written by
Max Gerke
Max Gerke
Market Insights

The Plastic Problem: How Start-ups Are Cleaning Up

The Plastic Problem: How Start-ups Are Cleaning Up

It is hardly news that the world is producing too many plastic bottles. However, as consumers are becoming more aware of plastic’s harmful effects and opting increasingly for sustainable products, German start-ups have seen an opportunity for innovation. Enter a new generation of concentrated tablets – most notably in the household cleaning sector.

The problem with plastic

Source: Matthew Gollop (Pixabay)

Plastic production has grown massively over recent decades, from 1.5 million tonnes worldwide in 1950 to 322 million tonnes in 2015. The Plastic Oceans Foundation estimates that 50% of this total amount is for single-use purposes. In Germany alone, 1.9 million disposable plastic bottles are consumed every hour. That amounts to 16.6 billion plastic bottles a year.

The problem is this. Single-use bottles are extremely difficult to dispose of responsibly and many end up littering our seas and oceans. Most disposable plastics end up being either burned or sent to landfill. Most plastics we sort in fact rarely get recycled - the German Government estimates only 39%, while the Green Party says that if non-recyclable composite materials and exports were excluded, it would be only 17.3 per cent. This is because the process is too expensive and complicated, and the resulting product is of lower quality. Even reusable bottles are not as environmentally friendly as they may appear: these are still transported long distances from the bottling site to point of sale. When they are ready to be reused they are transported back again to the botting site which leads to high carbon emissions.

The cleaning product industry is a large contributor to this problem. In Germany alone, approx. 800 million plastic cleaner/hand soap bottles are consumed every year (out of a total 16.4 billion plastic bottles overall). If these were replaced by sustainable solutions, it would be possible to reduce 5% of total plastic bottle consumption in Germany.

What consumers are saying

Source: telegraph.co.uk

The problem with plastic has not escaped the public’s attention.

In recent years moving images from documentaries like David Attenborough’s Blue Planet and publicity created by environmental campaigners like Greta Thunberg have put the issue directly onto the agenda. Suddenly people are realising that using less plastic is one simple change which can have a huge impact on the environment.

In a 2019 survey around 91 percent of German consumers stated that they would like to see fewer products in plastic packaging. Consumers are now also prepared to pay a higher price for sustainable alternatives. According to the KPMG Consumer Barometer report from January 2020, 69% of those surveyed said they would be prepared to pay more for sustainable FMCG* products.

This might not simply be due to a benign concern for the environment but for reasons of convenience too. Markus Winkler, Managing Director of sustainable cleaning tabs company Biobaula, feels that “not only have consumers noticed more plastic waste on the beaches when they go on holiday, they are seeing single use plastic bottles building up in their homes too. They are looking for products which solve these problems“.

How German start-ups are meeting this demand

Source: watson.de

All of these factors – greater public awareness around the problems of plastic, increased consumer demand and a willingness to pay for sustainable alternatives - are fuelling innovation in the start-up sector.

Household cleaning products are being reinvented for a plastic-free world. German start-ups such as Klaeny, Everdrop and Biobaula have a vision: that households reuse their cleaning fluid bottles over and over again. For this they have developed concentrated cleaning tabs which the customer can mix with water at home in a reusable glass bottle. These tabs don’t just make all-purpose cleaners but also glass cleaners, kitchen cleaners and also dishwashing detergents. This not only eliminates the customer’s need for a single-use plastic bottle every time they buy a cleaning product, but the smaller size of the tabs and lack of plastic bottles means fewer carbon emissions. These tabs are also made from all-natural ingredients and are completely biodegradable.

As customer demand grows, so does the interest of venture capitalists in financing such sustainable approaches. In March 2020 Klaeny announced the successful conclusion of an investment round resulting in a mid-six-figure investment. In their first investment round, Everdrop founders also initially raised a six-figure sum in seed funding, then in September 2020 announced a single million investment from HV Capital. Biobaula sold its first product in 2018, and its products are now carried in 6000 shops across Germany and sold in 10 international countries. Nor has this development gone unnoticed by the big companies: market leader Henkel has launched new filling stations in drugstores where customers can go to refill their bottles with detergents and has created a new brand for this purpose: Love Nature. Even LIDL has launched its own-brand tabs.

Let’s be clear: selling dehydrated products and asking people to add water to them at home is not a new concept (think coffee, tea and soap). In fact, the first concentrated cleaning tab entered the market back in the 1980s. Back then it garnered more ridicule than interest. But now is the right time for this approach. Consumers are looking for new, innovative solutions to the plastic problem and are willing to pay. We are really excited about this development and expect further disruptive solutions in this market in the near future.

*FMCG - Fast Moving Consumer Goods