There was a lot of hype in 2017 around Zume.
What if there was a better way to make and deliver pizza to
you? Turns out there.
Zume is revolutionizing delivery model.
All pizzerias out there, you're in trouble.
At the time Zume was a pizza company that used robots to
automate the pizza creation process and utilized large oven
carrying trucks to bake the pies as they traveled to customers.
The idea was a hit and earned Zume a $375 million investment
from SoftBank. So why are we talking about pizza made by
robots in a video about compostable packaging? That was
our question too.
One of the problems that we encountered in pizza was our
beautiful pizza with no stabilizers in it in a
traditional box, declined in quality from the time you cooked
it to the time it was delivered to the point where we didn't
think it was good enough. So we designed a new pizza box.
At the beginning of 2020 Zume laid off half of its workforce;
360 employees.
This is another stumble for SoftBank's Vision Fund, which
invested $375 million into Zume, bestowing that unicorn status;
$1 billion valuation.
But the company kept going. Now Zume is dedicated to producing
compostable packaging that is durable and backyard
compostable, breaking down in a matter of 90 days. Zume is
breaking into the $274.2 billion sustainable packaging market,
which is expected to grow to $413.8 billion by 2027. But the
industry does face challenges.
I wish I could say it was just the cost, you know, and cost is
gonna come down or it's just that we need one thing but it's
really, I think a variety of factors.
As the oceans fill up with plastic waste, and as companies
make pledges to switch to greener packaging, it could be
great timing for Zume. So let's take a look at some roadblocks
in the compostable packaging industry and what can be done to
overcome them.
Let's talk about the lifecycle of a package first using a
takeout container as an example. Takeout containers can be made
of many different materials which all have their pros and
cons, like plastic, metal, styrofoam, cardboard, and a
compostable material like molded fiber. Some plastics and metals
can be recycled, but they have to be perfectly clean in order
to be made into another product. They can also be down cycled,
which is where they're used to create something that cannot be
recycled again, like a park bench. But recycling has failed
in the US. In 2018, less than 9% of plastic waste was properly
recycled in the US. And it got worse in 2019 when China stopped
importing American trash. So most of what you think may be
getting recycled is actually getting sent to landfills or
making its way into rivers and oceans.
The UN says that by 2050, we'll have more plastic than fish in
the ocean. Plastic's become so prevalent that every person on
the planet eats a credit cards with a plastic a week.
Plastic recycling has actually been considered by some to be a
ploy by oil companies to make plastic production seem more
environmentally friendly than it is. And even sending food scraps
to the dump can be harmful.
When you're actually introducing those organics in a landfill,
you create a lot of methane. And as you know, methane is a very
important greenhouse gas emission. So then you want to
reduce that amount of organics that you send to the landfill.
But the US loves plastic. The country generated more than 14.5
million tons of plastic in 2018. It's not easy to get away from
that.
Plastic's an amazing material, it's miraculous, and the
convenience of plastic has powered many of the modern
conveniences that we enjoy as consumers around the world. But
unfortunately, the things that make plastic great come with
catastrophic consequences.
Aluminum containers are a bit easier to recycle but still only
saw about a 35% recycle rate in 2018. Cardboard is recyclable
and compostable, but only if it's clean and doesn't have some
sort of coating on it. Virgin cardboard can also contribute to
the deforestation of endangered habitats. Styrofoam, or
polystyrene is technically recyclable, but not in a way
that is economically feasible or environmentally effective. Many
cities and states including New York City, Maine, Vermont,
Maryland, and a long list of cities in California have
completely banned the use of polystyrene and the trend is
growing. Compostable materials seem like a solution to these
recycling issues but come with their own set of confusing
marketing tactics and end of life difficulties. For instance,
the word biodegradable which is used to describe certain
materials like plastic made from corn has been scrutinized.
That necessarily does not mean that a bio acronym at the
beginning will mean that the polymer is from a based
resources or is biodegradable and if it's biodegradable that
doesn't mean that it's compostable either.
The word biodegradable on its own for a marketing term is seen
as potentially pretty misleading. So several states
have passed laws actually forbidding the term
biodegradable in marketing language when it comes to single
use items. So states like California, Maryland, and
Washington, Minnesota for bags specifically,
Some materials require composting in an industrial
facility like certain cutlery and coffee cup lids, which means
you can't just throw it in your backyard and hope it will break
down. It has to be sent to a facility that monitors the
chemical and temperature levels of a large compost pile. The
materials are also sifted to make sure everything has broken
down properly. And if you think you're doing the environment to
favor buying these industrial facility compostable products,
and still throwing them away in the trash, you're only partly
correct. Landfills are usually too compressed to allow oxygen
and micro-organisms to break materials down. Even for things
like food or paper, which are usually pretty easy to break
down.
