Uffda. The cost of eco-friendly packaging? “It’s an easy question to ask, but very difficult to answer,” said Robin Tan, Managing Director and Co-founder of Zenpack.
While it might seem simple on the surface—the obvious direction to go is price—there are so many factors and angles that make up the idea of “cost” that to get some semblance of a full answer, it involves probing deep.
These include price comparisons, the notion of cost vs investment, ownership of packaging, and the cost of not using more sustainable packaging, which includes the less business-y but equally important areas of environmental and health costs, and what it means to be a good citizen, doing the ethically right thing even if it’s tiny bit harder, if only in the fact that change itself is hard.
I talked with Robin Tan and Leo Chao, two of the co-founders of Zenpack, to get their thoughts on the idea of cost, find out specific prices of materials, and see how this will change moving forward.
First, it should be noted that you shouldn’t actually use “eco-friendly” in your marketing. If you decide to go with more environmentally friendly packaging, don’t print “eco-friendly” anywhere on the package, because that’s just greenwashing. The most environmentally friendly packaging is none whatsoever. We’ll talk a bit more about communicating down below, but this is just a quick reminder now that this term, although still in the collective conversation—which is why we’re using it for the moment—is vague and essentially meaningless.
But it’s also a starting point. And many companies are at the starting line, wondering what it’ll take to use more sustainable packaging.
Financial Costs of Sustainable Packaging
Let’s get right into it—the first cost that comes to mind regarding sustainable packaging is price. How much does it cost in the literal sense? Well, what is sustainable packaging? That’s a good first question, because any industry with skin in the game will tell you their material is sustainable. That makes it difficult. But let’s start here:
“We started to really push this sustainable initiative starting in 2017,” Tan said. “And what we realized is, when people asked me this question in 2017— what is eco-packaging material—they really had no idea. They think it’s simply saying no plastic or foam. That was sort of the expectation to them of what non eco-friendly materials are. Now, in 2023, the public has learned really well. They say ‘Well, is your factory utilizing the most efficient renewable energy to make this product?’ So it is day and night type of differences.”
No fossil fuel plastic or foam is definitely a good place to start. As is using renewable energy during manufacturing. As is reducing waste at all points in the supply chain. As is using materials that can be reused or recycled without toxic chemicals or microparticles flying about.
These are all good places to start.
So that’s what sustainable packaging is, or more accurately, involves. But what does it cost?
“The short answer,” Tan said, “might be that eco packaging doesn’t have to be expensive.”
Expensive is relative, though.
“Everything is a comparison, right?” said Chao. “Because if you asked me, what’s the cost? Well, I can give you a quote. That’s the cost. That’s the cost of the material plus labor. There’s no good or bad.
“In terms of unit costs, over and over again we’ve found that the more sustainable solution can actually be cheaper.”
Price Comparisons of Sustainable Packaging
A price by itself is basically in a vacuum. So here is a comparison of a packaging insert to protect a product. It’s a simple comparison, but one to help you understand what both Tan and Chao stressed: Sustainable packaging can be cheaper than fossil fuel-based options.
A packaging insert to protect a product (figures current as of December 2023, min. 10k minimum order quantity)
- Corrugated cardboard: $0.18
- Thermal form (plastic) tray: $0.27
- EPE (expanded polyethylene): $0.46
- PU (polyurethane) foam: $0.71
So just looking at that simple comparison, plastic free packaging options can actually be cheaper on a unit by unit basis. But, Chao doesn’t see unit price as the biggest obstacle to switching to more sustainable packaging.
Business as usual is the culprit in this case.
“When we think about sustainable packaging challenges—cost—if you asked me five years ago, I’d probably give that answer as the biggest challenge. Today? No.
“It’s policy and procedure. When you want to change something, there are different forces that want to stop you. And sometimes it’s not personal or financial or anything like that. Sometimes people just hate change, especially in business. It brings uncertainty and when people don’t see the benefit, they have no real incentive to make the change. Because change is hard.”
Change is hard, but it’s also a lot easier if you use different words.
Cost vs. Investment
If the word cost was changed to investment, what then? How would companies and brands approach more sustainable packaging?
“When any brand or company asks about eco packaging,” Tan said, “they obviously have done their research, they want to do things long term.”
A long term approach is good, because according to Chao, time is necessary for creating more sustainable packaging.
“What you need to know about more sustainable packaging,” he said. “is that the cost is time and your willingness to put in the effort. So if you’re in a hurry, then it’s tough.
