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Brian Bauer 04:26
Outside of the UK, one project that we have that we’re really excited about is a pilot project with Coca Cola in several high profile Chilean universities. So what we’re doing there is we’re creating a system where, where the user gets a reusable mug, and it’s got a chip on it. So that chip allows the mug to communicate with the IoT connectivity that we integrate into the existing Coca Cola fountain dispensers. And that enables the machine to unlock a refill, and also bill for a refill. So when you do a fill, you’re doing two things, three things really. You’re Obviously, during the field, you’re doing a payment, and then there’s like, a verification of that process happen, which means we can create an impact report off of that happening. And it’s really exciting too, because for a long time, all the major brands are pretty much yeah, pretty much all the major brands have made commitments that they will do reuse. But they lumped it together with recycling. And instead, we’ll have 90% of our packaging or 100% of our packaging, either reusable or recyclable by 2030 2050, whatever. And I didn’t really like that I saw that as kind of an effective form of greenwashing. If you lumped together reuse with, with recycling, it’s two very distinct things, and it shouldn’t be done that way.
Brian Bauer 05:41
But as many people probably realised, recently, we’ve had some major movement with the beverage companies first with Coca Cola, committing to have 25% of their beverages consumed in reusable packaging by 2030. That’s huge. That’s the first kind of real commitment towards wreaths, it’s been quantifiable, that came out. And then shortly after that, maybe I don’t know, six, eight months after that PepsiCo came up with a similar commitment, but of 20%. So 1/5 of their packaging being reused. So we’re really excited to have a solution that can can address the on the go aspect, because the global economy produces about 1 million single use bottles per minute, that’s every single day 365. So think of that volume of plastic, it’s a huge impact opportunity. by far and away out of any product type in the FMCG space, it’s got the hugest potential and opportunity to create a meaningful reduction in how much single use plastic we’re putting onto the market. So that’s a quick update on a new and exciting projects that our Graham was working on in Chile.
Catherine Weetman 06:45
So just just to understand that a bit better. So it’s a reusable cup, is it is it branded for Coca Cola, or is it a kind of neutral brand?
Brian Bauer 06:57
So it’s a simple plastic cup. It’s double walled, so it keeps the beverage a little bit cooler, longer than a single use one word, it’s got a screw on top that’s airtight, so you can, you can have the beverage unit and it won’t fall over, it’s approximately a half litre in size, pretty lightweight. And how it works is it’s got the chip in the inside of the cup. And then that just like I said, unlocks payment, and refill and impact quantification with each refill, we can literally see exactly when someone bought the product and how many times they have used this reusable cup. And what’s really exciting from impact perspective, too, is that we’re moving towards non concentrate, instead of concentrate sales. The single use obviously being non concentrate, you’re moving a lot of water in that system, which means you’re you’re we’re reducing the supply chain weights by about 80% by going to a concentrate model, and then completely eliminating the packaging variable out of the equation, the single use packaging, which is a key cost driver as well. If you think about something like Coca Cola products, the the syrup doesn’t cost that much money. It’s the packaging that can make up a pretty significant percent of the overall product costs.
Catherine Weetman 08:08
And all the logistics
Brian Bauer 08:10
Yeah, all theenvironmental impacts associated with those factors as well.
Catherine Weetman 08:15
Yeah. So yeah, the cup looks really good. So that will talk to – is it a Coca Cola app that people use to refill? Or is that a kind of generic app that other brands could tap into as well?
Brian Bauer 08:29
We’re using the generic Algramo app currently, but we could potentially co-develop something with a partner in the future. It is pretty early stage pilot project right now. So we’re you know, we’re not we haven’t really explored those types of more advanced options, but that could be something potential for for the future.
Catherine Weetman 08:45
That sounds interesting. So that’s, that’s a big step forward, particularly in terms of those, those brands that have you know, in the, in the past been pretty, pretty slow and as you say, you know, bundling all sorts of certain circularity and together. So what about the types of products? I think when we spoke a couple of years ago, our grandma was mainly focused on things like household cleaning, personal care, maybe pet care, what kind of products besides the soft drinks have you expanded into?
Brian Bauer 09:22
We haven’t really expanded into new products yet. We’re currently focused on the same ones as before, our kind of forte I would say, is liquid home care products, and soon personal care products as well. We do have a little bit of a complication with personal care products and that a lot of our testing happens testing and product development, research and development happens in Chile. And in Chile, there’s a law that basically prohibits any personal care from being sold and refill, but that’s potentially being changed and we’re we’ve got our fingers crossed. That that does happen because then we’ll be able to more freely and freely and openly experiment with those types of products as well.
Catherine Weetman 09:59
And again, the potential for concentrates and topping up and so on is.
