When Australia set targets for 70 per cent of plastic packaging to be recycled or composted by 2025, sustainable developers such as SECOS (ASX: SES) stepped up to the plate.
Founded in 2015 after the merger of Cardia Bioplastics and Stellar Films, the Melbourne-based company has biopolymer manufacturing facilities in China and Malaysia to produce a range of bin liners, pet waste bags, courier satchels and produce bags.
The eco-friendly material can degrade completely within six months, as opposed to oxo-biodegradable products that leave behind microplastics.
“You've basically got this infinite sense of creation and destruction back to the earth. You can't do that with standard plastic [and] you can't do that with recycled plastic. Therefore, compostable plastic has a role,” SECOS CEO Ian Stacey told Business News Australia.
“You can’t also replace compostable polymer with paper because it doesn't have the same mechanical properties. Look at the volume of traditional plastic bags - if you try to replace them with paper, it would be an environmental disaster.
“We offer compostable materials which are really designed for organic streams and for waste diversion programs. We've been involved with council food organics and garden organics (FOGO) programs for [approximately] 10 years.”
Landing a deal with Woolworths (ASX: WOW) in July 2020, the company has gone from strength-to-strength since its 36-litre and eight-litre MyEcoBag bin liners hit the shelves in 86 stores.
Made of 100 per cent GMO free renewable corn starch, the bags are now ranged in 203 Woolworths retailers and account for 40 per cent of the supermarket’s total compostable garbage sales growth year-on-year.
The larger liners experienced the most sales growth at 550 per cent like-for-like, while its eight-litre counterpart saw sales grow of 450 per cent.
But the deals don’t end there. After teeing up an agreement with Officeworks to stock compostable courier bags via its online store, the company announced it would also be rolling out its products to 200 independent stores in New South Wales using Pacchini’s distribution network.
The distribution agreement also involved stocking MyEcoPet – a compostable doggy bag that comes in rolls of two or four – and new 12-litre and 28-litre bin liners.
“We see the demand for compostable products is quite extensive,” said Stacey.
“It makes sense just to broaden the channels to market. When we do that, we want to work with good partners and Pacchini are absolutely a good partner in that market.”
“They're well established, multi-generational family business that have got very deep connections with a range of retailers throughout New South Wales. It made sense for us to do business.”
Stacey notes that SECOS’s commitment to R&D in Australia has helped set itself apart from competitors.
The group has committed $2 million to its research facility for the next three years, and is working with chemical engineers at the University of Queensland to develop enhanced compostable resins and films for food packaging.
“We have got a fair degree of technical competence, which sets us apart from competitors that are in the compostable resin side because they don't necessarily do the film and the bags,” Stacey said.
“The fact we’re Australian R&D-based sets us apart from many others because if you look at other providers, what you'll often find is that they're simply a brand.
“When you look at the where compostable materials produced in the world, probably 55 per cent to 60 per cent of it is produced in Asia. Australia can certainly look at playing a role in greater production around biopolymers.”
The company has also made forays overseas after the U.S Department of Veteran Affairs agreed to supply its pet waste bags into 97 stores, with the potential to expand to more than 200.
When asked about the company’s market penetration, Stacey described growth rates as “significant”, and was optimistic it would continue down that path.
“We think the whole segment is a healthy segment - it's growing quite substantially. The capacities for compostable materials are growing by 30 to 40 per cent,” he added.
“This market will evolve where scale, know-how competence in the area of production will be important.
“There is a logical place for compostable technology. We think that’s in waste diversion programs. We also think it's logical that it can be used in food packaging.”
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