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UK Supermarket Iceland Could Be Leading Non-Plastic Packaging Innovation

Through removing all plastic packaging from their products, Iceland are ahead of the curve

23Jan
If you're looking for more innovation ideas check out the Chief Innovation Officer Summit in London

Blue Planet 2 was the most watched TV program in the UK in 2017, with the David Attenborough nature show taking 41% of the share of viewers for the first episode of the season. Given David Attenborough's global appeal, licensing for the show was also sold to 30 countries and there are likely to be huge on-demand views if previous examples of similar David Attenborough shows are anything to go by.

One of the constant themes throughout the show was the huge amount of plastic currently in the sea, with a family of clown fish trying to use a bottle as a nest, dolphins with plastic found in their stomachs after death, and a particularly impactful scene of a pilot whale carrying its dead calf, with Attenborough noting 'The calf may have been poisoned by the mother's own contaminated milk'. It had a significant impact, with the entire final episode of the season dedicated to the impact that plastics are having on the ocean and how they are breaking down and poisoning it. The issue is not something that people are unaware of, but this single TV show seems to have had a huge impact on public consciousness of the issue and the idea that we need to be doing more.

With the backdrop of this public awareness of the issues of plastics and plastic packaging, companies have begun to take the kind of action that environmental groups have been pushing for for several years. The first off the mark is Iceland, a supermarket chain in the UK that specializes in frozen food. Richard Walker, Managing Director of the company said in a press release about the change 'The onus is on retailers, as leading contributors to plastic packaging pollution and waste, to take a stand and deliver meaningful change'.

The company has pledged to remove all plastic packaging from its own label products by 2023, which came after a survey of 5,000 customers found that 80% of people would support the move. One of the things that Iceland claims allows them to do this is that 'It’s actually easier for Iceland to take action than it is for most companies because we are a privately owned, family business. We’re not answerable to shareholders focused on this year’s profits, so we can and do plan for the long term.'

This is also likely to see an increase in sales for the brand, with consumers increasingly making decisions based on moral choice over other potential differentiators. Jens Hainmueller, Michael J. Hiscox, and Sandra Sequeira conducted an experiment and it was found that in a popular generic coffee brand, when a fair trade label was added, sales increased by 10%, showing that given the choice, people today would rather choose a product that aligns with their moral compass.

This move by one of the top 10 supermarkets in the UK is going to create big questions for other large retailers, whose customers are also likely to demand the same kind of action. At present this is going to be a struggle given the huge impact this could have on the most basic elements of how these retail companies operate, but with the renewed public scrutiny of this issue it is something that companies are going to need to address.

Companies like Walmart, Tesco, Target, Walgreens, and 7-Eleven are going to face the biggest challenges within this, simply because, whereas Iceland represents only 2.1% market share of the relatively small UK market, they have thousands more locations and billions more products to stock. They have become successful based on an effective supply chain and having a wider range of products available, much of which has been dependent on how products are packaged. By fundamentally changing this packaging, they are putting their supply chain at risk.

Another key issue that retailers will face is that a large proportion of the stock they carry isn't produced by them, so they have no control over packaging. For instance, no one retailer is big enough to demand that Coca-Cola completely change their packaging, even Walmart would not represent enough global sales. However, most large retailers stock the same brands, which means that pressure must come from many, if not all, retailers at the same time. This creates a difficulty and represents the challenge that many companies must face - in order to go plastic free, retailers must become advocates for this movement rather than just bowing to public pressure.

Another key issue that needs to be addressed is the sourcing of enough biodegradable or non-plastic packaging. The main reasons why plastic has become the material of choice has as much to do with availability and speed of construction as any practical qualities. It has created an environment where plastics have become so dominant in packaging that trying to switch has become difficult because there aren't enough large suppliers to just switch.

The use of bioplastics is predicted to grow by 50% over the next 5 years according to the European Bioplastics Association, but even with this huge growth, it still won't meet the needs of the huge global retailers. One of the reasons why Coca-Cola - the world's largest producer of plastic bottles - hasn't been able to move away from oil-based plastics has been that there aren't many options around. Ben Jordan, head of environmental policy at Coca-Cola, told Bloomberg that 'It won’t ever work if there’s just one big consumer company like a Coca-Cola trying to drive suppliers...You need more demand out there in industry.' It is therefore important that retailers work as part of a group rather than individuals in order to create a large enough market for suppliers to either make the switch or for specialist suppliers to grow quickly.

These potential monumental changes in packaging will undoubtedly cost money and efficiency once implemented, which is one of the reasons why Iceland could implement these changes ahead of others, because as Richard Walker said, they are a private company. Companies like Walmart, Tesco, Target etc are all publicly traded companies, so a fall in their profits and subsequent fall in share price forces the kind of short-termism that is going to be the single largest hurdle to overcome when making this switch. However, with changing consumer expectations and the demand to remove plastics growing louder, any kind of short-term thinking may end up having severe long-term consequences. 

If you're looking for more innovation ideas check out the Chief Innovation Officer Summit in London
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