Brian Bauer 10:05
Yeah, that’s another huge opportunity is getting into concentrates. Some of our brand partners are interested in concentrates. Yeah. Chris, do you have anything to add?
Chris Baker – Algramo UK 10:14
Yeah, so first of all, yeah, delighted to be to be but yes, I’m focusing on the UK market. So building on what Brian has been talking about there, ‘on-the -go’ business is not if there’s something we’re going to consider here in the UK, but really where I’ve been focused is on in working with the retailers, and building on the work that we’ve been doing with the likes of Walmart in Chile. And the first product that we’ve got here in the UK is with is with Lidl, again in the homecare market space. But as Brian was alluding to it’s liquids where we’re really where’s the focus. So we’re talking about home care category at the moment, there’s a range of products that we’re considering within that. But we’re also then we’re already in discussions around expanding that to the personal care category. And I think it’s that liquid dispense, particularly in the UK market where we see that we can drive some some really interesting innovation and some really interesting efficiencies. In terms of sort of what we’re offering at the moment, we’re working with Lidl, we have a couple of different dispensers that we’ve been testing, when we’ve now developed a much more compact dispenser, we’ve also been testing a couple of different types of packaging as well, both rigid packaging, and flexible packaging to look into a couple of different options for the consumer.
Catherine Weetman 11:30
And what kind of early feedback are you getting from people in terms of the rigid versus the flexible that that sounds an interesting sort of a/b test?
Chris Baker – Algramo UK 11:40
Yes, and this is still ongoing. So the flexible packs have been in the market now since October. Now, one of the main reasons for introducing it is one of the classic challenges that gets thrown at reuse systems, sometimes unquantified, but it’s one of the one of the messages I’ve heard or complaints you could say I’ve heard in the past is that bringing large, bulky reusable containers to store is a barrier for some people. Now, the idea with a flexible pouch is you now have a very lightweight container, that when when taken home or when finished, and you could take it home and decant it perhaps into another bottle, you then have a very lightweight container that you can drop back into your reusable shopping bag, ready for the next journey. So it, it eases that pain point if you’d like for the consumer, but also in the retail supply chain, the pouches are very light, you can get a huge amount of them on a pallet. When you’re putting them out for replenishment, you can get many, many more on the shelf. So the it’s really been designed to optimise the supply chain to the store, but also for the customer afterwards. And not to mention as well is a lot less weight than a bottle. So you’re you’re not only replacing plastic in this instance by reusing it, but you’re also using a lot less in the pack format. Customer reaction has been positive so far. I mean, really, it’s early days that we’ve swapped, so a lot of the people who have had the pouch have only ever had the pouch, and there was concerned that they were going to miss things like the dosing cap for their laundry detergent, but we’ve not, we’ve not asked the question, and we’ve not arbitrarily had anyone come back and say that, that is an issue. In one of our stores in February, we switched from bottle to pouch and we’re going to be surveying them in the next couple of months to find out what feedback specifically they’ve got around that. But early signs are good that people are very happy with the pouch. Refill rates have been very similar for both formats. So there’s also, of course, the option that you could give both, but there’s no no issues have been shown by moving to the pound.
Catherine Weetman 13:44
That Yeah, that’s interesting. And certainly the dispensing container is one of my pet hates that we mostly by what used to be a cover, but you know, the kind of UK equivalent of Ecover. But for but for sportswear you know, only kind of industrial type detergent is is effective. And of course, every every bottle comes with, you know, a big hole in that, you know, from a logistics background, you look at the design of those bottles, and all the empty space that there must be in every vehicle because of the weird shape and then this hole in the middle and the number of different types of materials. So it winds me up every time I see one. But
Chris Baker – Algramo UK 14:35
One of the funny things that I have learned through doing this work is that the average consumer just doesn’t doesn’t use it anyway. People just pour straight into the machine because we have surveyed that and there’s probably an environmental message there because I suspect a lot of people are probably using 2, 3,4 times the amount they need to
Catherine Weetman 14:52
Yeah, yeah, quite possibly. Yeah. So in terms of the flexible packaging, then how does Has that score on recyclability, compared to the rigid packaging? Is it just a single type of plastic or is this like, you know, the sort of food and drink containers that are laminated and therefore difficult to recycle.
