor Straw, which was obviously around the straw problem. And I wanted to focus on trying to have the most impact with that business. So rather than sort of selling BYO products, personal products that consumers could use.
00:29:04
Speaker
I tried to sell wholesale to the retailers, to the bars, the restaurants, the cafes, and persuade them to use the bars' dining materials, which was partially successful. We'd saved a million plastic straws from waste, but that's kind of a drop in the ocean.
00:29:21
Speaker
And through that, it took me into whole takeaway packaging. And just as I was thinking about, I had this whole circular link for takeaway packaging, I met some guys who were having the same thought, who had just served a company called Revolve. And I joined them, opened the Singapore market, and then a couple of years ago, I took over as CEO, and we'd also just rebranded the news, and I've been part of the company since then.
00:29:46
Speaker
Yeah, it's interesting you mentioned Final Straw because I wanted to ask you about that. And looking at Final Straw, I mean, your entire innovation journey, can you just explain us through that process as to how you got to exactly the Final Straw and beyond that, how you got to Muse?
00:30:05
Speaker
Yeah, so it was initially just meant as a bit of an experiment. Like I'd never said a business up before. I actually wasn't really sure what an invoice was. I had to Google that. I still don't know. I don't know, right? Yeah. People pay me, that's all that matters really. And me and a friend who's like a circular economy expert were like, let's just sort of play around with some ideas. So we were looking at like a
00:30:31
Speaker
circular rental model for straws where we would never straws to restaurants, we'd pick them up, we'd clean them and bring them back, which is a ridiculous idea and never going to work because you know you fart through costly and it feels like just kind of a small item, actually kind of difficult to clean straws on mass when we're looking at UV cleaning and they're like these kind of bubble cleaning stuff and we've got that ridiculous and then we just kind of
00:30:58
Speaker
you know, just designing this stuff like just ourselves and then I went out and started talking to cafes and they were like, well, why don't you just like sell them to us and we'll use them. They're like, okay, that sounds a lot simpler. Less kind of cool and perhaps circular economy designy, but maybe more impact and actually solve the problem. So my mate became less interested after that because it's more of a theoretical kind of place. And I just kind of thought, okay, well set this up and see where it goes. You know, I didn't know anyone here. So it was also a way for me to start
00:31:26
Speaker
get to know people, get to know the space, understand what consumers thought. And also to be part of this, I think there has actually been quite a change in attitudes in Singapore in the six years I've been here and it really wasn't very, people weren't really very considerate about plastic waste or aware of it. And I'm not saying it's a paradise now, but I feel like there's definitely an awareness to increase.
00:31:48
Speaker
Yeah, it's it's interesting. I'm realizing we basically moved to Singapore at the exact same time. I also moved there in about six years ago in 2016. I just I just left so we could have been recording this podcast in person.
00:32:02
Speaker
I guess I'm curious, you've touched on this a couple of times, you made the comment that you wanted to go wholesale to businesses and not try and sell to consumers. And you also kind of mentioned that, hey, these businesses, we have this crazy idea of the reusable straws of businesses, hey, just keep it simple. So I'm kind of curious for your perspective on
00:32:23
Speaker
Particularly sort of the consumer attitude towards these types of products or these consumer attitude towards sustainability. Is it something where, because we hear at Lux a lot from our clients, consumers, they don't want to pay for these types of things. Or only a very small subset of consumers are going to pay for sustainability.
00:32:40
Speaker
So I'm just curious how you think about having launched a number of products. How do you get the businesses to buy in? Does the consumer, does that piece matter at all? Or is it just something that people stress out about, but really you have to come up with a good business model and that's all it takes? I'm just curious for your perspective. It's such a challenging question.
Consumer Willingness to Pay for Sustainability
00:33:05
Speaker
Yeah, it's a huge question. There's probably a thesis in there.
