The emergence of a new global middle class is good news, as billions of people are gradually being lifted out of poverty and accessing education as well as healthcare. It naturally also represents a huge opportunity for business in absolute terms, yet the linear “take, make and dispose” model of economic growth is facing serious challenges – including demographic expansion.

On average, a citizen in an OECD country buys 800 kg of food and beverages, 120 kg of packaging and 20 kg of new clothing and shoes every year. These goods are not returned, for the most part, for any further economic use. With 3 billion additional consumers coming onto the market by 2030, it’s easy to understand the sheer scale of the challenge.

$3.7 trillion worth of material goes into the Fast Moving Consumer Goods (FMCG) sector globally each year, and only 20 percent of that volume is recovered or valorized – an effective loss of $2.8 billion, leading to a gradual erosion of primary resources.

Surely, there has to be a better way?

How can companies in the FMCG sector set up restorative material loops, and shift to a circular economy model?

In the beverage industry, packaging plays a vital role. As our research indicates1, ensuring that secondary raw materials are used to produce new bottles yields significant benefits, both in terms of financial and in virgin resources. The introduction of the PET bottle in the late 1970s and the development of surrounding collection, sorting and recycling infrastructure has led to the creation of an industry standard and arguably provides one of the best examples of circular plastic flows within the economy.

Despite this, the discrepancy of recovery rates globally means that there is still a significant opportunity for realizing greater circularity and, in many countries, to increase recycling. Currently, just half of the 19.8 million tons of PET produced globally2 gets recycled every year.

We believe there are four building blocks for capturing this value:

  1. Optimized design and materials innovation for circularity;
  2. Focus on business model innovation across the supply "circle" to create an economic incentive for increased circularity;
  3. Optimization of collection, sorting, treatment and redeployment processes and infrastructure;
  4. Enabling system conditions – including the alignment of policy and education.
One example of how an idea can bring all these elements together is through the intelligent tagging or labeling of plastic packaging. The advent of smart labeling technologies could provide the ability for the waste/resource management industry globally to identify the type of material coming into an MRF and even to whom it belongs. This fixes a broken link in the current FMCG value chain and enables margin to be shared with the necessary stakeholders to incentivize continual improvement of processes and design. It also builds a valuable data set to enable manufacturers to assess what volume of material is actually being regenerated and what needs to be done to improve this.

Right now intelligent tagging of FMCG products is a very nascent technology. The Ellen MacArthur Foundation runs a number of initiatives to support ideas like this across the innovation "valley of death" – from idea into reality. One example is The Circular Economy 100, a platform for building innovation capacity, stimulating joint venture opportunities and bringing together corporations emerging innovators, pilot regions and the world’s leading design, engineering and business universities. The Coca-Cola system is part of this group, and we are excited to be working together to re-think the future together.

Jamie Butterworth

Jamie Butterworth is the chief executive of the Ellen MacArthur Foundation, an independent charity founded with the aim of accelerating the transition to a regenerative, circular economy. Since its launch in September 2010, the foundation has worked together with its founding partners (B&Q, BT/Cisco, National Grid and Renault) to embed circular economy thinking within four sectors of the economy. 

Jamie has worked for Ellen for over five years and has been instrumental in the foundation's development from its initial inception and launch and was part of the team behind the report Towards the Circular Economy – Economic and Business Rationale for an Accelerated Transition.