Chris Baker – Algramo UK 15:16
So this one, you know, being totally transparently, this one is a laminate, it’s got a, it’s a transparent material, but it has got two layers to it. It’s not that you can’t have a mono material. In fact, at scale we choose, we will have a mono layer material. At low at the low volumes we’re currently operating at we couldn’t get one that was sufficient. But the idea is to move to a monolayer polyethylene material, which will then be recyclable, of course, where flexible packs can be collected, because that’s the other challenge around flexible packaging, recycling systems. And although a number of the retailers now offer takeback schemes for flexibles, there is as pressing around that at the moment, that sort of not all of that is currently getting recycled, some of that is being stockpiled for future solutions, which are being which are being built. But naturally, of course, for us, the focus has to be on reusing the pack. So the other thing that we’re measuring right now is we’re looking at these packs, we’re testing them continuously ourselves as well to see how many uses can you get out of it? Because that’s the key, making sure that the pack can be reused as many times as possible.
Catherine Weetman 16:26
And how does it work from the user perspective? Say, I’d either you know, got got fed up with the reuse model or I decided this particular flexible pack was looking like it was, you know, getting a bit battered. What do I do, then? How do I Is there a drop off point in the store for me to return that? How does it work with deposits and the whole kind of interaction with with the customer?
Chris Baker – Algramo UK 16:53
Yeah, well, for the for the customer. So with the system that we’ve set up, specifically, we’ve laid it all on the first purchase, you pay 20 Pence for the for the pack. And the that 20 Pence is also there’s a 20 Pence discount on the product. So I should say when you when you refill, you’re going to save 20 P. So after your first purchase, you’re saving 20 P every time. Now if that pouch says if you decide you don’t want to take a part in the system anymore, or the pouch does get damaged or you’ve decided it’s at its end of life. If you bring that back to the store, most supermarkets now will have a area at the store that you can drop off flexible packaging. And as it is a as as it will be a modern material, you’ll be able to drop it in there. Otherwise at the moment, if you’ve reached the end of life, that would have to be discarded. But hopefully, that’s not going to happen too often.
Catherine Weetman 17:51
So if I try it once and decide it’s not for me, then it was cost neutral anyway, because I’ve got the payments to pay deposit and I’ve got the 20 P discount. But if I carry on, then every time I reuse it, I’m getting a 20 Pence discount from the product purchase. Is that right? Yeah, absolutely. Yeah. Yeah, great. Okay. So one of the other things that Brian mentioned them, which I’m keen to find out more about is the new modular dispensing machines. And you know, the benefits of those because obviously, modular modular design is a really key feature of designing products for circular economy. So it’d be great to know a bit more about that.
Chris Baker – Algramo UK 18:35
Yes, and one of the, if you’re familiar, if people are familiar with some of the older machines, we do have a, excuse me, a large standalone machine, which fits into the aisle. But one of the challenges that’s often presented by retailers is that, you know, it’s occupying too much space. Now, I would challenge that because I don’t know how they they come up with the metric of if you display more, you sell more. But what we’ve now come up with is a modular system that fits onto the shelf. And by modular it means that essentially, you can choose how many dispensing nozzles that you have with it. We currently have it set up with four products, you could just have two for instance. And then we’re also looking at in the future and maybe having up to 12 but one with one screen. Now the way that it works is you still have a digital user interface where you can select the product that you want, and when you click on that lights will light up above the the correct dispensing area, the screen will also indicate where you need to put your product and then you can you insert your pouch or your bottle and it clips into the machine. And that’s really important because it clips in because it gives a close a closed seal. And the close seal means that it’s not going to be any spilling. There’s not going to be any mess but also it opens you up to high speed filling because now it’s attached. There’s no way the liquid can go anywhere other than straight down into the pouch and it means that we can speed up the field time She’s great for convenience to the, I guess one of the limitations of having this this modular in shelf system, though, is you have now reduced the amount of space inside the equipment for storing your bulk liquid. So there’s a couple of different ways around that. One is concentrates we talked about earlier. So we can, we can push more people to go to a concentrate and to dilute at home, you can get a lot of servings inside or dispenses inside the machine itself. Another way would be to put the bulk underneath. And we’re already speaking to shelving manufacturers about, you know, the same shelving manufacturers that already supplied the major retailers about developing shelving that, that wheels out and allows you to hide larger Bulk Containers behind the shelf. So you still have a facing of all the products that you want to show. But then wheels out and behind you can have larger Bulk Containers, or what’s really exciting is borrowing technology from existing industries like the beer market, for instance, how did they get liquid from the cellar in a pub, brew to the aisle and actually taking that liquid from the warehouse to the machine. So there are options as well for that sort of bulk delivery to the aisle, which may challenge some of the traditional thinking that opens you up to some really massive supply chain efficiencies if you go down that route.
