Plastic Water Bottles, Which Enabled a Drinks Boom, Now Threaten a Crisis

The industry has tried and failed for years to make a better bottle.

Existing recycling technology needs clean, clear plastic to make new water bottles, and bottled-water companies say low recycling rates and a lack of infrastructure have stymied supply. Danone, for its part, is betting the reputation of its flagship water brand on a new technology that claims to turn old plastic from things like dirty carpets and sticky ketchup bottles into plastic suitable for new water bottles.

.. Plastic drink bottles are the third most common type of item found washed up on shorelines—behind cigarette butts and food wrappers

..  PepsiCo Inc. in August agreed to buy SodaStream—a maker of countertop machines that carbonate tap water—saying the $3.2 billion deal would help it go “beyond the bottle.”

.. Pepsi also now sells reusable water bottles that come with capsules to add flavors, and is testing stations in the U.S. that dispense Aquafina-branded water in different flavors.

.. Poland Spring-owner Nestlé is rolling out glass and aluminum packaging for some brands and researching ways to make all its packaging recyclable or reusable by 2025.“The importance of this now has sunk in,” said Beverage Marketing Corp.’s Chairman Michael Bellas, who has followed the drinks industry for the past 46 years. “It’s the total broadened awareness of the environment, especially with millennials.”

.. Still, executives aren’t looking to get rid of plastic, which is cheap, robust and lightweight. A former Nestlé executive said the company’s internal research showed consumers were unlikely to take to boxed water. Glass bottles, meanwhile, break easily and are expensive to transport because they are heavy.

“It’s tempting to romanticize a world without packaging,” Coca-ColaCo. CEO James Quincey wrote in a blog post this year. “Modern food and beverage containers help reduce food spoilage and waste. They limit the spread of disease.”

.. the challenge has been to find a recycled product that meets regulatory standards for food-grade PET plastic, which is used in bottles. So far, the industry has relied on a recycling method that washes, chops and melts waste plastic to create resin. Most of it gets turned into clothes and carpets since plastic loses some of its structural properties and becomes discolored with each recycle, diminishing the appeal to bottled-water makers.
A Montreal-based startup, Loop Industries Inc., had developed a process to break plastic into its base ingredients. The process didn’t use heat or pressure, so contaminants didn’t melt into the plastic and could be filtered out. Daniel Solomita, Loop’s CEO, likened it to disassembling a chocolate cake into its ingredients—sugar, flour, chocolate, eggs and butter—to make a brand new cake.

.. Mr. Dever and Danone executives had the process tested at Loop’s pilot plant—bringing their own waste plastic secretly tagged with a tracer to make sure that the returned samples were of the same material.

.. Loop has yet to scale up its technology, and the company said its production plant won’t be ready until 2020. Loop shares, listed on Nasdaq, are down about 50% this year. Danone said it has confidence in Loop’s technology. Loop has also signed supply deals with Pepsi and Coca-Cola’s European bottler.

.. Less than a third of PET bottles sold in the U.S. are collected for recycling, with less than 1% processed into food-grade plastic, according to Pepsi, one of the biggest buyers. The bottled-water industry says using more recycled plastic in bottles will incentivize collection of old bottles by giving them value.
.. Danone, like much of the industry, has made promises about using recycled material before only to break them. A decade ago it pledged to use 50% recycled plastic in its water bottles by 2009. The very next year it slashed that target to between 20%-30% by 2011. Today, just 14% of the plastic in the bottles across its brands is recycled material.
.. Nestlé’s plastic water bottles use just 5% recycled material in Europe and 7% in the U.S., while Coca-Cola’s use 10%. Pepsi says it uses 9% in bottles in the U.S. and 16% in Europe.
.. In 2009, Nestlé launched a bottle made of 25% recycled plastic at Whole Foods but later scrapped it. Danone yanked a Volvic bottle made partly from biobased plastic after consumers paid little attention.
.. Danone sought to be more ambitious with Evian. “Once we put ourselves in consumers’ shoes we realized 25% or 50% doesn’t make a lot of sense,” said Mr. Chauvelot. “What makes sense to the consumer is 100%.”
.. Evian rolled out in the U.S. in the late 1970s, wooing health-conscious Americans with splashy ads playing up the benefits of hydration. By 1999, helped by clever product placement among models and athletes, Evian was the world’s No. 1 bottled-water brand and the U.S. market leader by sales, according to company filings.
.. Then a flood of competitors, including mass-market offerings such as Coca-Cola’s Dasani and upscale brands such as Fiji, grabbed share. Evian’s U.S. volumes plunged to 29 million gallons last year from 69 million in 2000,

.. Danone said marketing about the recycling plan helped Evian sales climb 6% in the first nine months of the year.
.. The fastest of 10 lines can produce 72,000 bottles an hour. The plant has the capacity to make two billion bottles a year.
.. To hit its recycling goal, Evian hopes to take deliveries of Loop-branded plastics at the factory by 2020. It is also talking to other potential suppliers. “We have a backup plan for sure,”

Warren Buffett, at Berkshire Meeting, Condemns Republican Health Care Bill

He argued that the American Health Care Act, which passed the House this past week, amounted to “a huge tax cut for guys like me.” He also said rising health care costs, rather than high taxes, were the biggest drag on American businesses.

“Medical costs are the tapeworm of American economic competitiveness,” he said.

.. Yet Mr. Buffett and Mr. Munger stood by Wells Fargo and other Berkshire investments, including United Airlines and Coca-Cola. When a protester from Germany delivered a long speech decrying Coke, sugar and capitalism itself, Mr. Buffett said he would continue to drink his favorite beverage, Cherry Coke.

.. “Change is painful for a lot of people,” he said. “I think it’s absolutely essential to America that we become more productive, because that’s the only way we increase consumption per capita.”

.. Still, he allowed that he expected Berkshire’s next chief to already be rich after a career of business success. And in answering a question about how much that person would be paid, he took a swipe at compensation consultants who often urge corporate boards to pay their managers extravagant salaries. “If the board hires a compensation consultant, I’m coming back!” he joked.

Coca-Cola CEO Muhtar Kent to Step Down Next Year

Operating Chief James Quincey will become chief executive in May; Mr. Kent will remain chairman

One of Mr. Quincey’s biggest challenges will be the increasing number of governments weighing special taxes on sugary drinks amid rising obesity and diabetes.

.. “We’d like to go faster’’ in diversifying beyond core soda offerings that include Fanta, Sprite and the namesake cola, Mr. Quincey said Friday. Coke is expanding its selection of low-calorie and zero-calorie beverages, he said, and played down the prospect that it would expand beyond beverages, as rival PepsiCo Inc. has done.

.. But many investors have soured on the company. Coke’s share price has gained 24% over the past five years, less than a third of the gain in the S&P 500.

.. Coke has 20 brands with at least $1 billion each in retail sales, including Simply fruit juices, Powerade sports drinks, Dasani bottled water and Gold Peak tea.

.. Honest Tea, an organic brand Coke acquired under Mr. Kent.

.. The low-key executive is popular in Coke’s management ranks, with a reputation of being a good listener and a calm problem solver. He often wears jeans to work, unlike the more formal Mr. Kent.