Hi there, I am Lokesh, Co-Founder of Cupable and Refillable. I have been working in this segment since 2018 and have seen the space evolve majorly since then. Here are a few points on why do we need to build a reusable infrastructure now!
This entire thread might be a bit long, but bare with me. If y’all are aware of the problem and how it started, please jump down directly to the solution.
TL/DR - We will be covering the history of plastics, the problem, current scenario and why does the solution makes sense in India especially after the new laws. The reason for the boom in EV segment in India is not because the vehicle alone but the accessibility of the charging infrastructure. Similarly, for reuse to be successful, we need a reverse logistics and reuse infrastructure for it to succeed.
PROBLEM
Current Global Scenario:
Everyone thinks that plastic is the problem. They are partially incorrect - It is the way we consume things. The nature of single use - The make, use and dispose culture is the culprit of our landfills running on 200% capacity. To put that into perspective, Everyday, India alone generates over 26,000T of plastic waste, 40% of which ends up in landfills. The reason for plastic being so cheap is that no one accounts for the environment cost of the product itself.
Source:
History of plastics:
Plastic became popular in 1970s and 1980s due to the material qualities, affordability and convenience of its disposal. It was an instant hit in the packaging industry and changed the way we consume things forever. Before Plastic, everyone used to have returnable systems - remember your milk man or coco cola glass bottles in the early 2000s?
Anyway, with time people understood the importance of disposing waste and its ecological impact, hence plastic recycling was identified (Not going into the depth of different kind).Going back to the 1980s, recycling is still not common and not very accessible so naturally much more expensive. Countries started exporting their waste to developing/underdeveloped countries as their landfills were getting over.
By 2000s, Plastic Recycling had become a global phenomenon - Indian Informal Segment of waste pickers were so efficient that the PET Bottle Recycling rates were over 85% at one time. There was value in waste, entrepreneurs realised that they could now use the same recycled material and blend it with virgin material to optimise their costs and thats what we call PCR material now. Anyway as times progressed, legislation evolved and started executing EPR laws (Extended Producer Responsibility).
Currently, due to the legislation, each brand needs to recycle 100% of the plastic consumed.
Why is Recycling not the final solution?
Lets say a tap in your bathroom is leaking. Instead of fixing it, you have found a way to collect the water and use it again. Recycling is exactly this - The tap is always open and it will be till the time we find a better way of consumption. Reusable and Refillable Packaging solutions were introduced only for this reason.
What is Reusable Packaging and how does it work?
As the name suggests, brands replace their SUP packaging with a reusable container. This container is collected (reverse logistics), cleaned, washed and sent for refill/reuse.
India as a country has always been a reuse economy barring the past 2 decades. Even now, you will see households hoarding containers from restaurants and reusing them as tiffin. It is extremely common.
Why has it not been able to scale otherwise?
Here’s a small blog post created by us which explains the practical issues with multiple stake holders involved: The problem with reusable packaging and why does it not scale? | by Lokesh Sambhwani | Medium
Why is the time to act now and particularly in India?
My colleagues and I have spent a lot of time writing about this, if y’all get a chance please go through this to understand the space better
SOLUTION
What is Refillable?
We help brands to reduce their packaging waste by enabling them to reuse and refill the same packaging again and again.
What have we done so far?
We are currently present in 7 cities with an active customer base of 5000 people. We have set up refill trucks, refill in-store machines and conducted returnable glass bottle systems across the country. 4 state Govts have specially invited us to build the infrastructure in their cities.![|602x391]
Who all are our partners?
Fortunately, for us - we have been able to work with likes of Unilever, Marico, Diverset etc. In this financial year, we already have work orders worth $200k from these players lined up to implement our solutions
Apart from the brands, we work with operational partners in each city. Bangalore - Hasiru Dala, Pune - Swachh, Surat - Ecolution, Chennai - Saahas and India Wasted. We like to partner with waste management companies for a clear GTM strategy for their existing customers itself.
What are our insights?
- Customers prefer well known brands
- Order Density makes refilling a very viable option. It becomes operationally feasible and unit economically positive.
- Corporates and HORECA are looking for better options. - Nude Food Cafe, Mittal Industries, Raksha Welfare Foundation etc. We dont have a B2B arm yet but it still accounts for 13% of our business conducted last year.
