Santiago-headquartered start-up Algramo says it is in business to solve two environmental and social issues. The first, to reduce the amount of single-use plastic packaging used in consumer packaged goods (CPG) products. These tend to have a use-phase of several hours but a lifespan of hundreds of years, and with over 40% of the plastic in the world produced for packaging, the potential impact is huge.
According to figures from the Ellen MacArthur Foundation 2019, replacing just 20% of the single-use plastic packaging on the market with reusable alternatives, could unlock a $10 billion opportunity for businesses.
The social issue Algramo wants to tackle is the poverty tax whereby individuals on low incomes buy smaller volume products. This can add up to 40% more to the cost on a per-unit basis, and Algramo's reusable packaging effectively eliminates this.
“We’re not just a platform for rich people concerned about the environment, we’re for people who just want to save money,” said Canadian-born, Santiago-based Brian Bauer, head of circular economy and alliances at Algramo. “Of course, we’re happy to be connected to that higher-income segment but to appeal to lots of people, you need convenience and price. We are currently beating supermarket prices by 30% so we’re cheaper than business-as-usual.”
Savings for consumers, manufacturers & retailers
The start-up is already working with CPG giants Unilever for laundry detergent, dishwasher soap and Nestlé for pet food and is in talks with several multinational manufacturers and retailers for other products.
Over the past six years, the start-up has built up a network of refilling stations in 2,000 stores and 350,000 customers in the Chilean capital, bringing average savings of 30% to customers.
It also offers a home refill service where consumers place an order via an app and an electric tricycle - capable of carrying up to 375 kg of product - comes to refill their container with detergent, rice, chickpeas, burro beans, lentils or sugar.
Bauer describes the app as 'a one-stop-shop' for refills, offering a digital payment method that works across brands and product types when the dispensers are set up in retail, allowing consumers to do their grocery refills in one go. Consumers can also choose how much they want to fill up; if they can’t afford to fill the entire three-liter bottle, they can choose to buy just 500 ml.
The start-up places its dispensing machines in corner shops and supermarkets, which offers savings for consumers, manufacturers and retailers. The dispensing machines take up less shelf per kilo product than stacked shelves – a 40 cm-wide dispenser can be connected to a 1000-liter tank depending on the location – and does not require any staff to restock it.
It is also looking at placing the dispenser in strategic locations in high-density buildings, such as apartment building laundry rooms, and is set to open an Algramo store next month – depending on COVID-19 developments – in Santiago and in the US in the second half of 2020.
“What we are doing is like Amazon Go but one step further – the stores are all cashless, and everything is 100% in reusable packaging." said Bauer.
Confirmed products are Unilever homecare and Nestlé pet food with more in the pipeline.
Expanding the portfolio to 'complex foods'
Shelf-stable pantry goods, such as rice and beans, and processed products with a long shelf-life such as confectionery are easy products to add to its portfolio from a food safety point of view. Products such as dairy, however, present a greater challenge.
It is developing a customer washing station for packaging and is exploring technology to provide high-quality cleaning with minimal water use.
“This is critical to getting to more complex food products,” said Bauer.
Bauer said Algramo is “agnostic” about product categories but the faster-moving the better, and it is most excited about beverages such as water, juice and soda.
“Laundry detergent is [refilled] every three to six weeks, but a beverage is every day. When people start to do something on a regular basis because it’s easy, convenient and cheap, that can shift people to new consumption models,” he said.
Bauer, who develops new business alliances for Algramo, said it's relatively easy to pitch the start-up's proposition to food industry players, and it's not just the sustainability argument that wins companies over.
“Around 70% [of big brands] have high CEO-level commitment to radically reduce the impact of packaging on the environment so there’s a lot of internal alignment to invest in what we’re doing.
“But they also want to do this because there are lots of logistic efficiencies that allow us to reduce the price by up to 40%. That creates a significant competitive advantage for them; it’s not good to compete with brands that offer 30% lower prices.”