Catherine Weetman 21:17
Yeah, although the concentrate sounds like the biggest overall win, don’t they? For both the entire supply chain. And of course, you know, the convenience for the for the consumer, you know, as much if you’re not even Well, I suppose even if you’re going shopping in your car, every container of laundry liquid, and so on that you’ve got really weighs down your bags, doesn’t it? And
Chris Baker – Algramo UK 21:44
yeah, I think you’re absolutely right. It’s an interesting one that I mentioned earlier that people don’t use the dosing cap. And I’ve there have been trials in the UK with concentrates that you that you then you add to at home. And maybe one of the easiest comparisons is sort of concentrate, juice or squash, right, that you dilute at home. And people still not really understanding what measure to put in. So I think you’re absolutely right. But what we’re seeing is the consumer behaviour there is still just to pour. And we’ve got to figure out how do we get them to dose the right amount. One of the things that we’re we’re developing at the moment with our manufacturing partners is to look at, we have in order for the pack to work, when you clip that pack in, you don’t have to take the lid off anymore, that the lid stays on, and it has a valve inside the lid. And when you press go, nozzle comes down, activates that valve and that’s when the filming starts, we can use that same lid in the home for dosing. So you can clip dispenser attachments into there and buy, it may be a press-fill, it may be a pump, it could be like a sort of traditional washing up liquid where you squeeze, but that’s going to help us control the dose. And that will also help us with the move to concentrates because it’s going to help people who would otherwise just be pouring any old amount into their machine.
Catherine Weetman 23:11
Yeah, that sounds like a really good set of design challenges for for some, you know, red hot graduate to kind of come up with the best option for that. Because I guess another there’s another option of the kind of thing what I’m trying to think what product is like that there’s something that you do where you kind of one, one squeeze gives you a blob, and the blob is a pretty uniform size, I suppose like a soap, you know, a hand pump soap dispenser. You know, one, one pump gives you the same pretty much the same amount each time. So Brian, did you want to come in there?
Brian Bauer 23:48
Yeah, just got a quick comment. I recently got a new washing machine. And I noticed on the there’s a little sticker where you put the detergent in, it says Warning, do not put excessive amounts of detergent, it can damage the machine. So what we’re talking about is a pretty it’s not just about spending a little bit too much money. If you put in too much detergent, it’s about potentially damaging your 600 pound washing machine. So I think that’s a really critical issue as well.
Catherine Weetman 24:13
Yeah, that’s a good point. And that reminds me of a company called Homie, which does pay-perpuse washing machines. We interviewed them on the podcast, I think back in 2019 – actually started by one of the current leading thinkers on the circular economy professor, Professor Nancy Bokken. She was getting fed up of not having enough real examples of circular business models. So she and her colleagues at TU Delft started something so they started this pay-per-use washing machine and one of the… so it it measures the programme that you use as well so it’s looking at you know whether using a low energy programme or short programme that might use less water And as part of the control, it encourages you to do a hot wash once a month to keep everything clean inside the washing machine. And the market for this was mainly students who you think would already be on a tight budget. But what they found was within a month of people have in this paper used system, they’d all reduced the water energy consumption, will washing less frequently with bigger loads and all the rest of it. So I think it’s, it’s one thing to sort of have the warning notice, but it’s another thing to sort of have a maybe the app could do this, you know, if you’re monitoring how much you saving a bit like the, you know, Smart Energy metres and so on, people like to know. And that kind of brings us on to something else I wanted to talk about which, which is the gamification that you’ve, you’ve talked about that in the past, helping people engage either in competitions with their social network, or, or other ways. So how does that work?
Brian Bauer 26:03
Okay, well, I’ll speak a little bit high level on gamification, then some potential opportunities that we can do as an example, like, like I said, potential, we’re not actually doing this yet. But as an example, in Chile, we’re starting to roll out our beverage on the go system and various universities. So what we can do is do things like send messages to the users and say, like, if X percentage of your school was using this system, we would eliminate the need for X amount of bottles. And we can basically put together impact reports to quantify the massive level of impact that we can create as a community, if we can get X percentage of the community to use the system, x amount of times per month. So there’s just some really powerful ways to let the people see and realise and feel that they’re in their small little individual effort of refilling this reusable cup one time that many times at a community level can create huge impact. And once again, a core aspect that our grandma does across IT systems is every time there’s a refill, there’s a digital verification and basically record of that refill happening. So that creates that opportunity to create that gamification strategy. And we just have to figure out the optimal ways to to create those strategies. And we’re, it’s something we’re working on right now. It’s not we don’t have a formal, precise plan worked out exactly how we’re doing that. But having that digital verification of the refill happening is a core aspect that enables that, that opportunity.