“Because the most sustainable solution needs some time to be developed. The cost is human power—that people need to think about it. Experts need to sit around and figure out a good system. That’s the cost. Unit costs, not so much.”
Human power, developing thought-out creations—these are a long term approach, and an investment. It’s the right mindset to take with more sustainable packaging because while the insert example above shows that it can be cheaper than fossil fuel-based materials, that’s not always the case.
For instance, a molded pulp tray is more expensive on a by-unit basis than polystyrene (PS). Using the same dimensions for a tray insert, with an MOQ of 10k, you can see the price comparison below:
- Top: 189.5 x 109.75 x 47.16mm
- Bottom: 189.5 x 109.75 x 43.07mm
- Black paper pulp tray: $2.02
- 1.4mm white PS: $0.81
But those prices still need context. The tooling fee to create the mold for the paper pulp tray would be another $10-15k. This is an investment. And while those prices are accurate for December 2023, they may not be in a year or two. Here’s why:
“If it’s a new material, sometimes it costs more,” Chao said. “But if everyone decided to jump on it, it’ll become very inexpensive. Like plastic is cheap, of course, because everyone’s using it. It was once very expensive—in the 60s, when it was the new material—it was super expensive.”
Plastics made from fossil fuels have another advantage that more sustainable options don’t: besides being widely used, the fossil fuel industry received approximately $7 trillion in subsidies in 2022. Yes, trillion with a T. As a country, those subsidies would be the 3rd most valuable economy in the world.
While this financial help doesn’t look to be receding any time soon, the fact that a cardboard insert can compete on price right now with materials made by an industry so spoon-fed and propped up, it’s only a matter of time before we start to see mass adoption of more sustainable packaging materials. And when that happens, unit price, again, won’t be an issue.
Tan said that investments into more sustainable packaging include long-term ROI such as improving a company’s branding, and the actual mass production of the packaging. After, for instance, the cost of tooling fees, creating millions of units of packaging will cost less as time goes on. Mass production lowers the cost, and the spend becomes irrelevant after a few years.
How can the spend become irrelevant, though? Well, perhaps you won’t mind spending a bit more if you aren’t giving it away.
Who Owns the Packaging?
Chao, Zenpack’s Creative Director, dwelled on the notion of ownership and who owns packaging when discussing this question. I’m just going to let him roll in this section.
“When a brand—Apple, for instance—sells you an iPhone, it gives you a box, right? You own the box, and you decide what to do with it. You can keep it, you can throw it away. But at that point, you own it. And when you throw it away, it actually costs you money. Some guy with a truck comes to your house and picks up your garbage.
“I’m kind of okay with an iPhone box, but there are many times I truly do not want the packaging. Like I don’t need it, I just want the product.
“If I have a choice of standing in front of the store, ripping up everything, and just taking the product, there are a few things where I would do that. I don’t need it. And this is coming from a packaging company owner, but that’s the truth.
“The packaging serves a brand’s purpose to protect the product until it reaches me, but as a customer I don’t actually want it. So what if the whole world was set up a different way?
“Let’s say a supplier like Zenpack, or even a brand owner—you don’t actually buy anything from us. It’s a lease, like what we have with cars. Customers don’t need to figure out how to deal with it. It might be a little weird, but if ownership never changes, the idea of cost also starts to change.
“What if everything Zenpack puts out, everything we produce, is not owned by you. At some point, we’ll go pick it up. Like we’ll actually have a truck, go around and pick up all the things we produce. At that point, I think the cost question becomes very interesting. When we’re actually responsible for the entire lifecycle of whatever we produce, then the costs start to change. If we produce a whole lot of plastic, I probably need to invest in a place where it gets recycled or thrown away. And what’s the cost of building a recycling plant?”
“You’re talking about reusable packaging,” I said.
“Exactly. Now, I’m gonna talk about this purely from a business point of view—pretend I don’t even care about sustainability. So if it’s upon us, the responsibility and owning everything, I’m probably going to design my packaging very differently. Because if I have to spend money building a factory to recycle everything—what if I don’t do that? What if I design the packaging in such a way I can take it back? Do some minor things and reuse them again? Isn’t that more valuable to a business? I would probably say so.
“We see this over and over again, reusing anything saves a whole lot of money.
