Through the Line Podcast: Why Some Brands May Pay EPR Fees Instead of Redesigning Packaging

Welcome to Through the Line, a podcast exploring innovations and information across the packaging and processing landscape. From topics impacting consumer packaged goods and healthcare packaging to the latest technologies in food processing operations.

Hello, loyal subjects. I am Derek Teal, King of Pro Food World, and this is the End of the Line podcast where the editors of PMY Media Group get together and talk about things that have happened in the past week. As always, I am joined by Liz Cuneo, editor-in-chief of Healthcare Packaging, John Riley, the editor of OEM, and Matt Reynolds, editor of Packaging World. Hello, subjects. Hello.

Hello, happy Halloween.

Hello, my lord. Exactly. For those of you who don't understand why I'm acting so strange, more strange than usual. It is Halloween tomorrow. I know we'd be seeing this or hearing this after Halloween, but currently October 30th when we're recording this. And I'm wearing a crown, people in podcast land, I'm wearing a crown and a cape, fur-lined cape, of course. Still chilly here in Michigan. But Liz, you have something mask-related in the spirit of Halloween?

Yes, but not Halloween masks per se. So, yes, I did an interview with Aim Plass. I think that's what we're saying, A-I-M-P-L-A-S, for those of you who want to picture it out in your head. It's the Plastics Technology Center. And they are investigating the potential of using bacterial cellulose to develop facial masks. And these facial masks, if you can think of it and picture wives and daughters and such, you know, the face masks that go right over your skin. And these can act as carriers for active ingredients. So right now you might think of them as hydrating, plumping, right? But they're exploring this specific material that might be able to be used for skin after sun exposure or wounds or ulcers. And really the opportunities are pretty broad when talking about prescription topicals. So it's an interesting trend. It's a different delivery, if you will, for medicine on the face. So I reached out to them, like, what are what are the implications for packaging, right? And we talked a little bit about what that might have to look like. The mask would have to be kept, of course, as they are now, kept moist, kept protected from light, and free from contamination. So we talked a little bit about what that would look like. So it's a pretty interesting interview and article that'll be on our site next week, which is November, which is crazy to think how fast the year's going by. But it's really exciting to see new ways of applying medicine to the skin. So moving beyond just an ointment or cream and really getting into that mask that really kind of adheres to the skin and really keeps it on there for a full length that you'd want it to be on there. So applications are really broad, like I said, from sun exposure to wounds to skin ulcers to the beauty and cosmetic industry, of course, and then potentially topical steroids, prescriptions, and the like. So fun to see a different medicine kind of delivery platform in our space and just dips its toe into cosmetics, which I appreciate.

Yeah, I've seen even our open bathroom a few doors down, there's a few of these eye masks type of things. I think they're in, they look like they're in flexible packaging, flow wrap packaging, not transparent. So probably similar in avoiding light and also maintaining moisture. So I haven't opened one up myself. I'd have to look at it, but I assume there's probably a multi-layer kind of structure in there to make sure you've got moisture barrier and and probably some sort of if it's an opaque or a colored print surface to keep light out as well. I assume these are mostly flow wrap, or they could do do anything with it, with the as long as it's flexible packaging that keeps the moisture in.

And what's interesting is this bacterial cellulose is really an innovative bio-based alternative to cellulose, which is an organic polymer. So they are biodegradable and biobased. But of course, when we start talking about packaging, as you just mentioned, we won't be able to use, like I guess I don't want to say that for sure, but it's gonna have to be a multi-layer structure. So get into what that looks like and maybe a metallized layer and such. But again, keeping that product really secure and free from contamination and light and oxygen and all the different things. So yeah, interesting to see. But yeah, that's the package, Matt. So you have it in the bathroom.

I just need to start using it. You're talking about sun exposure between Sean, Derek, and I've three sunburns just waiting to happen.

Yeah, maybe I'll have occasion of Illinois, Pennsylvania, and Michigan.