Catherine Weetman 27:40
Yeah, that’s interesting. And that’s bringing a book to mind that I read a couple of years ago, I shall look it up and send you a link afterwards, and probably put it in the show notes. But yeah, somebody who was talking about gamification, and, you know, building, not just building movements, but gamification to encourage more sustainable behaviour and so on, and the ways that they’d experimented with doing that. So excellent. So it’d be interesting to see how that’s how that’s going to progress. And I’m also keen to understand how the motivations and messages that you and your retail partners are using vary across the different income groups, because you’re already in some higher income countries like the UK, although with a with a kind of no frills supermarket, as well as the starting point with you know, Jose Manuel Moller in the, you know, the the trying to solve the poverty tax for people living around him in in Chile. So, how’s that all panning out? Is it? Is it a similar message? Or is it completely different messages to engage people?
Brian Bauer 28:59
Be honest, I haven’t thought of this question at the like, at the different market segment level. But maybe I’ll speak to what we’re doing in Chile. And then Chris can verify how similar that is to what is going on in the UK. But essentially what we’re doing in Chile is just looking at the amount of plastic that is saved the amount of single use plastic that is avoided from a refill, and then communicating that to the end customer that they’ve – “Congratulations, you’ve done a refill of a three litre OMO bottle, you save 235 grammes of HDP plastic from going onto the market. And that’s that’s the kind of the core focus it’s fairly simple, I guess. But that’s the core focus we’re doing here is basically just how much single use packaging you have avoided. And then like I said, we have that ability to kind of connect to community and kind of potentially communicate the potential of the system done at a wider scale. And that’s something I think we need to move into a little more in the future is trying to figure out how to motivate We’ll get people excited about that potential if we can get a wider movement doing refill.
Catherine Weetman 30:05
I think that this could be so powerful, couldn’t it because one of the reasons that people give for not doing not changing their habits is that just what I do won’t make enough difference. So being able to see the power of your local community, or your town or your university or whatever, and and the difference that that makes when it’s all suddenly scaled up and being, you know, being able to see how things can grow really quickly, could be a massive motivator.
Brian Bauer 30:37
This isn’t something we’ve done yet at the universities, but I think it’s something that could potentially happen, if we’re successful with our beverage on the go at the universities. What’s really exciting about beverage on the go is it’s a product with a really quick consumption cycle and a very frequent consumption cycle. If we’re speaking of laundry detergent, you know, that’s got a consumption cycle of, I don’t know, four to eight weeks, depending on family size. But if we’re speaking about beverages, there’s a lot of students that have a couple of days. And it’s something also that’s very in your face, if you’re walking around carrying this mug everywhere, it’s you’re saying like, look at me, this is this is how I do it. And if we reach critical thresholds where there’s a lot of people doing this, there could be cultural ticking points where it starts to become not cool to use the single use people like look at your Why are you doing that you’re using that cup for that bottle or that that Aluminium can for 15 minutes. And then that there’s in Chile as an example, we’ve got really limited recycling, I think the household recycling rates are less than 2%. And with aluminium, I’m not sure why it is because aluminium was one of the highest value materials in the FMCG sector packaging space. In Chile, there’s it’s very, very rare that aluminium gets recycled. So if we can get people thinking about kind of thinking it’s shameful to be single, single use, when there is this opportunity that’s cheaper, and more convenient. I think that’s a huge powerful opportunity, especially in a place like a campus where you have like a large demographic that’s quite similar, and likely to be motivated by similar factors and create that kind of collective mentality that that can happen through this type of action.
Catherine Weetman 32:19
Definitely, things can change really fast. Currently, I’m thinking back to in the UK when we introduced the tax on single use carrier bags, in supermarkets and so on. And I remember somebody on the radio a couple of weeks later saying that he’d been using bags for life for years. But suddenly the perception when he pitched up at the, at the checkout or the counter with his reusable bag, instead of people looking at him as if, you know, he was some sort of weird tree-hugger. Now it was just normal. And kind of, you know, bring it not bringing your bags. I don’t think it’s quite reached the stage of of people looking askance at you that, you know, what, what do you mean, if not brought a bag. But it quickly, you know, within a few weeks it was normalised in terms of the reuse rates, particularly in Chile, where you’ve been going for a few a few years, and people have had time to get used to the idea. And also, as we were just saying the social norms have changed. What kind of reuse rates are you seeing? And has that improved over the last couple of years?
Brian Bauer 33:26
So basically, in Chile, we’ve got there’s two different systems we have where we we can look at our reuse rates. One is Walmart private label products, so they’re obviously a kind of a lower entry cost product. And the reuse rate growth on them was on a constant up curve. But the curve was pretty gentle. It took like each month there was maybe a three or 4%. I’m not actually I’m not sure exactly on the percentage, but there was like a gentle upward curve on the release rates. And eventually we got to I believe we’re now a little over 70% on a release rates with with white label products and in Chile. And what’s interesting with the Unilever, basically pilot that happened about a year after the Chilean pilot happened with Walmart or after the Walmart Chile project. About a year later we did Walmart or the pardon me that Unilever pilot, and the release rates grew at almost doubled the rate that the initial rates grew. With the Walmart product, there’s many different we could talk about that for a long time and make many different postulations on how and why that happened. But my guess is would be that we created an awareness for the system and awareness about reusable packaging through the initial pilot with Walmart private label, and that kind of educated the consumers to the opportunity with Unilever products. And so basically a quick way to summarise it would be that as we’ve done more products in the future, the raise rates have increased faster. So that’s That’s really promising, encouraging to see Chris and see what he has to say about that.
