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The trend for sustainable packaging for beverages is accelerating in Southeast Asia, buoyed by greater consumer awareness of sustainability and increased focus by various stakeholders. However, despite this increased awareness, consumers in the region are largely price-conscious and unwilling to pay more for sustainable beverage packaging. Other stakeholders lead the sustainability drive, with governments incentivising a shift towards a circular economy and manufacturers focusing on recycling, packaging reduction and adoption of more sustainable packaging alternatives.
In Southeast Asia, sustainable beverage packaging practices have often focused on the “3 Rs” which are to reduce, replace and recycle. One way firms aim to “reduce” is through reducing packaging. Yakult Singapore stopped providing single-use plastic straws for its yoghurt drinks from the end of December 2018, while Thai Beverage introduced PET bottles using plant-based ingredients. The “replace” component refers to the replacing of pack types such as plastic with more recyclable alternatives. Nestlé Malaysia introduced paper straws in place of the usual plastic straws for its Milo packaged drink in 2019. Winking Seal Beer Co launched canned bottled water in Vietnam, seen as more recyclable than PET bottles. The “recycle” aspect comprises both greater recycling and use of recycled material for packaging production. Danone and Coca-Cola introduced 100% recycled PET for their bottled water brands Aqua in Indonesia and Viva in the Philippines respectively. In addition, Coca-Cola has begun switching its Sprite PET bottle packaging from its iconic green to transparent packaging across its Southeast Asian markets in 2020, to improve packaging recyclability.
Government initiatives in sustainable beverage packaging appear targeted at incentivising recycling as part of a wider, circular economy approach, a closed-looped sustainable system aimed at eliminating waste and re-utilising resources. Indonesia’s second-largest city, Surabaya, launched a scheme in 2018 that allowed residents to pay bus fares using plastic bottles. The financial incentive of free rides attracted a significant buy-in from residents, with some more consciously collecting plastic waste to use as bus fares rather than merely disposing of it. This has helped authorities achieve their aim of spreading awareness about packaging sustainability and collecting more plastic bottles for recycling. Similarly, Singapore’s National Environmental Agency partnered beverage manufacturing firm F&N to roll out 50 reverse vending machines across Singapore. Beverage consumers were incentivised to recycle plastic bottles and metal cans at these machines in exchange for supermarket discount coupons.
Among other stakeholders, foodservice outlets have contributed to the beverage sustainability drive through fostering lifestyle habits such as reducing and eliminating the usage of plastic straws. It is not uncommon to find bamboo straws in restaurants of Vietnamese cities such as Ho Chi Minh City. Meanwhile, in Thailand, vegan restaurant chain Broccoli Revolution showed its creativity by replacing plastic straws with edible kangkong straws. In Singapore, fast food outlets like KFC have implemented a strict “no straw” policy, although this has received pushback from some customers. Reports of KFC customers taking straws from adjacent foodservice restaurants demonstrates a key challenge to the sustainability mindset among some consumers – the unwillingness to sacrifice personal convenience for sustainability.
Coronavirus (COVID-19) has hit multiple industries hard, prompting some companies to reduce their short-term sustainability focus amidst cost-cutting, while governments redirected their resources and attention towards fighting the pandemic. However, the importance of sustainability in contributing to branding is evident from the Euromonitor International Voice of the Industry: Sustainability in the Coronavirus Era survey, where companies increasingly view branding as a reason for sustainability investment in a post-COVID-19 world.
COVID-19 has provided new opportunities for sustainable packaging innovation by beverage manufacturers in packaging and cost reduction. With cost savings being the immediate aim of most beverage companies, reducing packaging and packaging waste such as straws could become more commonplace, as it positively impacts companies’ bottom lines. In addition, home seclusion during COVID-19 has shifted consumer beverage purchasing behaviour from single-serve portions and impulse purchasing to larger take-home portions and multipacks. The shift to multipacks has created opportunities for Southeast Asia to learn from other regions. For example, Coca-Cola in Europe is phasing out shrink wrap packaging in its multipacks and replacing it with sustainable paperboard toppers, an initiative that can be replicated in Southeast Asia.
Despite growing sustainability awareness among Southeast Asian consumers, their price sensitivity means that multinationals and governments will still continue driving sustainable beverage packaging momentum moving forward, focusing on packaging technology and incentivising a circular economy respectively. While some beverage players may be tempted to deprioritise sustainability amidst COVID-19, they should not lose sight of the longer-term benefits to brand reputation in embracing sustainability.
For more information on the topic, download the free report: Growth of Sustainability in Southeast Asia