By Eric Stryson
Coca Cola has been outspoken about its aggressive expansion plans in China and other developing markets. Capitalizing on China’s ballooning middle class, the company plans to triple its sales in the country over the coming decade, to exceed 30 billion cases of non-alcoholic packaged drinks. These projections should make shareholders happy, however in light of the dilemma of container disposal it is worth a closer look at the figures.
Current consumption of Coca Cola products as of 2008 in Chinais about 28 products per capita per annum. With a population of 1.4 billion therefore the annual number of drink products produced by the company and its bottlers and consumed in China is approximately 39 billion. According to Coke’s Global Packaging Breakdown, over half (52%) of the company’s 23.7 billion cases of drink products sold worldwide in 2008 were in PET (polyethylene terephthalate) non-refillable plastic bottles. Applying this broad estimate of 50% to the existing sales numbers inChina yields a figure of about 19.5 billion PET bottles.
If Coke is successful in its targets for China over the next ten years, it would mean tripling sales to nearly 120 billion products per annum, of which some 60 billion would likely be in PET bottles. The end of life options for these bottles is either a landfill or a recycling plant and if collection and recycling efforts do not keep up with sales, it is most certainly a landfill.
Relative to other plastics, PET is recycling friendly. The challenge however is in collection. Voluntary recycling initiatives have generally failed and will likely continue to fail due to the very nature of single-serving products. Consumers buy them for convenience and it is not always convenient to carry an empty bottle around until a collection bin presents itself. The reality is that even in developed countries like the United States, the amount of recycled bottles ranges only from about 20-30% on the upper end. In emerging markets likeChina, this figure will be dramatically lower under similar voluntary schemes.
Therefore the question remains, what will happen to the tens of billions of disposable PET bottles each year in China? In Coke’s Sustainability Review the company talks about a goal to increase worldwide recovery of their bottles and cans to 50% by 2015. This becomes completely unrealistic when one considers the statistics above. If the company were to reach this goal in 2020, it would mean recovering 60 billion individual bottles and cans each year. Even by 2015 this figure would fall out to somewhere between 20 and 30 billion individual containers every year.
To put this in perspective, the company recently announced the launch in January 2009 of the world’s largest PET recycling plant in South Carolina, USA. This plant cost US$50m and will have the capacity, when fully operational, to recycle enough plastic to create 2 billion 20oz bottles per year. The majority of the plastics used in this plant are purchased from other sources rather than from containers that the company may recover itself. Even if such a plant used plastics derived exclusively from containers produced by the company it would not approach the quantities described in China. Clearly the company’s ambition to grow its sales volume far outstrips its rational ambition to deal with its products’ end of life.
Recently the communications department at Coke has been busy talking about its new “PlantBottle” which uses 30% plant based material to create the PET bottle. Yet, the “bottle” is meant to be recycled just as are other PET bottles. The difference is that the PlantBottle uses less plastic on the front end. So, the issue of waste collection remains.
Coca Cola is the most outspoken of any consumer beverage company when it comes to sustainability and Corporate Social Responsibility. The company has invested a huge amount of money to protect the image of the world’s most recognizable brand. There are many other beverage manufactures in the US, China and elsewhere that spend far less time and money even talking about responsible disposal, much less actually coming up with solutions to the problem.
More attention should be given to creating robust systems for managing the waste stream of the company’s products following their consumption rather than leaving this critical element to consumers and third party collection agents.
It is time that all manufactures of single serving plastic drink bottles are held accountable for their role in what is becoming an intractable environmental disaster with as yet unknown impacts on human health. We do not know what the consequences are of increasing the amounts of petrochemicals from PET in our groundwater, the food-chain and to a lesser but substantial extent in the oceans.
Given the scale of production for these products and the growth trajectory in the developing world, regulators need to take a sober look at the failure of voluntary recycling initiatives. Governments must mandate a new relationship between the companies that reap enormous profits from the sale of these products and the mechanisms by which they are collected and processed after their use. Collection must be tied to distribution and companies must be financially incentivized or penalized for the success of their recovery efforts. Consumers are unlikely to give up convenience once granted to them. Therefore, manufacturers must be required to manage the fallout.
 FT.com 22 Nov 2009
Eric Stryson is the Director at the Global Institute For Tomorrow.