Karma Takeaway: As awareness about plastic pollution rises, more big brands and investors are relying on startups like Sulapac to drive packaging and biomaterials innovation
Edible cutlery, melting paper tubes, mushroom-based packaging, straws made of pasta.
These are some of the biodegradable products being developed to satisfy the needs of environmentally conscious consumers, who want to do their part to help the planet but find themselves unable to give up the convenience of single-use plastics.
In Finland, one biomaterial startup says the best way to turn more consumers green is to meet their demand for convenience. Helsinki-based Sulapac, which produces materials made of wood chips for cosmetic and jewelry packaging, has developed biodegradable straws that compost like a birch leaf, yet can pass the test of a few mojitos without getting soggy.
“We believe that by providing sustainable products that don’t compromise functionality and quality, and are also feasible cost-wise is the best way to change consumer behavior,” Sulapac CEO Suvi Haimi said in an e-mail through a spokesperson. “The Sulapac material has a very unique look and feel.”
The straws are just the beginning. Sulapac, which has raised $20.6 million to date from investors, including the French cosmetics and fashion powerhouse Chanel, plans to expand globally as it develops other eco-friendly alternatives to everyday items like clothes hangers, jars and disposable cups.
As environmentalists pressure companies to eliminate single-use plastic, industry giants and investors are betting on startups like Sulapac to help drive innovation and tap into the purchasing power of socially aware consumers. Twenty global companies, including Sulapac, in the sustainable packaging and materials sector have raised more than $850 million in the past three years, according to Crunchbase.
Last year, the world’s largest food and beverage company, Nestle partnered with the startup Danimer Scientific to develop biodegradable water bottles as part of its $2 billion plan to shift from virgin plastic to food-grade recycled plastic. Nestle also became a founding partner and investor in Loop, a circular delivery service that promotes high-quality reusable containers by the recycling startup TerraCycle.
“There is much interest in the sustainable packaging market, a sector in which Sulapac is developing innovative new materials,” packaging expert Neil Farmer told Karma. “Sulapac has opportunities to be fast on its feet, working with brands to further develop the circular economy at a rapid rate.”
The global sustainable packaging market is expected to increase to $412.7 billion by 2027 from $246 billion in 2018, according to Research and Markets.
Zume, the Softbank-based company that last month closed its robot-made pizza business and switched to sustainable packaging, has teamed up with Pizza Hut to roll out “Pizza Pod,” a round compostable box made of plant fibers designed to keep food hot and crisp. Since its inception, the Mountain View, California-based company has raised $423 million, according to Crunchbase.
In Israel, compostable packaging producer TIPA is developing material that is as transparent, durable and impermeable as conventional plastic. Meanwhile, GreenMantra Technologies in Canada turns used plastics into specialty chemicals such as waxes and polymer additives. The City of Vancouver, for example, has incorporated the firm’s waxes into a mix for asphalt paving.
Sulapac was born out of frustration. Haimi and Laura Tirkkonen-Rajasalo, both biochemists specializing in biomaterials, were baffled by the lack of eco-friendly bottles, jars and tubes in the cosmetic industry. The co-founders developed a durable plastic alternative made of wood chips and plant-based binders but wanted to bring to market something more than just “boring granulars,” Haimi said during a presentation in 2018.
Partnering with prominent Finnish designers, the startup produced a minimalistic line of cosmetic jars with details derived from the Nordic nature: the first batch was stained with blueberry juice, and other colors also came from northern berries.
While 2019 sales figures haven’t been released, they roughly doubled from $1.19 million in 2018, the company’s marketing chief Antti Valtonen told Karma. According to LinkedIn, Sulapac employs 32.
“We’re still at a start-up phase and the focus is to grow fast,” Valtonen said. “This means we’re sacrificing profitability in the short term but of course in the long-term the desire is to be profitable.”
Sulapac’s materials, which allow for mass production and custom design on any plastic manufacturing machine, attracted luxury and beauty brands including Chanel, Lumene and Naviter. Last December, Sulapac partnered with paper and packaging industry giant Stora Enso to bring “the world’s most sustainable, industrial-scale straw” to the European market.
The startup encourages clients to dispose of its products in industrial compost, where they take about 21 days to degrade. But if the jars or straws are accidentally left in nature, they decompose faster than a piece of wood of the same size, leaving no microplastic behind.
Sulapac materials, which are typically more expensive compared to traditional plastics, become cost-efficient when produced in large volumes, says Haimi, who argues that the comparison should be made between sustainable options: the Sulapac straw is competitive against the paper straw.
As is the case with most sustainable consumer products, they cost a lot more than their plastic counterpart, which undoubtedly turns off buyers. On Amazon, 500 individually wrapped plastic straws $7, while a box of 500 Sulapac straws cost $22.53. White paper straws cost $20.47.
Sulapac raw materials can be used with existing plastic product manufacturing machinery, which means there’s no need to build new production lines to start producing the Sulapac straws, she says.
In December, Sulapac raised a $16.4 million Series A round from Chanel, Mousse Partners, Sky Ocean Ventures, Bonnier Ventures, and Lifeline Ventures with plans to scale up its material production and continue the development of new formula.
Jamie Rowles, head of investments at Sky Ocean Ventures, which is pouring more than $32 million in innovative companies like Sulapac, said the impact investing fund is looking for startups that not only can help fight marine plastic pollution but also be profitable and scale up.
“This is not philanthropy. We want these businesses to grow and become large and commercially sustainable,” Rowles said during the 2019 Our Ocean Wealth Summit. “Each of the companies we’ve invested shows that market forces can help us design and build a different system for plastic and that consumers want change.”
Plastic Waste Problem
Each year, an estimated 7.26 million tons of plastic end up in the ocean – equivalent to a full garbage truck dumped into the sea every minute, according to the United Nations Environment Program. And while more than 38 million people have watched the video of a turtle with a straw stuck up its nostril, many may not be aware of the amount of plastic from their daily skin-care products that ends up in the sea.
Europe has passed a ban on all single-use plastics, such as plates, cutlery, cotton swab sticks and straws, which will take effect by 2021. Similar action at a national level is unlikely any time soon in the U.S., where sustainability trends have been driven almost purely by consumers, particularly millennials, according to LEK Consulting.
Sulapac faces the challenge of navigating regulations and obtaining certifications as it enters new international markets.
“In the end, we want to save the world from plastic waste, and everything we do should bring us closer to this mission,” she said.