TerraCycle is on a mission to get rid of waste in business. Chris Baker, UK general manager of the company, talks to Louise Bateman about the company's unique method of 'upcycling'.
Q. TerraCycle launched in the UK last September to market a process called 'upcycling' here. It’s a business the company has already developed successfully in the US. Can you describe what it means and what makes it different from recycling?
A. Quite simply upcycling directly reuses materials that would otherwise have a very short lifecycle and would otherwise be destined for landfill. So, for example, single use food packaging, we may turn into a bag.
Q. TerraCycle describes itself as one of the fastest-growing eco-friendly manufacturers in the world. It is founded by eco entrepreneur Tom Szaky, who is something of a celebrity in the US. Can you describe the company to me, its ethos and what makes it unique?
A. The company ethos is based on the premise that there is no such thing as waste in nature. We are trying to apply that to the human population. So TerraCycle is striving to turn business on its head.
Q. I understand your founder is a proponent of a type of capitalism called eco-capitalism? What does that mean?
A. A simple explanation would be to say that what makes us sustainable also makes us profitable.
Q. You launched in the UK with a programme with Kraft Foods to upcycle some of its short-life materials, such as Kenco packaging, turning them into bags and dustbins, etc. You have announced the process to be a success after seven months. What do you base that on and where does the programme go from here?
A. We already have 23,000 people participating in the Kraft Food programme. The programme works by consumers registering as member of a 'Brigade’, which can be in a school or office or even a household. They collect the waste and then send it to us in pre-paid envelope. What has impressed us with this programme is when you look at the rate of sign ups and how quickly waste has come back after sign up, what we’ve seen here in the UK has been fantastic.
Based on this success, the Kraft programme will continue running and continue expanding here.
Q. What further goals do you have in the UK?
A. We already collect 30 different waste streams in the US and we want to expand in the same way here in the UK. So we are absolutely looking to expand into as many waste streams as possible.
Q. Do you have plans to expand into other European markets? If so, which markets are you targeting in the shorter-term?
A. We are already in late discussions with a number of countries in mainland Europe. In the short-term, we plan to expand into Germany, Sweden, France, Holland and Spain, as well, and the Republic of Ireland in late May. We are prepared to look at anywhere, but this year we expect to be in France, Sweden and Germany.
Q. You partner with some major players, such as Kraft, Mars and Kimberley-Clark, and yet you are a relatively small business - just 75 employees worldwide. How difficult has it been to get a foot in the door with these large corporates?
A. Actually very difficult at first. Our first partners were Honest Tea, Stonyfield Farm Yogurts and Clif Bar, which are much smaller companies. The success of the programmes we ran with them encouraged Kraft to work with us and through that we won more programmes with large companies.
Q. What are the key criteria for successful partnerships you have forged and does your business model mean you only work with big companies or do you work with SMEs as well?
A. The success of programmes depends on participation on the part of consumers and on the number of units of waste we collect. The consumer is the key to this and their participation helps drive the products we produce.
We are very willing to talk to any type and size of business.
Q. How does the business model work - do your partners subsidise your upcycling as part of their environmental plans?
A. You are quite right to say they subsidise the programme – the benefit for them is they are solving the problem of their waste going to landfill. The other softer benefit is they are getting increased awareness of their brand through upcycling.
I can’t share specific finance schemes, but because they are tailored to different types of materials and rates it is affordable for any company to become a sponsor. It is not billed as a set fee to be part of programme –it is more performance-based.
Q.What kind of materials/brands can you/can you not 'upcycle'?
A. So far we haven’t found any waste streams that we aren’t able to work with. We are having discussions around upcycling razor blades, for instance, and certain medical products, such as pill packaging – even female hygiene products and cigarette butts. There is always going to be legislative requirements for safe handling and processing so we work around them and there will be some waste, such as hazardous waste, that will always be out of reach.
Q. Do you manufacturer all of your own products or do you use third party manufacturers, particularly in countries outside of the US?
A. We do both. Most of our product manufacturing is done externally, but we still manufacturer our own garden products in the US.
We are experts in finding and collecting waste, not making pencil cases, so we partner with 'best in class’ manufacturers and we will teach them how to work with materials.
We are currently speaking to manufacturers at the moment in the UK. We are still building up waste at the moment, and when we have the volume, the products come next. We expect to see the first products hitting the shelves by the end of the year.
Q. How do you resell your products - through third party retailers and, if so, which ones?
A. In the US we have an e-commerce site, shoponlygreen.com. We also sell through indies and big stores. In the UK, we are planning to replicate the same system as in the US. I can tell you that we are speaking to some of the large retailers in the UK.
Q. What is your biggest selling product?
A. Our garden products are very successful and typically bags and back to school products.
Q. TerraCycle's revenue reached nearly £5 million in 2009, from operations in the US, Canada, Brazil and Mexico – and now the UK. What proportion of its revenue does it forecast coming from the UK market going forward?
A. The UK is going to be a crucial part of our global expansion. By 2011, we expect it to contribute seven percent of our revenue, and by 2012, 10 per cent.
Q. Where would you like the company to be in the future?
A. We would love to match recycling. Why not?