Chris Baker – Algramo UK 35:05
No, I can build on that. And sort of also going back to what we were just talking about the cost and, and where Algramo came from, you know, ultimately, in the UK, we’re trying to stay true to that, that same, that same idea that we want people to buy the product, not the packaging, and therefore, the idea that we’re we’re trying to work towards is that you can buy this product for the same price, or perhaps even less, if this was at scale. And the challenge, of course, is you we have a single use system that is incredibly efficient, where it’s very easy to get your product onto the shelf. And creating this circular and refill system is, is more difficult. Now, once we get to scale, I’m confident and having done very in depth supply chain analysis with our partners, I think we can you can achieve that, you know, you’re going to save a lot of money in the supply chain and on and on packaging. So what we’re doing at the moment, or rather, what little we’re doing at the moment is investing in the system to meet to show that it is price parity on the first purchase. And it is cheaper on future purchases. Now the reason I say all of that is once you overcome that first hurdle, the price, because so often sustainable solutions come at a premium. And of course, right if you’re trying to do something on a small scale, it’s going to cost more. But once you’ve overcome that, and it’s the same price. People get it in the UK, we’re in a situation where they understand that where they can, they need to reduce packaging, and therefore we haven’t, we’ve had really good uptake. But Brian says the reuse rates have grown quicker than we’ve seen in other markets previously. And that’s because there is a fundamental understanding of what the system’s for and why they’re doing it. And people want to reduce their packaging. And there’s a few other things that sort of play into it as well. This idea of you mentioned the reusable carrier bag, right. And now, when you go to the till it’s sort of like you’re you’re you’re accepted. And look at this, we used to talk about this, I used to work for KeepCup. And we had reusable coffee cups. And we used to talk about influencers and influencers not in the the Instagram sense. But influencers who influences your ability to purchase or make in this case gives you the permission to use that reusable. So we’ve been doing a lot of working with the store staff directly because they’re the ones they’re on the ground every day in if they can ease the passage for the customer, or they can offer it to the customer, highlight it to the customer basically make the customer feel good about it. And even just saying ‘Good on you’ when they come through the checkout, all of that giving them permission and that positive reinforcement that they’re doing a good thing. So that’s one, one element. Another element is obviously trying to make it as convenient as possible for them in and we talked about making it a higher speed process etc. But also it’s got to reflect the standard user journey. Loads of investment has gone into making sure the refill the journey for the retail store is is the correct one. We’ve done surveys and 69% of the refill customers in Lidl have seen the machine and learnt about the machine in the aisle when going to buy their regular detergent. And that’s because the machine is right there next to the regulators surgeon and you’d be surprised how many times refill systems when they’re tested and not near the the product that they’re there to replace. And even the people that haven’t purchased from the machines we serve the people who didn’t use it as well. And we did this or using the Lidl plus app. Even then we found that 58% of people who didn’t use it had also seen and the reason they hadn’t used it wasn’t necessarily a technical one it would have been because they prefer powders or they prefer tablets or maybe they just don’t buy their detergent at Lidl. So the barrier to entry. If you get the system right, you get the cost, right people will use it and they do tend to understand the purpose for the machine. I’m not sure if I’ve completely answered the question. I think Brian was asking me about reuse rates.
Catherine Weetman 39:11
Well, that was that was very interesting and really plays into the kind of, you know, the potential for nudge tactics, doesn’t it? Particularly for those supermarkets that track your purchases? And can you know, either send you a voucher off for the reusable when next time or say Did you know? And I really like the idea of somebody at the checkout kind of saying ‘Good on you’.
Chris Baker – Algramo UK 39:34
And what we’ve found is the permission is right, the amount of times I’ve stood in an hour, and I’ll watch somebody looking at the machine. And I say you okay, then they say oh, yeah, I just want to I said they won’t buy it and you have a go and then they’re straight in there. But it’s almost that’s why they call it a nudge tactic. Right. They just need that that little nudge. Yeah, and the people that use it and I think this also speaks to why we’re seeing the rates growing way that they are, once you see one of your peers using it and see someone else have a successful experience, you That’s that little nudge, do you think? Well, if they’ve done it, then I can do it.