00:33:10
Speaker
I think it's right. I mean, consumers don't... There's a small segment of the population that will pay for sustainability. At Muse, actually, our business model is that we charge vendors a packaging fee to stock reusable packaging. It's a flat fee per month. If they use more, they get better value. If they use less, they get less value.
00:33:34
Speaker
But we originally started off with a user pay model and a free-to-vendor model. So we had a subscription where it was like $3 to $5 per month to have access to reusable packaging across the vendors. And there was a portion of the population here that was very happy.
00:33:51
Speaker
really happy to do that and feel like they were part of the change. But we realized that for reasonable packaging for it to work, it needs to be a scale solution. To get scale, we need the mainstream on board, it needs to be a barrier, it needs to be as low as possible. And also from a logical perspective, vendors are paying for packaging already. We see ourselves as just another packaging alternative just because we're
00:34:13
Speaker
more sustainable doesn't mean that we should really try and think of it differently. I mean, there's a case of like able to get the vendors comfortable with it first, which is why we did free to start with. But yeah, I think definitely they're not going to pay much more.
00:34:29
Speaker
From a vendor point of view, I think it's super challenging to get vendors to do it if they don't think their consumers are interested in it or going to be up for it. The cost is an issue, but I think because packaging is a really cheap item for them already,
00:34:50
Speaker
a lot of them I think really factor it into their, like it's just a small cost that you're not saving a huge amount by trying to, you can't really be cheaper than Singling's currently is, so you're not really going to save money then to do it slightly if you're really good on a loose scale. But you're basically going to be cost parity at best. And then they're thinking about all the operational effort. It's not just like I'm swapping in a plastic product for a paper product or a bioplastic product or a composting product where it's basically just like for like,
00:35:20
Speaker
you're changing your system and that brings effort, they've got to train the staff, they've got to think differently about doing things. That whole like, this feels like a big thing and inertia, I think is probably the biggest aspect. It's not so much
00:35:36
Speaker
The commercials, they're important, but I think vendors are willing to pay, you know, 15, 20% more. It's kind of, I mean, you already see that, right, with the shift out from plastic to paperboard, like people have these nice craft paper ones, which are double the price of plastic, and polystyrene doesn't really happen anymore, that's super cheap. So you already see that there is a move, but, you know, kind of the average vendor pays probably around 20 to 30 cents per piece.
00:36:04
Speaker
probably willing to pay around 30, but not going to pay 50.
00:36:08
Speaker
Speaking of consumers and sticking to that topic, this is one thing I hear a lot internally within Lux Research as well. I don't follow the sustainable packaging space. I'm more into energy. But when I talk to my colleagues here, they go, do you know personally, as in they're asking me the question and they go, are you aware of policies related to the use of sustainable packaging? How do you dispose recyclable goods or where do you dispose them off?
00:36:36
Speaker
And I was like, that's an interesting question, even though I have a limited knowledge of Dutch and I can read pamphlets and stuff. I really don't know. And my colleague was like, that's because consumer awareness about
00:36:50
Speaker
sustainable packaging and the use of recyclable products and how you dispose of them off is very, very low. So my question to you is within Singapore, Asia, and you're also from the UK, so I'm sure you have a lot of family friends here in the Western part of the world. What do you see in terms of trends, in terms of policies and improving that consumer awareness of sustainable packaging goods? Yeah, I think it's a good question because you talked about there's this big implementation leap and
00:37:19
Speaker
how much of that rests on the consumers or the users, right? And especially in France, you have McDonald's beginning to adopt this kind of thing. It's like, okay, well, as we scale it up, it gets to be less and less of a controlled environment. So yeah, I'm curious about your thinking on this part for sure. Yeah.
Systems to Enable Sustainable Consumer Behavior
00:37:40
Speaker
My general view is that it's not really on the consumer. It's
00:37:45
Speaker
I think the consumer is the one with the ultimate power and the business and governments are ultimately looking at consumers and what are they thinking? What do I need to do to keep them on side? The consumer is the one with the least power, the least agency, the least time to do anything about it. So trying to put the solution on them is really tough, which is why BYO has been pushed for like 10 years. It's such a tiny proportion of most restaurants.