Unlike with recycling, where you have different plastic types,
you have different shapes, and that can help determine the
recyclability, and each community has different
requirements based on what their recycling facility can sort,
there's no common one common definition of what is
recyclable. With composability, it's different. We have these
international standards saying this is what is compostable
regardless of what plastic type you're using, regardless of
whether there's paper in there or not.
According to one report, only about 27% of the United States
population has access to some kind of composting program that
accepts either food waste only, or food waste and some form of
compostable packaging. So it's not a ubiquitous solution yet.
The real difficulty here at Zume is finding solutions to replace
all of those arrows. Let's get rid of those arrows so that you
don't have the confusion at the consumer level. You know, can I
or can't tie and throw your hands up and I'm just going to
throw it in the trash and let it go to landfill. So it's going to
be make it simpler, easier. I know I can just take it, compost
it and 90 days later, I can use it to fertilize my garden.
Zume developed packaging that is backyard compostable, and it
really makes a difference. Backyard compostable packaging
can break down without the use of industrial monitoring. They
use the microorganisms in the soil or water to break down
packaging. For people living in areas without composting
services, this gives consumers the option to discard their
waste in a local compost pile, or even in their backyard
compost piles.
I can tell you that we've tested our products with independent
labs in all of the known waste streams and we have all the
certifications that give you the results that you'd be looking
for.
Recently, compostable products have been on the rise. Companies
like Full Cycle in the US, Astu in India and Biofase in Mexico
have been springing up left and right. Unilever and PepsiCo
among others have goals to design 100% of packaging to be
reusable, recyclable, compostable, or biodegradable by
2025.
That's partly a technical definition, so making it
technically recyclable, or compostable, but you also have
to be able to get it recycled or composted at scale. And you
know, that's what we're all working on right now is how do
we make that happen both technically recyclable or
compostable, and at scale.
And Zume is trying to make the compostable transition easier
for brands, brokers and distributors by creating
packaging out of materials that are local to the companies that
need them. For some of their packaging, the materials they
use come directly from nearby farms who can sell their
agricultural waste to Zume.
One of the big things I think we can do here is the revamping
this supply chain. So let's build a pulp mill, next to the
source of the agricultural waste so it doesn't get burned or it
doesn't get taken to a landfill, turn it into premium molded
fiber packaging that then is composted, so it's a place to
grow the next crop. It's a closed loop supply chain. And,
you know, something I think we've heard a lot about over the
past year is the supply chain.
The company has products available in 21 countries
including takeout containers, cosmetics packaging, and their
robotic technology when a company wants to produce
packaging themselves.
We work with some of the largest industrial companies in the
world, and they build factories based on our technology. At the
same time we work with some of the biggest brands in the world,
and what's All of their product problems, we help give them a
road beyond plastic. When we have these fully qualified
products and these fully qualified factories, we connect
the two of them together. And we give brands a path beyond
plastic at scale with great economics for the brands, and
great economics for the factory partners.
The sustainable packaging industry is a $274.2 billion a
year business. Of course, the packaging industry as a whole is
about $900 billion. So there's still a lot of work to be done.
There are some constraints when it comes to compostable
packaging like higher cost. 100 plastic straws can cost as low
as $1.53 when bought in bulk, compared to paper straws, which
can cost $1.67 for 100, when bought in bulk. That's an
increase of 9%. These plastic clamshell containers for burgers
and sandwiches can cost 13 cents each when purchased in bulk.
Their natural fiber counterparts cost 19 cents each when bought
in bulk, an increase of 46%.
Remember, packaging is a commodity and it's always a low
cost product. So in general, for food, or for this kind of
situation, your margin is very small that you can actually not
have a large amount of room there to have a course in the
packaging system.
Zume says it's robots are the reason it can keep costs down.
Previously, machines could either make very low quality
things quickly, some machines could make high quality things
very slowly, but they were so expensive that they would be
outrageous for a consumer market. What our technology does
that so revolutionary is it can make very high quality parts
very fast.
And then there's the question of performance. Compostable
packaging companies have come up with many ways to make their
products as durable as environmentally damaging
alternatives. But it's not always easy.
We're using technology to advance the state of the art in
molded fiber production. So we can take many, many millions of
tons of agricultural waste and turn it into not plastic. And we
can do that without compromising on performance or on price and
we can do it with speed that is absolutely category leading.
One thing Zume doesn't have control over though, is the
difficulty that comes with waste management, including the lack
of composting programs mentioned before, along with the general
confusion of whether something is compostable or not.
The problem is that the waste management system is at the
state level. So we have 50 states with different types of
goals. So we should have tried to get at least an aggregation
of a state or if the government can actually pass some type of
regulation on whatever we have goals to move the whole country
forward.
Without a fully circular economy, meaning packaging is
created, used and turned back into materials that can be used
to create more, our packaging obsession will continue to cause
problems.
There's tremendous demand for these solutions in the market
and with consumers. So now that the solutions exist, and the
demand is there, now we're getting the scale.