Catherine Weetman 40:11
Just coming back to the reuse rates to make make sure I understand it. So Brian gave a figure of 70%. So is that, you know, 10 people buy the first reusable packaging, and seven of those will go back and do a refill. What does the 70% mean? Brian?
Brian Bauer 40:33
I think it’s actually 74%. Okay, so what that means, basically, is that for if there’s, for every refill, that happens 74% of the time, or for every fill, that happens 74% of the time, it’s a refill. So that that’s a quick, simple way to explain it.
Catherine Weetman 40:55
Okay? And when you saying, you see the rates going up, you know, faster in in some trials and others? How can you can you unpack that a bit, I can’t quite get my head around the the rate going up?
Brian Bauer 41:12
Um, well, basically, so we started. So keep in mind what we’re doing here in Chile, with Walmart, with Walmart Chile products, that was the first time that that’s been done in a in a corporate grocery store like that. So it’s a completely new concept. And you’ve got this, this idea to have the technology adoption curve, where you get, like, certain parts of the population are categorised as innovators, which is typically seen as 2.5%. So to get a system started and get it getting people to, you know, who are comfortable to use that system, and, you know, use it 2.5% of the population are innovators, but 13.5% of early adopters. So that’s the segment you’re dealing with initially. And then as you get that small segment of the market, using your system, that kind of opens up the early majority phase, which is 34% of the overall market. So you need to get people to understand and see value in that system. To do it. We’re just talking about how people see one person do it. And then like, Well, I’m gonna try that that person is older than I and and I’m not that he doesn’t look like he’s great with technology. I’m not afraid to do it now. And I’ll try that system. And that’s the key part of it there, I think. And people just kind of learn culturally over time, about this new idea that other companies come up to the market and start doing refill. So that can kind of motivate people and make it a little more mainstream. And it could be to do with with kind of the socio economic elements? I am not. I haven’t done deep analysis into that in Chile. But I think the general theory that would probably be true as people with higher levels of disposable income are more probable to be willing to pay, or be willing to invest time in an environmentally sustainable solution. And perhaps that’s the reason why the Unilever products, which cost probably close to twice as much as the Walmart products on a per litre basis. Perhaps that’s part of the reason why the consumers are are adopting to the system faster and have a higher refresh rates. But actually, with that said, though, in the old Algramo 1.0 system where the roots of Algromo come from, which is virtually exclusively low income marginalised communities in Santiago, we’ve got a network of about 5000 stores that sell a gramme of products in that network. And the reuse rates in that segment are, I believe, a little over I think it was 84-85%. So it’s interesting that that Aris rates are that high in that segment, and it’s it’s the most socioeconomically marginalised segment of the retail space that we’re working with in Santiago. Yeah, but also to that’s the system that’s been in place for the longest that system goes back to about 2015. So I think that’s that’s part of it, too. Having your system in place, kind of it slowly evolves and gets better and better, but it it takes a while at first, like I mean, Algramo 1.0 for a while the the reuse rates were like less than 10%. And I mean, if your business model is predicated on creating the impact in this new experience, the reusable packaging and you’re less than 10% You’re on the path to going extinct. But we were able to play around with factors and get that rate up to now well over 80% so
Catherine Weetman 44:26
yeah, that’s all really fascinating, isn’t it to think about the different motivations of each of the customer cohorts because you know, the the Walmart Unilever angle, it could be on the kind of, you know, the, the type of shopping people are doing, whether they’re cost conscious or not. Or it could be that people are choosing Unilever because they believe it’s a brand with a purpose or you know, I don’t know I know Walmart’s are also starting to do lots of things in that space, but it could be They’re kind of, you know, the mindset and the Eco consciousness of the consumer to begin with, in terms of the brand choice that they’re making, you know, who knows. So when when we’re talking about the rate speeding up, you’re talking about the speed of the moving up that product adoption curve, kind of, you know, getting moving beyond your initial two and a half cents of the innovators through to the early majority. And the speed that that happens,
Brian Bauer 45:28
I would say the speed that that happens, and also the speed that people do their second, third, fourth, fifth refills, I’ve seen a lot of studies looking at, like, many different refill systems across many different product types, globally speaking. And one of the biggest challenges a lot of refill systems face is it’s, it’s not that if you have a promoter, they’re promoting the product, it’s not that hard to get someone to buy at once. But what gets where it gets where the rubber meets the road where it gets way more serious, and way more critical, is to have that person bring that packaging back, especially with a system like Algramo, where you’re bringing that packaging backwards, a little more complex, where there’s a little more behaviour change required, that’s where the rubber meets the road is getting the consumer to come back or the customer to come back a second time, third time, fourth time, fifth time, and get those number of refills in each bottle coming up. One thing to point out, too, that’s really critical. And I think extra valuable and modelled grammar does is most of the time we’re using business as usual packaging. So that essentially means with one refill, the first the first purchase is there’s no impact really because it’s we use the single use bottles, but the second refill, you’re getting a significant environmental benefit. There’s a lot of reusable packaging systems that use stainless steel, double walled insulated bottles or something, or really kind of pack weight material like heavy, lots of material in the packaging. And when you have those types of systems you might need, I don’t know 5, 10, 15 refills to break even environmentally speaking. So Graham was really impressive in that we’re using single use packaging most often. So we get that really quick environmental ROI with just one refill, which is really critical.