00:38:11
Speaker
take away. Recycling, again, is a consumer solution, which doesn't really work. Any level of work could be considered successful. So I think ultimately, it is incumbent on the business community and government, I think, together to create the right infrastructural systems to allow the consumer to behave in a different way. So you see that in McDonald's in France is a great example where the law has come in and said,
00:38:39
Speaker
You have to have reusables in dining. You can't use a single use anymore for that in that environment. McDonald's probably wouldn't have done that themselves unless the regulation had come in because they incur a cost for doing it. But once they're told that's the law, everyone has to do it. Okay, cool, we'll do it. We'll probably do it better than everyone else because we're super efficient. And they go out and do it. And yeah, there's totally some teething issues with it, I'm sure.
00:39:04
Speaker
But then obviously the consumers are maybe now at a point where they're going to be more accepting of it too. That comes with the warming up of them and making sure people understand it. But I think ultimately, I'm looking really at business and government. I guess I include us in this too. Having the confidence to take that step and try these things out and create the right systems and environments.
00:39:28
Speaker
Can you talk a little bit about, on this question like McDonald's, this question of scale, right? You may have seen the, there was this UN report turning off the tap and they forecast in their sort of successful system transition scenario as high as a 30% reuse rate for plastics.
00:39:47
Speaker
which some of the plastics producers were like, wow, that's crazy. That's like cuckoo banana stock, right? And so I'm curious for your perspective, obviously, because you know, I think, much better, frankly, than any of even the major plastics players. What's really possible in terms of reuse?
00:40:06
Speaker
And what the long-term sort of trajectory, how far can it go in terms of that scale? Is it always going to be something that's kind of niche or limited, or where does it run into challenges with scale?
Mainstream Potential of Reusable Packaging
00:40:23
Speaker
I think it will be...
00:40:27
Speaker
I think it will be the default in a lot of contexts. I can actually see it being the main solution where simple use is really the anomaly. Maybe you pay a premium for single use. I think in the next few years, we'll see like in the easy.
00:40:42
Speaker
The easiest places to start are stadiums, events, big closed-loop locations, big hand teams, office environments. I think event stadiums will probably, in two or three years, they'll all be using reusable products. It's a no-brainer. They can actually make money out of it as well.
00:41:00
Speaker
It's a really, really easy change. The kind of full cities, everyone using, borrowing, turning everywhere is more, is definitely quite complex. I think we thought it would be, but it was more complex than we thought it was going to be to kind of make that whole city environment. There's just a lot of different stuff going on.
00:41:24
Speaker
I do think in like five or ten years there will be infrastructure in cities for reuse in the same way that exists for trash recycling, food waste, garden waste, whatever. I think that will exist. In terms of the number of cycles you can get out of an item,
00:41:40
Speaker
I think the industry is the market and the whole retail space is still pretty young and so I don't think anyone really has a, you know, there's not a huge evidence base on any of this stuff. Manufacturers will say the products can go through hundreds and hundreds of times. They've not like put curry in it and like chucked in a reserve station and washed it or whatever. They're just like,
00:41:59
Speaker
open and shut it or something. You can't really go on what they say but the products that we see that we use are pretty durable. I mean we conservatively say 100 per item and I reckon most should go more than that. The loss rate is the key bit so obviously you need a system that ensures you can collect back
00:42:24
Speaker
the containers, because if you have a 90% return rate, that means you lose one every 10. So you need to basically have a material that breaks even environmentally up to 10 uses. So yeah, I can go on a lot in this space, but yeah, you need to have systems that ensure stuff comes back. I would be curious for your comments on this, because I think this is one of the pushback we see on this type of reusable thing. Often it's in pretty bad faith, you know, you'll read a
00:42:51
Speaker
pretty stupid article in the New York Times or whatever where they're like, Oh, those plastic reusable bags are actually worse for the environment. And it's like, no, they're not like, but um, there is something to this idea of, Hey, how do we actually manage these trade offs? Right.
