Capsules

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Plastic single-use capsules are not easily recycled, not marine compostable, and definitely not yet green

By Dan Bolton

Pressure on the packaging industry to develop easily recycled coffee capsules continues to build as brands confront an increasingly impatient core of consumers.

While coffee consumption increased to 64% of U.S. adults in 2018, the highest since 2012, household penetration of single-cup brewers declined slightly in both the U.S. and Canada.

Unit sales growth slowed to 1.6% in 2017 in U.S. grocery and mass market outlets, but Keurig and private-label K-cup compatible rivals will still manufacture more than 10 billion single-serve capsules in 2018. (See Single-Serve Slows, December 2017).

Sustainable packaging is a rapidly growing industry, already nearing $400 billion globally, with demand for single-use containers of coffee, yogurt, cereal, and snacks increasing. All evoke pushback with Generation X and Millennials, the most vocal cohorts (and the globe’s most financially powerful consumers).

In March legislation was introduced in Canada mandating that all single-use pods sold in British Columbia be compostable. Municipalities and their waste management contractors would be required to accept pods as green waste. Ontario is debating similar legislation and in the US several cities are considering fees, fines and outright bans to reduce plastic waste.

Single-cup brewers are remarkably advanced compared to 1998. Single-origin and unique premium quality coffee for both Keurig and Nespresso brewers is now commonplace (consider Nespresso’s 100% Robusta Uganda expresso capsules or Green Mountain’s Costa Rica Paraiso from Keurig). So why hasn’t the plastics industry developed a “green” single-serve capsule?

Not yet green

Switching from polyethylene to polypropylene enabled many coffee brands using K-Cups to label their products “recyclable” once the coffee is removed and the plastic is shredded. LBP’s UpShot Solution was the first to market a recyclable polypropylene that can be mixed with other #5 plastics. Mother Parkers Tea & Coffee offers the RealCup, a recyclable polystyrene #6 cup and the Eco-Cup (except filter and lid) can be recycled at two-thirds of the municipal systems in the US once disassembled by users. Ring style capsules made of plant-based plastics have been certified compostable in landfills by the Biodegradable Products Institute (BPI) but do not decompose in water. Club Coffee offers a BPI certified PurPod capsule made from coffee chaff.

“The main problem we see with rings is the capsules do not have a high barrier, so it will need to be put into a barrier bag or wrapped in a material that is recyclable or compostable,” writes Philip Angus, director of business development at ICA USA

“We are working on recyclable bags with zippers for ease of functionality. ICA could fill and count 20 Nespresso style bio capsules into a re-closable standup bag,” said Angus. “The compostable K-cup pods are wrapped individually and then can be put into a bag or a display carton,” he said. The current shelf life of a pod in a carton box is 10 months. Pods in a barrier bags with gas flush would have a 24-month shelf life, he said.

Robert A. Melikian, president of ABCD (Automatic Brewers and Coffee Devices) a private label capsule fill and pack manufacturer near Philadelphia, uses LBP capsules and is closely monitoring the development of a new plastics. The cost of sourcing and assembling exotic raw plastics, filter materials used in making capsules, and air-tight lids is a growing concern as the marketplace puts downward pressure on retail prices that today average less than 40-cents per serving.

Single-serve alternatives include coffee bags “steeped” in the cup and paper filter pods. Virgin Hotels recently began ordering 20-gram fractional packs for use with a pour-over filter “adding a little romance for guests who like pouring,” he said.

Another concern is that environmentally friendly materials are outpacing the processing capabilities of most landfills, Melikian explains. California no longer permits brands to label capsules biodegradable or compostable regardless of materials since virtually all the capsules that are discarded end up in landfills.

The 2020 promise

Coffee brewing systems rivals Nestlé and JAB Holdings (which purchased Keurig for $13.9 billion in 2016 and last year appended Dr Pepper Snapple which earns $26 billion annually) both produce capsules made of recyclable materials — but neither is easily recycled.

Nespresso uses an aluminum shell that requires removal of the coffee within. Parent Nestle subsidizes pickup with a recycling partner. Keurig first introduced recyclable plastic in 2016. Keurig Dr Pepper repeated in 2017 a promise to change the composition to enable 100% of its capsules to be recycled by the end of 2020. About two-thirds of the latest design can be recycled when consumers remove the foil lid, filter, and grinds.

From a niche market, single-serve beverage capsules have grown to be one of the most important sub-applications of the ambient thin wall packaging segment in the past five years.

