- Nestlé Waters North America is investing in Timeplast, a startup investigating technology that minimizes the impact of improperly recycled plastic leaking toxins into the environment, according to a release. The amount of the investment was not disclosed.
- The companies will create a new operation called TPN Alliance Polymers. Nestlé will provide financing and additional support to evaluate Timeplast’s technology. From this collaborative partnership, the two companies hope to bring a solution to market that “both addresses plastic pollution while maintaining compatibility with the existing recycling system.”
- Nestlé Waters has committed to achieving 25% recycled PET plastic across its U.S. portfolio by next year and then increase that percentage to 50% by 2025. Sustainability has been a central focus at the Switzerland-based multinational that plans to spend up to 2 billion Swiss francs ($2.1 billion) to shift its packaging from virgin plastics to food-grade recycled plastics.
Sustainability is big business for Nestlé. Last January, the company announced it would not only invest billions in shifting its own packaging solutions to more environmentally friendly materials but that it also would launch a sustainable packaging venture fund with 250 million Swiss francs ($260 million) to invest in start-up companies focusing on these areas.
While Timeplast fits the start-up mold, it is not looking to develop another packaging solution so far. Instead, it aims to ease existing problems from plastics being dumped into landfills, such as leaching toxins into the environment. Only 9% of all plastic discarded since 1950 has been recycled, according to a 2019 study by the Center for International Environmental Law, so addressing the end state of plastic is as important a consideration for companies as reducing the manufacture of virgin plastics.
Nestlé's biggest use of plastic is in its bottled water division, which produces and distributes brands including Poland Spring and Nestlé Pure Life. In June, Nestlé Waters North America doubled the amount of recycled PET plastic (rPET) used since 2019 in its U.S. domestic portfolio to 16.5%, according to the company. However, Greenpeace in 2018 ranked Nestlé as one of the worst plastic polluters in North and South America. In terms of volume, Nestlé's total plastic packaging usage in 2019 was 1.5 million metric tons, according to the company's website, equal to a third of the total across its businesses. Only 2% of the total amount of plastic used for its products was recycled.
Timeplast marks Nestlé's latest investment in companies that aim to reduce the impact from improperly disposed plastic. This spring, the world's largest food company was one of the CPGs to partner with chemistry firm Carbios in industrial-scale trials of a new enzyme that can decompose PET plastic down into food-grade material in a matter of hours. Earlier this year, Nestlé also invested $30 million into the private equity fund of investment firm Closed Loop Partners whose goal is upgrading U.S. recycling infrastructure and gaining access to food-grade recycled plastics.
Despite such technological advancements, consumers have drifted away from the bottled water category over concerns about the environmental impact of plastic water bottles. Bloomberg reported in June that Nestlé’s bottled water unit posted its worst sales in a decade last year. With water making up about 8% of Nestlé's overall sales and less than 5% of profit, according to Jefferies data highlighted by The Wall Street Journal, continued declines in the category could have substantial effects on the company's bottom line.
With this downward trend in mind, Nestlé is considering selling the majority of its North American Nestlé Waters business unit. But even with its future within the company uncertain, Nestlé Waters can still improve its plastic profile. If the Timeplast partnership produces a solution prior to a sale, the business unit could command a higher price since its bottles would incorporate a valuable technology that makes them less harmful to the environment. Nestlé also could incorporate the new insight it gained to other parts of its business beyond bottled water.
Other companies such as Coca-Cola have noted they will not entirely phase out plastic from their portfolios because consumers like the resealable, lightweight packaging. Plastic has other advantages, including lower cost, and the ability to protect products and endure temperature shifts. If the Timeplast partnership is able to make plastic less harmful to the environment, it could entice other companies to make recyclable plastic as their primary packaging material or to include it in the mix.