00:43:06
Speaker
So I'm curious, is it a design question of the packaging itself? Is it within the ecosystem that the retailer or the vendor sets up? What's going to impact that? What's going to drive that forward?
Models for Encouraging Packaging Returns
00:43:21
Speaker
And especially with consumers, the burden is not really on the consumer, but you have to kind of create a system that's easy for them to use and easy for them to do that. So how are you thinking about that?
00:43:32
Speaker
Yeah, the product is part of it. And you're going to have to think about the whole system. So what accountability mechanism are? How are you ensuring that the stuff comes back, so that people put it where you want them to put it once they've used it? And I guess you can think about that broadly in two ways. One, whether you penalize them for not returning, which is more than we use currently.
00:44:02
Speaker
And that allows you, from our model, there's no upfront deposit, which removes one of the barriers for reuse. But if you don't bring it back within 30 days, then you get charged the cost of the item. Which allows you to use higher value reuse items, because no one's having to fork out an item unless they don't bring it back. But there is a slight anxiety around if I don't bring this item.
00:44:23
Speaker
and i could be in up to ten fifteen dollars paying for something which is an ideal feeling but we do get a really good return rate so our return rate is 98% because using that model or you can look at it okay how do i incentivize people to bring it back
00:44:44
Speaker
So there's no penalty if you don't. So if you drop it back in and maybe you sign up for something at that point, you can get a reward or a discount on your next purchase or something on those lines. And I think that's quite an attractive model. It's a lot lighter in terms of friction and the amount of stuff the customer has to do. It's also a positive experience, not maybe a potential negative one.
00:45:09
Speaker
I think we're experimenting with that at the moment and we're interested in seeing what that does for return rates. I think the context is obviously super important too. So like at events, large scale stadiums events, you need something that's going to be high, able to deal with high volume. You've got 50,000 people leave at the same time. You can't like be taking deposits off all of them or giving them back or whatever. Trust me, we've done that with events where you just hand out bills and notes as deposits and it's like, yeah, a nightmare.
00:45:35
Speaker
You don't want to do that. And you probably, everyone's even at the same point. If you make it super convenient, communicate the program well, you might not even need any kind of like system or incentive. Maybe the incentives are just sort of sweetener to like just get that extra time to sign up.
00:45:50
Speaker
If you're talking about like take away from your fast food or like anywhere in the city then people aren't going to bring that back because they're going to take it home and it's going to sit in their kitchen cupboards and like unless someone's coming to their door to collect it which is probably like the last step in the reuse.
00:46:06
Speaker
market because that's just such a logistically costly thing to do. It's not going to come back. And we've seen that some of the reuse companies that are out there have tried a light to touch things in that context. It doesn't work as well. So it's one of
00:46:25
Speaker
This is one of the challenges of also being a startup where you're trying to pivot into different things, trying different stuff out that all the time you're like, okay, this context, actually this model works with Bella. And as consequently, we can use this product where like, for example, like the incentive model, you want to achieve a product because you can't be using $15 of kind of cost of product when someone doesn't bring it back, you need something that's more like two or three.
00:46:48
Speaker
and you can offset that in your costs and like an event cup is like the dollar basically so you can kind of work with that but like yeah if you're talking about kind of in the open city space it's a lot harder.
00:47:04
Speaker
And then also the quality of the product affects how people use it, also whether they wanted to keep it, and then some of that stuff too. So there's a whole bunch of different factors. It's a bit like Rubik's Cube, and you've just got to line up a few different things, and hope everything's aligned to deliver what you want.
00:47:20
Speaker
Yeah. I mean, it's fascinating and I think it's one of those things where I feel like you can make a really small change and it either is really impactful or it ruins, you know, something like, you know, it's like, oh, we made this hinge designed like 3% thinner and now it breaks and no one returns it because like the hinges failed. It just feels like such a landmine of a situation, which is why I'm a podcaster and not accurate.
