Hi everyone and welcome to the fifth blog post of a Circular Victory! Last week we analysed the Circular business case of Circos. Circos has a subscription model for baby and maternity clothing. We looked at how this business model helps to reduce waste and what makes it Circular. In order to analyse that, we used the Circular strategies and the Circular business models. It’s a really interesting business model, so if you haven’t read that blog post yet, go check it out here!
This week, we are going to look at an interesting example of take-back management that someone from our audience mentioned.
What is "Pfand"?
Today I want to discuss an interesting example of sustainability and circularity that someone from the audience mentioned. Tanya is based in Germany. In Germany (and some other countries), they have the system of “Pfand”. This means that when you buy beverages in glass bottles or cans, you will pay a little bit extra for the packaging. This extra payment functions as a deposit, because when you return the bottle or can to the store, you will get money back. This is a very neat example of ”take-back management”.
Take-back management is a system where companies incentivise their consumers to return products once they are done using them. This allows companies to reuse the materials. Take-back management improves the sustainability of businesses and can also reduce their costs.
In a Circular Economy, a great way to avoid waste is by reusing materials, and that's what this model is all about. In order for the beverage company to avoid operating in a “take make dispose” model, they want to reuse the packaging of their products. However, their products have relatively low value, so it does not make much sense to create a complex, expensive model to keep track of their product. With some larger products, such as machinery, we see companies retaining ownership of their asset. This allows them to know where their asset is, analyse data to carry out predictive maintenance and so on.
For a beverage manufacturer, this would be almost impossible to implement because of cost limitations and technical challenges.
That’s why this deposit model works great for them. They do not need to keep track of the product once it is with the customer, because they have created an incentive to return the bottles. When the customer brings the bottles back, they receive money in return! Especially for the glass bottles, the possibility of reuse is very high. The bottles can be washed and cleaned easily and then quickly reused. The process for cans is a bit more complicated, but they are highly recyclable as well.
It does not only lead to advantages for the companies, it expands to the broader society. Because the bottles, that are traditionally trash, are now worth money, they won't be thrown away. This means there will be less litter in parks and streets, because there is a bigger incentive to hold onto your bottles.
I really liked this example, because for people who live in countries with such a system, such as Belgium or Germany, it seems very normal. Whenever a foreigner sees this system though, they are amazed by it.
I would love to hear from my listeners where they are from and whether or not they have such a deposit system in place in your country!
A little change for the coming weeks
A quick announcement for the coming weeks! I will start posting the podcasts and blogs on Mondays instead of Fridays. This is for multiple reasons, but the most important one is engagement. I recently found out that traffic and engagement on LinkedIn (my main communication channel) is significantly higher throughout the weekdays. By posting on Fridays, I drop my episodes just before the weekend. Because early engagement is so important in the algorithm, this reduces my visibility.
So don't worry if you don't see a post next Friday, I will be back with another episode on Monday!
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