Yeah, I mean, the sun still comes out, yes, it does. And I've got my lifetime supply of SPF Irish in the in the closet here because I need it more than most. Cool.

So, Sean, what informational tides have you brought for us today?

Informational tide. I had a conversation with another interesting fellow like yourself. His name is Brent Lindbergh. He's the head of curiosity at Fut Foo's Neo. Matt knows him well from the packaging recycling summit. He's big in the industry from a helping out brands standpoint, brand putting brands together, putting together packaging lines and stuff like that. So we were talking at PacExpo, and I again we're gonna hit on EPR because it seems like we talk about it all the time, but it's a topic that's up in the news, so it makes sense that we would talk about it a lot. And like I said, he deals with a lot of bigger brands that he didn't really mention by name, but he has a reputation that kind of speaks for himself. And we went off on a bit of a sidebar when we were talking about EPR and how how are these big brands adapting to having to create different packages for the different states that are gonna have different EPR rules and different legislation that's gonna come in, especially with different deadlines. It's not like it's all gonna hit November 1st, all of our rules are going to go into place, they're all staggered deadlines and things like that. And what he said struck me. He said that in a lot of cases, and this is where I'm wondering if Matt has heard anything like this as well. He said some of the bigger brands are just prepared to eat the fines, are ready to eat the fines for whether it's the first couple states, whether it's until all the states come in. Basically, they're gonna do it until it becomes too cost prohibited rather than try to whack them all and be constantly reinventing a new package for each of the states. And I guess to me that just seemed it was something I hadn't even thought of. I just thought that they would all have to adapt right away. But in this case, it might be more cost effective to not jump all in with one and then not have it work in another. Would that make sense, Matt? Yeah, if you're our guru on this.

I'm no guru, but from what I've heard, it's all none of this, very little of this is altruism, and this is all one big cost-benefit analysis, and it's all one big and and the brands will be in compliance, they will be in compliance, but compliance includes being out of spec or using a material that might not be might incur greater fines, but they'll pay the fines, and if they're still complying by paying that fine, there's no question that brands will be compliant in compliance for the most part with all of these state rules and regulations, but they're it, like I said, it's cost-benefit analysis. If they have to pay a little bit more for their current package or they have to work towards plastics reduction, for instance, in California. First of all, I would say on the EPR side, there is some leeway and give as well that you gotta they're meeting the brands halfway, or at least they say they are, if there's good faith efforts to make these changes. But they know that for a big brand with huge install bases of equipment that might not be able to run the slightly lighter weight or material, that these it's turning up an aircraft carrier, but it's not going to be able to happen all on January 1. I'd also say that there is an effort too amongst different states to kind of coordinate and harmonize as best they can on the dates and the reporting dates.

Oh, okay. I didn't realize that.

It's not there yet, but I think that's something that was the initial outcry. Oregon was the first state to go live in 2025. I want to say June 20 or 2024, maybe even. I'm mixing, no, it was 2025. But then California goes live in January 1. But there's going to be some concerted effort down the road to try and harmonize the reporting date. So it's not like every month they have to report to a new state. There's also a lot of programs out there that are their entire intention is to you input your packaging information. This we use this much corrugated at this gauge. We use this much flexible packaging of the this multi-layer structure and this much of the put it all into one place, one hub, and then there's systems out there that are intended to then fill in the reporting data specific to each state from your hub. So you're not having to do one for you, you technically are going to be submitting one for each state, but you're putting all the information into one hub, and then these programs software, some AI-assisted software, will then take that central hub of packaging reporting data, which you're getting from your suppliers as a brand, and then tailor it to the specific reporting needs for Oregon, for Colorado, for California. So that wherever harmonization can happen, it's going to happen. But that's a lot of words to go back to your question, Sean. It's all cost-benefit analysis. And yes, that if it's cheaper, if it's less expensive to pay some fines up front, to wait for things to be more harmonized so you can do it all at once. And if the brands have the resources to do it, they'll do it. They'll still be in compliance, they'll just be paying a fee instead of making the changes that long term they'll need to avoid continuously paying that fee over and over again. I don't think the long-term solution is just to pay the fee, but there may be, yeah.