00:47:49
Speaker
I'm not actually trying to do anything. I want to leave you with kind of one big picture, final question. In the decarbonization space as an example, it feels like there's a lot of agreement.
Diverse Perspectives on Sustainability Goals
00:48:05
Speaker
Net zero is the goal. Everyone's kind of swimming towards that. Space is like the energy sector. There's pretty clear roadmaps for what's necessary. And of course there's some level of disagreement.
00:48:15
Speaker
In the circular economy, space as a whole, people I find have really wildly different ideas about what is sustainable, what the future should look like, what works, what doesn't. There's people who say, hey, we have to increase recycling rates. There's people who say, hey, recycling just doesn't work at all. There's people who say, hey, we have to eliminate packaging entirely. And so it feels like there's this really, really fractured
00:48:44
Speaker
space and there's not a single goal that anyone's working towards.
00:48:48
Speaker
So I guess I'm just curious as to what do you see as like the end state, or what do you see as, you know, what's your North Star because you have to manage these trade offs in any type of packaging solution, right? Simple use for reusable carbon footprint waste. So how do you try and find a direction to go towards and what are you sort of most concerned about? Or what do you like, what would you like to achieve, you know, in the very long term?
00:49:18
Speaker
I mean, our business goal is pretty simple. We just try to get as many reuse as possible. So as many reusable containers borrowed by, well, as many people, but I guess if there's one person, that'd be fine. So we're doing it all. Many single use containers avoided or diverted from landfill as possible. And so at the upstream stage, we're stopping the waste being created in the first place.
00:49:40
Speaker
I think for me that's always why reuse is more interesting and attractive than the downstream solutions because it's stopping the waste being created in the first place or at least minimising it quite heavily. I think I'm not an expert in recycling or the kind of innovative technologies around single-use materials. I suspect, I think there probably is a place for all of that. I'm sure we can definitely do a lot of it better, like recycling better.
00:50:07
Speaker
And my view probably would be to rebrand reciting its material recovery and focus it around a few specific materials that the consumer can understand and even product types, try and get a bit more, as it's already happening, try and get a bit more harmonization around types of material, get more modern material out there, less blended stuff. There's so much to roll back from that it's quite scary.
00:50:36
Speaker
but there's also a lot of low-hanging fruit too, so I guess that you can kind of look at it in both ways. Yeah, in terms of kind of long term, I do think, I think that EVs, I think, is an industry that's maybe five or ten years on from where we are, something that I feel like has been around for
00:51:00
Speaker
Energy cars should have happened like 10 years ago, but it sort of hasn't always almost just happening now. And that's one of the sort of similar industry where you need infrastructure and behavior change and consumer awareness and engagement and sort of trying to bring that all together. And maybe we'll be in a similar space. I do think we should take the majority of packaging in cities. I don't really see why it can't, particularly when you're at a heading scale.
00:51:31
Speaker
There's always going to be a place for single-use packages. Even if you're talking about paper-wrapped burgers, for example, or small bags, I don't know if that makes sense to swap that for reuse, really, but definitely when you're talking about the majority of food and drink, then I think it really does.
00:51:54
Speaker
All right, Jonathan, we'll leave it there. I have one last lighthearted question. In Singapore, you can get your kopi in either a cup or a bag. And the hot drinks in a bag thing with a straw really messed me up. So I'm curious, are you a bag kind of guy? Or do you go ice with a cup?
00:52:15
Speaker
I'm a cup person. I'm not drinking out of the bag. I love the bags. It takes some getting used to, but you can get, you can hold like five or six bags on your fingers, you know, just with the little things. No, I've never got into that. I'm still in my cup. Okay. Well, Jonathan, thank you so much. Maybe that's the next thing. We need the reusable, we need the reusable coffee bag for...
00:52:42
Speaker
But it was great having you on, and I really appreciate you taking the time out. Cheers. Thanks, guys. Thanks a lot.