- Customers love a hero brand - it establishes trust and becomes easier to cross sell. 60% of the customers listen to our customer concierge and move to the brands suggested by us for other products
- We have a bottle collection rate of 80% in comparison to the virgin bottle used month on month. PS - We have never asked our customers explicitly to return the bottles
- Reverse Logistics becomes easier with scale only if geographical density increases
- ROAS can be >5+ if focused on the right geographies
New Govt Legislation for 2025
- With the updated EPR laws to be implemented in 2025, we expect brands to move their bulk packaging to reusable quickly. As you can see in the screenshot below Govt expects to reuse 70% of the bulk packaging (>4.9LTR)
- Order density in each geographic region will get better with the new laws coming into place. B2B will help to reduce the reverse logistics and cleaning costs at scale
- Reuse and Refilling Distribution Centres to see the rise for each brand to help sustain demand for the future
What is our project proposal?
Return Infrastructure - The timing works out really well for this project. We want to build a reuse centre for brands to return their packaging, clean and refill them. We are working with Buzil Rossari, Diversey and Unilever Professional to be in line with Indian Regulations and gain a few extra EPR Credits. In simple words, Without disrupting the existing channel of distributors, we would like to collect bulk containers back from corporates and customers, clean them and refill (if allowed) to restock the distributors itself
Operations - We will be setting up reuse facilities (clean rooms) where each of the containers will be brought back for cleaning and filling purposes. We will be collaborating with the corporates, housekeeping agencies and waste management companies to collect these containers back. Once filled, these containers will go to the existing distributors for sale purposes
Marketing - There is no direct marketing budget required for this project
Commercials - We need to identify the most dense region to set up a reuse and refill centre. Each virgin can cost around 40-80/- depending on shape, size and quantum. For the pilot, we are confident of offering the same at 50/-. This shows significant savings for the brands. Additionally, Brands pay waste management companies currently to offset their plastic waste to comply, whereas just by reusing at a cheaper cost they fulfil their criteria. For us, we happen to maintain 20% gross margins even after incurring the cost of reverse logistics
Revenue - Through this pilot, we will develop capabilities of washing 100,000 units a month and generating revenues worth 50L monthly.
Impact - The impact of this project is extremely significant. Each container weighs 250 gms. If we reuse 10,000 containers for the pilot, we would be saving 2.5T of waste. At scale, we can look at reducing 100T a month alone from one region.
Investment - The CAPEX investment to set up a reuse centre costs 60L. We have already covered 20% of the cost through Transform and we are in talks with a few more foundations to help us out for the pilot.
We are extremely excited for this opportunity and timing of the regulations. This aligns with our overarching thesis of packaging as a service.
What is our MOAT?
We have been working in the refill and return space for the past 4 and a half years and believe B2B reusable packaging can change the direction of the industry itself. Globally, it hasn’t been tested out yet.
- We are creating a network of reuse centres - An extension of the existing Material Recovery Facilities. Instead of logging horns with recyclers, this is a new line of revenue source in the same set up. We are already in talks with Lucro & HDI for a pilot, whereas Nepra and Recykal have shown interest too.
- To optimise, we would leverage our experience in refilling and set up mini plants in each geography to save on reverse logistics costs + get a significant margin of refilling (10-15% of the total sale value)
- EPR Tool for Reuse - As the new EPR laws are implemented, Brands will scramble to adhere and comply. Our software will connect them to these networks and immediately work on it. Brands wont need to interact with multiple vendors across states and just work with their software and account manager.
- Backend Technology - In our current operations of “Packaging As A Service”, we have built out a traceability system for all the units. We can understand where we lose the packaging units if we do lose them. Our tracker helps us monitor all the packaging units remotely.
- First mover advantage - Currently, the entire industry is focused on recycling where as we have been taking strides in developing the reuse infrastructure with the brands itself
Next Steps
We have confirmations from Unilever, Diversey and Buzil Rossari for the pilot along with support of Marico. Though we are restricting our pilot to the cleaning industry, our target industries are Paints, Lubricants, Engine Oil, Cooking Oil etc.
We are looking to raise 60L for this pilot project and prove commercial feasibility and scale of the project. Based on our projections, we can generate 50L+ revenue monthly and build the use case around it.
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