I didn't realize that that would put them in compliance. That's what threw me. I just thought if you're paying a fine, that means you're not following the rule. But part of being in compliance is paying the fine.

That's not really a fine. It's just it's if you're using this material cost, the term, yeah. So it's their fees, not fines. The idea is like the fee for plastic or a multilater plastic structure might be a dollar or whatever per thousand units. And then the fee if you if that that same product in paper or something that's recyclable might be 20 cents per unit. So you're gonna pay regardless. The thing is, it's the incentive there is to move brands over time into more recyclable item packaging because that it behooves them financially to do so, and they don't have to do that right away. The good the other part of the good news is a lot of these EPR systems, the money isn't going into somebody's pocket. The money is going to build a recycling infrastructure, a better recycling infrastructure. So some higher fees up front are actually important. And a lot of these programs, they're it a lot of the money that's going into these programs is got to be higher because they're upfront costs to get these programs started. So, again, five years, 10 years from now, you're gonna ideally have less money needed because more infrastructure has been built and is being built, and then less money going in because brands over time will be adjusting their packaging portfolio to better align with the they call them bonuses or malices that it's part of the eco-modulation structure to say if you're trying to get into a more sustainable, more recyclable packaging structures, you the fees are less. If you remain in your less, less recyclable structures, the fees are going to be more. So it's something that over time should correct itself. It's a people call it taxes. I think just it's a fee structure that that kind of has a little bit of the Adam Smith invisible hand in it, if you look at it closely. So I can imagine brands are looking at their bottom line and seeing what's best for them right now, and that might not necessarily be making a huge switch overnight.

If you're not a guru, you're guru adjacent. Because that was a lot of information.

It's different for every state, but I was just I was immersed in it this week. I was here in Chicago at the University of Chicago for the Sustainable Packaging Innovation Forum, which is a lot of very similar subject matter to what we had at our PRS packaging recycling summit. And it was uh it's called a Chatham House rule event. So I can't report on who was there, I can't report on what was said, I can't report on who said it. But I can from a distance say that EPR was a big subject. And if the idea is that EPR, and I think the the Ian Welsh is the who is the host of the event and kind of the the manager, the general manager behind the whole event. I spoke to him directly on the record. He's the one person I could speak to on the record. And he thinks that, yeah, these are basically carrots and sticks. And over time, the the bonuses and the malices are carrots and sticks. It's like it takes time, first of all, to start up these programs, and it takes time for brands to slowly, especially the pig brands, they've got these huge portfolios of different types of packaging. And the hard part, the steepest part of the climb is happening right now. And then hopefully a lot of puzzle pieces click in into place. And what's funny is the states are even talking to each other. I mentioned this already. All of the laws came up, especially the early ones, came up separately in kind of somewhat siloed sense, because Oregon's different than California and the definitions are different. But I think even after in the rulemaking phases, they talk to each other and try and make it simpler for brands to report in their reporting just once. And the more states are rolling out, as we see the Maryland and the Minnesota, and I think Maine's having a little trouble right now to be they're the seventh state, but they're having a little trouble getting things organized. I just suspect that you're going to see a de facto harmonization and de facto standardization because it'll hum along a lot better that way.

Awesome. Thank you all so much for what you have to share. I think that's gonna do it for this episode of End of the Line. Thanks as always to Liz, Sean, and Matt. I have things to share, but I will share those in the next episode because the king has duties he has to attend to, even though I'm gonna take off the crown. I'm probably gonna keep the cape because it's pretty warm.

Yeah.

But thanks you all for listening, and we will catch you next time.

Thank you for listening to Through the Line Packaging and Processing. You can listen to more episodes on all streaming platforms. Be sure to visit us at packworld.com, profoodworld.com, and healthcarepackaging.com for more packaging and processing news. This podcast was edited by Bri Guntz.