Meet the company that stands to benefit from the war on plastic straws

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With some of the world’s largest companies and entire cities banning plastic straws, Hoffmaster Group Inc. and Aardvark Straws, makers of paper straws, are stepping up for increased demand and sales.

Plastic straw bans have been declared in places like Seattle and Vancouver and at global companies like Starbucks Corp. SBUX,
-0.03%,
McDonald’s Corp. MCD,
+ 0.67%,
Hyatt Hotels Corp. H,
+ 3.58%,
and Ikea, opening the door to alternatives.

On August 6, Hoffmaster, a company that makes paper tableware, announced it had acquired Aardvark Straws, “the only US producer of paper straws,” according to the statement. By the time MarketWatch spoke with Andy Romjue, president of Hoffmaster, just over a week later, the company had already started taking action to meet a flood of orders. The media have already assessed the increase in demand at 5,000% in recent months.

“We have equipment on order to serve five times the capacity we currently have,” said Romjue, who called the previous eight days a “whirlwind” in which the company has made “significant” investments to increase capacity.

“We are expanding the facility and increasing employment.

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Hoffmaster started working with Aardvark around 2012, according to Romjue. Even then, David Rhodes, global sales manager at Aardvark, was talking about a ban on plastic straw.

The world has become more aware of the plastic pollution that threatens oceans and marine life. The viral video of a sea turtle having a plastic straw removed from its nose has raised the level of urgency regarding the environmental impact of plastic waste.

“All of a sudden one day it happened,” Romjue said of the bans.

The wholesaling of paper bags and disposable plastic products reached an annual turnover of $ 82.1 billion in the five years leading up to 2017, according to data from IbisWorld. Disposable plastic boxes, containers, cups and dishes accounted for 10.9% of this activity. Household paper and plastic products and products classified as “other” each accounted for 11.5%.

Romjue said between $ 1.5 billion and $ 2 billion worth of plastic straws are sold each year. Paper straws accounted for less than 1/10 of 1% of this amount.

The bans instantly made paper straws a growing category.

“It can go up to 20 to 50% of the market,” he said.

When faced with a major change in a daily habit, consumers may be reluctant or even outright opposed to the change. Diners who grab a straw to drink their iced coffee in the morning may not be thinking of the oceans.

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But the bans have occurred in cities where awareness is heightened, experts say. And when large companies change their practices, it can help drive behavior change.

“If you had asked six months ago, I would have said it would be a long build,” Romjue said. But while this is the new standard at some of the world’s biggest restaurant chains, “anyone who considers themselves upscale would want to be on the eco-train. Everyone is going in that direction. “

Larine Urbina, vice president of communications in the United States and Canada for Tetra Pak, a food processing and packaging company that also makes plastic straws for its small cartons like juice boxes, said the company shares concern about plastic pollution in the world’s waters. However, it focuses on “small boxes with plastic straws attached”, such as juice boxes. The company is “committed” to finding an alternative to these items.

“Until we achieve this goal, indiscriminately banning straws is not a solution as it will not solve the problem of plastic waste and, in the case of straws attached to small cartons, could lead to alternatives. which are actually worse for the environment, ”she said. MarketWatch said.

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Tetra Pak believes the best solution is one that leads to “major improvements in waste management and recycling infrastructure around the world, while raising awareness of the importance of recycling and the impact of waste,” said she declared.

For now, plastic straws are what everyone is focusing on. Starbucks has already introduced a straw-free cover as part of its commitment to phase out plastic straws from its 28,000 stores by 2020.

And Marriott International Inc. MAR,
+ 1.73%
says plastic straws will be phased out by July 2019. The company has already replaced mini toiletry bottles with in-shower dispensers at around 450 hotels in a bid to reduce waste.

“This is certainly a demand shock for single-use plastic or paper straws, but many of the major retail users are already looking for substitutes,” said Bill Leedale, senior advisor at IFS, a company business software. Alternatives include reusable glass straws and bamboo straws.

“There is definitely a change in the supply chain, but paper is not the only mid-term solution,” Leedale said. “The shortage may be more prevalent in the healthcare industry where alternatives may have some resistance due to regulatory requirements.”

Supply chain technology has evolved to incorporate artificial intelligence and machine learning to solve problems. This type of technology can be useful in a situation like this where businesses need to determine a whole new demand.

Fred Baumann, group vice president of industrial strategy at JDA Software, says the use of algorithms and even social media sentiment gathered from posts such as Instagram posts can help understand this what consumers think.

For example, data from CivicScience, a consumer intelligence research company, found that 31% of the population thinks people will use fewer plastic straws in six months, but Gen Z, who have fewer 18 years old, don’t use too much. straws to start.

“What we’re trying to do is create an environmentally friendly disposable market, which is what we need if we want the world to be around,” Hoffmaster’s Romjue said.

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