Catherine Weetman 47:06
Yeah, that’s, that’s really interesting. And is well worth companies thinking about when they’re looking to move towards a reuse system. Because it, you know, is one of the big dangers isn’t that you, you put something in place that in theory is better, but actually ends up causing rebound. So excellent. Thank you. Thank you for unpacking that, Brian. And are you able to tell it to say anything about what’s next on the horizon for Algramo.
Brian Bauer 47:36
From my end, I would say our biggest aspiration is a scale up of the beverage on the go pilot. Moving into other types of beverages potentially into there’s pretty much any kind of let’s Another thing that’s really exciting about Algramo too, is we’d like to work with existing technologies, existing systems. So any kind of existing beverage system that’s in place and has a large market segment is ripe for us to disrupt with the system. We’re doing piloting right now with Coca Cola and Chile here. So I think getting into truly scaling up our beverage on the gold system is something that the team in Chile is really excited about. And I think I’ll let Chris talk about what he sees is kind of the next phase or something really exciting in the context of the UK. So Chris.
Chris Baker – Algramo UK 48:26
Yeah, I think from my perspective, it’s really now proving the principle that we’ve been talking about. So we we’ve seen that for retail, this can work, but you’ve got to disrupt that supply chain, and we’re working with Lidl, and they’re the sort of organisation that has that they have the power to scale. But also, you know, they are in in a sort of a challenger position, they’re more of a discounter position in terms of their price. So if they can do it, it really proves the model. So we’ve been really focusing very heavily on supply chain analysis and really unpacking that all the way through, right from the product manufacturer, right to the consumer to understand where are all the efficiencies and where are the where can we unpick that linear single use supply chain and, and bring reuse in and understand those cost efficiencies? We’ve done a lot of work on that we’re going to be introducing other products because we’ve been focusing until now on laundry detergent and fabric conditioner. But we want to see how does this play out for other product categories. And then the other thing is to start testing different types of user demographics as well. So not just in the UK, but in the European market as a whole is the what we’re seeing in Britain the same as other potential markets. And that’s again, where having a partner like Lidl can come into play quite nicely because they are an international retailer. So I think most likely the next market that we’re going to test out is the Netherlands. And then we’re also beginning to sort of feel out where else we should be looking to try and build on what we’ve been doing in the EU case a build on the learnings that we’ve had. But also to sort of test to make sure that the model that we’ve got the passion that we’ve got the user system, user interface that we’ve got plays out the same in the different markets.
Catherine Weetman 50:13
Yeah, fascinating. And I think you’re right, that cultures can be so different even then, countries that kind of seem close together, gather geographically and so on. You know, there’s, there’s quite a big push in France, isn’t that towards repair ability, and reuse and so on. And I think the Netherlands is definitely ahead in many areas on on sustainable behaviour as it’s Sweden. So really looking forward to hearing what happens with those those next phase, the next phase of development? Yeah,
Chris Baker – Algramo UK 50:47
one of the things I’m interested in there as well, though, is some of these markets, sometimes there’s a, there’s a feeling that they’ve already got it figured out because they may have such good recycling infrastructure. And sometimes that can be counterintuitive to reuse as well, because you’ve made me feel like the problem isn’t there. So it’s, it’s not always in, I feel that it is not always as simple as because they’ve got sustainable behaviours in one way that they’re going to immediately adapt to reuse. So that will be interesting.
Catherine Weetman 51:15
Definitely, it’s all very complex, isn’t it? The kind of what what people think is an effective system, and then, obviously, trying to break in and ask people to change their habits is, is where it gets really complicated. So excellent. Thank you, Brian. And thank you, Chris. That was really fascinating. And I’ve learned lots. And it’s kind of unpacked a new level of complexity for me, you know, I know a fair bit about supply chains because I spent many years of my career in them. But just thinking of all the different permutations of, you know, sending, sending bulk kegs and a dispenser system that sits elsewhere in the store or going down the concentrate routes, just so many different permutations and trying to work out which is the best way forward is going to be interesting. So thank you very much and good luck with what comes next.
Brian Bauer 52:05
Thank you so much. That was an honour. Great to be back
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