Plastic Straw Ban Is Here But Beverage Makers Are Not Ready Yet
Beverage makers could lose Rs 3,000 crore in sales after plastic straw ban kicks in.
India's ban on single-use plastic rolls out on July 1. Yet, makers of packed juices, fizzy drinks and milk-based beverages are still struggling to find a sustainable, cost-effective alternative to plastic straws.
Companies such as Parle Agro Pvt., Amul, PepsiCo Inc., Dabur Ltd. and Mother Dairy are wary as the industry requires more than 600 crore straws annually. At risk is the demand from fast-selling affordable packs of buttermilk and lassi to fruit juices priced below Rs 30. According to industry estimates, low-value units including such packs contribute 40-50% to the beverage market sales.
As the deadline draws near, companies are importing paper straws but have run into global shortage and higher costs.
"The infrastructure for producing both biodegradable plastic straws and paper straws at scale is non-existent in India today," said Shahrukh Khan, executive director (operations) at Dabur India Ltd., which sells Real fruit juice packs priced at Rs 10. "We would be able to cover only 10-15% of our requirement with the imported paper straws as there is a huge global demand-supply gap."
According to Khan, plastic straws that come with juice and milk-based drink packs do not contribute as much to plastic pollution since they are part of a recycling and processing chain put in place by companies in compliance with the Plastic Waste Management Rules, 2016.
"Independent surveys have pointed out that plastic straws account for less than 0.1% of total plastic consumption," he said. Khan hopes the government extends the date of the ban till the infrastructure for producing paper straws locally is developed.
The country currently has zero capacity to produce compostable and recyclable plastic straws, according to Praveen Aggarwal, chief executive officer at Action Alliance for Recycling Beverage Cartons, which represents beverage makers including Dabur, Parle and PepsiCo.
Lack of commercially viable alternatives could lead to losses worth Rs 3,000 crore in sales for the industry, he said.
"But work is under progress to introduce bio-compostable polylactic acid or PLA straws," Aggarwal said over the phone. "Orders for machines to manufacture such straws locally have been placed, but the production would begin at the end of this year."
PLA straws look and feel like plastic straws but are a bioplastic made from corn starch and are compostable. Unlike paper straws, the plant-based PLA straws don't get soggy when wet. But, it is more expensive.
Another alternative is shipping products without a straw. That, however, would compromise hygiene and it doesn't make the products “convenient”.
The transition is expected to take 12-18 months as these straws also require approval from agencies, including the Bureau of Indian Standards and the Food Safety and Standards Authority of India, Aggarwal said, calling for the deadline to be extended.
A mango drink pack with a plastic straw. (Source: BQ Prime)
Why The Ban
As part of the government’s efforts to reduce pollution, a committee has identified 19 items to be banned as they are low in utility but have a high potential to litter.
It includes items such as plates, cups, glasses, forks, spoons, knives, straws, wrappers and packing films made of plastic. The ban also covers invitation cards, cigarette packets, stirrers and plastic banners that are less than 100 microns in thickness.
Unlike beverage makers, other companies using some of the banned items have alternatives. For instance, Bikanervala Foods Pvt.—the owner of Bikano brand—uses shrink wrap for sweet packs and is set to switch to non-plastic "flap stickering" as a green alternative, Manish Aggarwal, director at Bikanervala Foods, told BQ Prime.
Are Paper Straws Viable?
A major constraint for beverage makers are costs. Paper is more expensive than plastic, and the cost of production would rise at a time when unprecedented inflation is already hurting volumes and depleting margins of fast-moving Rs 10-30 beverage packs.
Mother Dairy Fruit & Vegetable Pvt., which sells milkshakes in cartons, has been importing paper straws to replace plastic. "But these straws are four times more expensive," said Managing Director Manish Bandlish. "As of now, we will absorb the increased cost and are not planning to increase the retail price of our products.
Other companies like Amul, which sells buttermilk in tetra packs, and Parle Agro—the maker of Frooti, Appy and flavoured milk Smoodh—are scrambling due to lack of availability of paper straws in the domestic and international markets.
According to Schauna Chauhan, chief executive officer at Parle Agro, the company has begun importing paper straws to keep its factory operational but there is a delay due to logistical and capacity drawbacks, she said. "Not only are they [paper straws] far more expensive, which will be challenging to afford during inflationary times, they will affect consumer experience as well," Chauhan told BQ Prime.
Paper straws also get soggy when wet and “there are chances of people swallowing pieces of paper". The company will gradually switch to PLA straws when manufacturing of this alternative starts, Chauhan said.
Flap stickering. (Source: Bikano)
Hoping For Extension
The current deadline of July 1 was notified in August 2021. And a few companies have already switched to alternatives. For instance, Nestle India Ltd. has started attaching paper straws with its cold coffee packs.
So why did so many companies fail to place adequate import orders in advance?
Many companies expected the government would extend the deadline, given the cost pressures that companies have to bear in a pandemic-hit world, according to a senior executive at a beverage and biscuit manufacturing company who spoke on the condition of anonymity.
The industry is also unclear on the status of stocks on shelves.
The Indian Paper Manufacturers Association, however, believes India has enough capacity and technological know-how to manufacture paper straws.
“A wrong impression is being created that there is no Indian paper mill that can manufacture the required paper for making straws," said AS Mehta, president of the association in an emailed statement. "Any additional paper requirement for making paper straws can also easily be met by Indian paper mills.”
UFlex, an Indian packaging company, is setting up a plant in Gujarat to cater to the local demand for sustainable paper straws. "The production will commence next quarter, and we aim to produce six billion straws annually, in line with the current market potential, running at full optimization capacity by the fourth quarter of FY23," said Ashwani Kumar Sharma, president and chief executive officer at the Aseptic Liquid Packaging Business division, UFlex.
Plastic-Free By 2025?
It might be a while before a commercially viable plastic alternative is found. But most FMCG companies are keen on going plastic-free over the next few years.
For instance, India's largest consumer goods maker Hindustan Unilever Ltd. has pledged to use 100% reusable, recyclable or compostable material for packaging by 2025. It uses about 1.07 lakh tonnes of plastic to package its products.
In its annual report, it voiced certain concerns. "Not only is there a risk around finding appropriate replacement materials, but the cost of recycled plastic or other alternative packaging materials could significantly increase in the foreseeable future, and this could impact our profitability."
According to the maker of Sunsilk shampoos, helping consumers to understand waste segregation and disposal methods is crucial as "the plastics problem is too big for us to solve alone".