“If the current system is changed, the cost question becomes quite clear. I don’t know who invented the waste management system—it was probably for good reason—but what we’re doing right now is not a good system. Because we’re just stuffing things to our customers. And they don’t really know how to deal with it. They just pay someone else to deal with it. And whoever is taking it might not know how to deal with it either. So they take the cheapest option and throw it in the ground, let it rot. The system we have today kind of prevents us from seeing the true costs of a lot of things.
“So, again, on cost, I think a lot about ownership. And this is obviously getting to circular design. That’s coming. The whole circularity thing is really going to drive us to that area. And I know it’s a very pro consumer thing, but that’s the only way you get this problem solved, because the problem is still at the source.
“So what’s the cost? I don’t have the answer, actually. After all that. Which is kind of the interesting part about this question. It’s tough to give a true cost. But one thing for certain is that changes are needed. Let’s look at change.”
But who drives change? It’s customers and companies—who you’re competing for, and with.
Customer Backlash, a Competitive Disadvantage, and Our Collective Wellbeing: The Financial Cost of Not Using Sustainable Packaging
This is where the idea of cost becomes less quantifiable but equally important. Both Chao and Tan had thoughts about the other side of the coin, what non-sustainable packaging is, and what the cost of using it might be.
“Brand recognition,” Tan said. “You are going backwards. The negativity that you’re going to get for your brand from not using more sustainable packaging. The other part of it is an actual financial loss. The [market] environment today, you will be left behind if you’re not using eco-friendly packaging. So what’s the financial cost of not using eco-friendly materials? It’s competitiveness.”
Customers say they want more sustainable packaging for products—albeit the degree with which they follow through is questionable. And Chao says that although he believes the numerous studies saying customers would pay more for sustainable packaging, he also thinks the decision isn’t made at the zero moment of truth, when customers are standing in the aisle deciding between two products.
It’s made long before that. First, it should be noted, the better product will always win out over more sustainable packaging—however the customer defines the notion of better.
But when brands use more sustainable packaging, they need to communicate that usage. They need to make it part of their identity. Then there becomes a collective awareness of what a product and a brand stands for, and when given a choice in an aisle, customers will instinctively reach for what they connect with.
Basically, he said, if you’re doing the more sustainable thing, but you’re not telling anyone, you’re:
- Not making more money from it.
- Not advancing the cause. You might make yourself feel good about using it, but you’re also not pressuring other brands into following.
“Brand owners need to embed that kind of information into their product and story way before the zero moment,” Chao said. “Then customers love your product, and that makes a huge difference.”
Now besides the dual threat of competitiveness and customer backlash, there is another cost of not using more sustainable packaging.
“I believe it’s now becoming an ethical question,” Tan said. “You know, 10 years ago versus today, global warming wasn’t that bad. Look at all the natural disasters that global warming has created around the world. I think it’s not ethical anymore to use non-sustainable packaging because we know it’s harming this planet. It’s going to affect our next generation. If you know this, if you know it will get worse, why would it be ethical to continue using non-eco-friendly products?”
“When you can determine the cost of using non-sustainable packaging,” Chao said, “then the cost of sustainable packaging kind of becomes irrelevant. You begin to see the other side—that if we continue to produce this plastic over and over and everything cannot be recycled, just gets thrown away—it ultimately will cost a lot more than we can bear.
“And to that end, it’s everything, it’s financial, moral, everything. We can already see it happening—your food is affected, weather, toxicity, health. I don’t know how you even calculate the cost that this pollution has put on us.
“So when we think about the cost of sustainable packaging, it’s negative, if you will. If it’s a fully compostable solution, compare it to the other scenario and you ultimately will save a lot of money as a society and as a human. The cost is nothing. It’s actually beneficial.”
And this is exactly it. Unsustainable packaging, linear systems, and toxic chemicals are weighing a heavy toll on our species and our planet. Microplastics have been found in human blood and placentas, and they’re been found to pass through the blood/brain barrier of mice. While they float in the ocean they block out valuable sunlight for phytoplankton, and obviously who can ignore all the stories of dead whales with bellies full of plastic, micro and macro.
And while packaging is one small piece of the sustainability pie, it’s also a highly visible one, one that can spur other people to make changes. We can choose to be good neighbors, good citizens. It might take a little more effort to implement, but good things usually do.
So if the cost for more sustainable packaging sounds good to you, and you want a team that considers your brand’s future when designing packaging, talk to Zenpack. We’re always thinking about this stuff.