Applied Market Information (AMI) a British consulting firm said: “there is an urgent need to review the materials used for capsules conversion in search of more sustainable options, as well as to explore end-of-life solutions.” Material changes are likely to disrupt the supply chain even further, according to AMI which is organizing a Single-Cup Capsules conference in Vienna in September.

“Increased demand for recyclable, bio-based, and other sustainable packaging types, driven largely by environmentally conscious consumers will reach $440.3 billion by 2025, according to Research and Markets.

A 2016 study by Lux Research identified bio-based materials and chemicals that perform as well as – and in some instances better than – petro-based incumbents. The focus is currently on bio-based PET plastic at commercial scale with Coca-Cola and other bottle giants already adding 30% plant-based plastics with a pledge to increase that amount. Hard-sided single-use coffee capsules with a long shelf life pose greater challenges and new opportunities.

“The supply chain of capsules is rapidly losing its oligopolistic nature,” according to AIM. “The former dominance of major suppliers is challenged as the market expands... leading to a more fragmented supply chain that affects the overall profit pool and the way consumers make their choices.”

Convenience dictates

This year’s National Coffee Association’s annual survey of past-day coffee drinkers shows daily use of traditional drip coffee machines continues to decline. Forty-one percent of past-day drinkers reported brewing their coffee on a drip machine, a number that has fallen below half for the first time.

This is strong evidence that the convenience of single-serve will replace drip.

Single-cup brewers are found in 41% of homes and 28% of offices, according to the National Coffee Drinking Trends survey. Single-cup brewers were used by 26% of past-day drinkers to make the coffee they drank, up from 19% in 2012. Those aged 25-39 with kids at home are the most likely to own a single-cup brewer. Households with a combined income greater than $100,000 own the most machines. If anything, the trend to make better coffee at home is gaining momentum. The annual survey found 13% of past-day coffee brewed their coffee using an espresso machine.

One reason cited for drinking less at-home coffee is waste. Seven percent of past-day drinkers expressed concern “about the waste that it creates.” This was much more important for Generation X and Millennials, a group that also cited concerns about “the carbon footprint of the coffee I drink.” A comparable 8% cite “the waste it creates” as a reason for drinking less coffee out of home.

Among the most important reasons for drinking more coffee out of home are “tastes great” (63%),  “to give myself a treat” (59%) and its “convenient” (53%).

Coffee at home is viewed as more affordable, good with food, a taste-treat, or part of a daily ritual. Convenience is cited as a reason for drinking coffee at home and increasingly viewed as a prerequisite for premium brands. There appears to be little interest in filling K-Cups with Blue Bottle (now owned by Nestle) or Stumptown Coffee Roasters (now owned by JAB Holdings) but Peets Coffee & Tea in K-Cups is a big seller.

In April JM Smuckers launched its “1850 by Folgers” a 100% arabica in both 12-ounce bags and, not surprisingly, K-Cups. The premium steel-cut coffee is finished in perforated drum roasters and sells for 55 cents an ounce, more than double the retail price of Folgers’ traditional blend of arabica and robusta coffee.

Wanted: A simple solution

Starbucks has invested a lot of money in researching end-of-life solutions. In March the company turned to the public for help, offering a $10 million reward for ideas on how to make a more environmentally friendly takeaway cup. Now everyone is chasing the big breakthrough. 

Every problem has a solution — but it’s not necessarily an easy solution. Progress resolving limitations in materials, as well as manufacturing and design issues during the past year was incremental, but it’s progress. 

Why It’s Taking So Long

If Elon Musk, who founded SpaceX in 2002, can launch “Rocketman” to the stars behind the wheel of a cherry red Tesla in less than 20 years, why has it taken so long to figure out how to easily recycle capsules?

Below are constraints identified by PAC NEXT, an industry-financed consortium to assist packaging stakeholders in resolving end-of-life challenges for material recycling facilities (MRFs).

What happens to this material today?

Capsules are generally not accepted at curbside due to the multiple components of pod, filter, seal/lid, and grounds. Nonetheless, consumers put these materials into their recycling box.

Due to their small size, capsules tend to drop through mechanical screens. Because they still contain grounds the capsules then contaminate other waste streams, particularly glass.

In many locations, pods are manually sorted from the line or left to go in with the mixed plastics as the negative sort.

What can be done about it?

There is an end market for polypropylene and polyethylene. The key is to be able to separate all the components of the package including the pod, filter, seal/lid, and grounds.

Consumer education is needed where packaging is not compatible with MRF capabilities.

Brands should promote return-to-retail where appropriate and take advantage of solutions like Terracycle mail-in recycling.

This is a highly evolving market likely to be disrupted by the introduction of new sustainable packaging solutions.

Learn more: www.pac.ca