Returnable Glass Bottle Implementation for Africa and Beyond

Returnable Glass Bottle Implementation in Africa

In my previous newsletters, I have written about Returnable Glass Bottles (#RGB) and Refillable Plastic Bottles (RefPET) in some detail. Whatever motivation companies may have to implement such initiatives, one thing is certain, Returnable bottle packaging is the right thing to do. Returnable Glass Bottles are not only #sustainable but can be cost-effective and profitable as well. The question is no longer whether or not companies should implement RGB, but it’s about how companies can implement RGB for their operations.

So, what does it take to set up or implement an RGB Operation in Africa or elsewhere in the world? The Fundamentals are the same and they are summarised in this essential RGB Toolkit below.

1.???DEFINE YOUR RGB STRATEGY

Implementing an RGB Operation is not a standalone call but a strategic one that should be informed by the company’s overall strategy. The decision to implement RGB can be because of many reasons, some of which are discussed below:

• It’s legally required. Country-specific legislation may require that certain packaging be reused or recycled
• It’s the right thing to do from an environmental and sustainability standpoint
• It’s a cost reduction strategy. Implemented well, RGB will result in significant cost savings
• It’s a consumer requirement from a quality or a cleaner packaging point of view
• It’s a pricing strategy that supports a cost-beneficial business model that supports and underpins providing an affordable product in markets where competition id fierce and margins are tight.

?2.???RGB PLANT INFRASTUCTURE

Setting up and equipping an RGB Operation is capital heavy and businesses must have a tested business case that proves ROI within a reasonable time frame. The RGB operation must as a basic have the following in place:

1. Receiving Station for receiving all the bottles from Distributors and the trade. This station may also have an “Empty Bottle Inspector” (EBI) which checks and removes defective bottles from the float
2. Sorting Station for sorting and separating various bottles, defective bottles etcetera
3. Cleaning station or facility for all bottles. At this stage, the labels may also be removed
4. Sterilisation station for all bottles before they are filled with product
5. Filling – this should be in place in any event, to fill the beverage product. The number of lines will depend on the number of brands, packs, or extensions
6. Labelling. Brewers and Beverage Suppliers must decide what type of label they want for their products. There are a few options. There are permanent ink, plastic, or paper labels available. The choice of the label will determine what investment will be required. Permanent labels may save cost but are not flexible as bottles cannot be used for different SKUs. A removable paper or plastic label comes with an OPEX cost

3.???GLASS/CRATE FLOAT

There is a once-off Capex cost for getting crates and bottles to float, and there would be an ongoing cost for replacing damaged, or unreturned crates or bottles. Some of this cost can be reduced or offset by crushing damaged bottles into culets and selling them to glass manufacturers. Brewers and Beverage Suppliers must invest in sufficient float – and treat this as an asset in the P&L. All Bottles must be tracked and accounted for in the Supply and Value Chain.

4.???BOTTLE DESIGN

The bottle design is critical to cost management in 2 ways

?The Bottle must not be too light as to be fragile and break easily, yet it must not be too heavy as this will increase handling, logistics, and transport costs

Will the business have a universal bottle to be used across the same pack size? Or do they want separate bottles for different SKUs even if the pack size is the same? This choice will impact product costs and differentiation and suppliers must decide what is important, and how each choice impacts the Business Case

5.???BOTTLE LABELING

Key questions to ask here:

• Are the bottles pre-labelled?
• Will you be using paper or plastic level – or even ink? And will these labels be applied onsite?

Whatever the situation, the Brewers and Beverage suppliers must have a labelling solution that supports the business strategy. If the company decides on removable labels then there must be an onsite facility that will enable removing and reapplication of labels as required.

6.???DEPOSIT SYSTEM

A proven way of protecting and securing bottles that enter the marketplace and making sure they are returned to suppliers is by attaching a monetary value – a deposit - to each bottle and passing this cost to the customers and consumers. Customers and consumers can then get back this deposit when they return the bottle or they can get another similar product at a reduced cost when they exchange the bottle for the full beverage product. This incentive helps customers and consumers to see the bottle as an asset – and they are more likely to return it. Key considerations for designing Bottle return or Deposit Return Schemes (#DRS) are the following:

• Assign the right deposit amount that will entice consumers to recycle the bottle
• Assign Bottle return centres and make it possible for consumers to return bottles where they bought them.
• Mark the bottle clearly and note that it is returnable and put value for the return deposit
• Educate customers and consumers alike on the DRS. Campaigns in the media, and in the trade should spread the message.

7.???GLASS BOTTLES COLLECTION PROGRAM

Some Brewers and Beverage companies may choose to strategically introduce a Glass Bottle Collection program for 2 main reasons. Firstly, to reduce the environmental damage and impact on landfill, and secondly to counter the threat of illicit brews. In some markets, criminal syndicates collect bottles and fill them with the counterfeit product that they sell as legitimate in the market. Leading CPB Brands like 可口可乐公司 have initiatives like #WorldWithoutWaste where they collect as many of their bottles as possible that are in the markets, they serve in a deliberate strategy to minimize harm to the environment. Brewers and Beverage Suppliers may want to opt into such Glass Collection Programs.

8.???CONSUMER AND MARKET EDUCATION

It is critical for Brewers and Beverage Companies to have extensive market education and awareness campaigns that support and underpin their RGB Strategy. Such campaigns would focus on the Value Chain – from Suppliers to Distributors, Wholesalers, Cash and Carry, etc, to retailers and consumers. Such campaigns may focus on the following:

• Benefits of RGB Products (Price, Sustainability, Quality, etc?
• Pack and price architecture for RGB Products
• How the deposit systems work
• Customer support/consumer complaints line

The success of any RGB operation will depend on the extent and effectiveness of consumer and customer education campaigns that raise product awareness.

So, what’s next? For all its benefits, an RGB Operation is not easy to set up and is fraught with risk and many challenges. However, with expert help and meticulous planning, an RGB Operation is a powerful strategic and competitive lever that can deliver increased volumes, revenues, and market share. If you would like to find out more or need help with RGB in your market please contact me directly.

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