The US Market Requires an Increase in Availability of rPET

McKinsey's study warns of potential shortages in recycled packaging materials in the US due to the increasing demand for recycled content in packaging. Brands aiming for sustainable packaging face challenges as the supply of high-quality recycled material remains nearly stagnant. The study suggests that if brands stick to their recycled-content commitments, the demand for rPET in 2030 could surpass the supply by threefold, leading to a significant price gap between rPET and virgin PET.

With only 27% of PET bottles and 18% of recyclable PET plastic waste currently being collected, the majority ends up in landfills. Despite new players entering the recovery and reprocessing chain, the growth in rPET supply has been modest, increasing by only 1% annually from 2012-22. This stagnant situation results in about 4.6 billion pounds of PET going to landfills each year.

To address this challenge, experts recommend focusing on three key approaches: increasing supply, ensuring access, and designing for circularity. These strategies, applicable to various packaging substrates, are crucial for the industry to meet sustainability goals and navigate the growing regulatory pressure. The road ahead involves unlocking additional rPET supply to bridge the widening gap between demand and availability.

To enhance the availability of future rPET, McKinsey suggests three strategic approaches for leaders in the packaging industry:

1. Boost Supply:
   - Utilize the untapped potential of PET waste, where over 80% remains unused.
   - Invest in advanced sorting equipment at material recovery facilities to enhance the efficiency of PET processing.
   - Embrace national and state-level policies, like extended producer responsibility or deposit-return schemes, as seen in Nordic countries, to positively impact rPET supply.

2. Ensure Access:
   - As rPET scarcity looms, securing access becomes crucial for brands committed to recycled-content goals.
   - Tailor strategic options based on local policies, manufacturing plant locations, and rPET supply sources.
   - Consider vertical integration with recyclers or establish long-term partnerships and contracts with suppliers or competitors.
   - Explore innovative models such as brands recovering their own bottles directly from consumers, potentially becoming economically viable with the rising value of recycled materials.

3. Design for Circularity:
   - Accelerate circularity commitments by reassessing packaging design to facilitate material recovery.
   - Implement solutions like transitioning away from colored PET to improve labeling and product design, encouraging higher rates of consumer recycling.
   - Learn from industry examples, such as Coca-Cola's decision in July 2022 to eliminate green-colored PET plastic from its Sprite brand, a move aligning with easier recycling into future food-grade bottles.

In conclusion, a comprehensive strategy encompassing increased supply, secured access, and circular design is essential for the packaging industry to navigate the challenges and meet sustainability commitments in the evolving landscape of recycled materials.