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This is Bloomberg Business Week with Carol Messer and Tim Stenebek.
On Bloomberg Radio.
It is Global Recycling Day, and on that Bloomberg Sleslie Coffin, writing at the start of twenty twenty four this year, Here's what she said. It is no secret that recycling in America is broken. The Environmental Protection Agency estimates that the US has a combined combined recycling rate of only thirty two percent for materials including glass, plastic, cardboard, and paper. That figure reflects collections from industrial, commercial, and residential trash.
Well, yeah, I mean, not great news, not great numbers. We're spending the rest of the program talking a little bit about what's going on, at least the next two guests who are with us about what happens in the world of sustainability. First up is Tony Parata of PA Consulting. His broad area focus is on sustainability, economy, and the organization works with companies and industries. He joins us from Westport, Connecticut. Tony, good to have you with us this afternoon. How are you.
I'm good. Thank you for having me.
Yeah, thanks so much for joining us. When you hear thirty two percent when it comes to materials like glass, plastic, cardboard, and paper. That's from the EPA. Obviously not surprising to you because you work in this space. How do you think we get that number higher?
It's a massive opportunity.
There's a number of ways that we can work together to get that number higher. First, technology, better mechanical recycling practices leveraged by AI and robotics. Second, new recycling methods are coming on the scene, things like chemical recycling that go beyond just mechanical recycling. And finally, what we're most excited about is a move away from plastics altogether into
alternative materials. As low as those recycling grades are, it does represent opportunity both for enhanced collection, but also a new.
World and the new horizon of new materials.
Well, Tony, you know, it's interesting too, And I always feel like when there's need to be made, people kind of can go and do the right thing, or you know, tax policy can also make us do the right thing. What is it though, that moves the needle the most, you know, in terms of sustainability initiatives, at least in your world, what you've seen, it really kind of moves people company industries to do the right thing.
In the world of materials like plastics and aluminum and glass, what we've seen, especially here in the US, is a bottle return deposit system does a lot to.
Move recycling rates upward.
So here in the US and in my hometown of Connecticut, now we just raise the redunption rate from five cents to ten cents. It's been unchanged for the better part of three decades, so that was a major move. Bills and initiatives like that do an immense amount to.
Be able to increase the collection of those materials.
Is it just I mean, is it kind of a waste of time for us to be talking about the consumer end of this? Isn't doesn't so much of this happen on the industrial side of this stuff.
Would agree? If you take the mentality of I have a problem to solve.
Yeah, I'm going to convince three billion individuals to quote unquote do the right thing. Or would I prefer to convince a thousand companies to change the way in which they go to the market.
Well, what are the regulations around companies? Because it seems like that really is what moves the needle with this stuff.
Regulation is definitely the tip of the sphere.
There's been a lot of talk around extended producer responsibility and the cost that firms will incur as a result of manufacturing and producing these items, but again, major opportunity for the companies.
I get it right.
At the end of the day, sustainability is in essence talking about using resources properly and that allocation of those resources it means better business.
Hey, Tony, how has the recent news from the SEC and chair Gary Gensler had an impact? I'm thinking about the SEC now forcing companies to disclose their greenhouse gas emissions for the first time, but we should point out watered down a key requirement after there was some heavy lot being from industry groups. But this alone, how am I change kind of the story and the impact and move us to a much more sustainable world.
Well, I think the story that we've seen unfold for the past ten years is there is a real embracing of this concept, in particular by the capital markets. So the lack of a climate action plan inside the company is the lack of a business continuity plan.
It makes you less investible.
So by embracing the notion of sustainability, greenhouse gas emission, and being transparent in that data collection. In your activity in essence as a leader of an organization, you're helping make your firm a more investable asset class and your future proofing your own business.
Hey, I want to talk a little bit about other issues that we've talked about on our program when it comes to sustainability, and a lot of that has to do with sort of the effects that we're living with each and every day because of decisions that have been made and production over the last fifty to one hundred years. We talked about single use plastics and the idea that we're starting to see microplastics show up in places that
we do not want them. And we talk about pfast, these so called forever chemicals tainting water streams and the water that we're drinking just from the tap in certain areas. How do you think about all this stuff, Tony, in ways to kind of, like, I don't know, keep yourself safe.
So it's clear to a large number of us that the amount of plastic that we're producing at scale is just untenable. On top of that, to your well made point, the medical community is stepping in and every week discovering more and more places that plastics in particular show up. What is heartening and promising is a whole raft of new technologies coming onto the landscape. So things like seaweeds inalegenates and plant based fibers are being used to replace
plastics in particular. You've got companies like not Pla. They won an Earthshot Prize late last year. PA actually helped them with their initial technology. We're seeing a whole revolution in the world of plant based fibers. There's a technology called pull pack where they're using fibers to replace plastics of all kinds. So as disheartening as one may see, some of the data look like there are immense opportunities to be had and new technologies coming onto the marketplace every day.
Right How quickly though? Can it change the needle? Like I totally get into it. Bloomberg very involved in the earth Shot Prize as you know, you know, but I still am surrounded by a lot of plastic And if I go to buy anything, there's certain aisles in supermarkets and various stores that all it is is plastic containers. So how do we you know, I talked about Gensler chair sec chair Gantler. I mean a lot of lobbying, and these are whether it's the petroleum industry, the plastics industries,
I mean spend a lot in terms of lobbying. Their survivability is at stake. Some would say, so how do you ultimately move that needle?
I would offer one example that just dropped last week. Crick the coffee company. They disrupted the world of coffee years ago with a single serve pod and we all get to choose the flavor and the style and the amount we want in our homes. They just launched last week in the US and you product called the k Round. It's basically a plastic free coffee capsule that you can use in your home without the need for using plastics
or aluminum. It's that type of innovation that will not only solve the material in the waste side of it, but I expect that to be a huge commercial and consumer success.
Wait, these are the ones that you don't have to send these back to recycle, right.
No, it's literally a pressed coffee pod that's coded in a non plastic coating. You drop that pressed coffee pod into curious new machine and you get the same amazing experience that we all come to know and expect, just without all the extra packaging.
Hallelujah.
But you know, there's some stuff that you just feel like can't be made in a sustainable way, like legos, the things I step on.
Every day, Tony, do you have a solution thirty seconds left for do you have a solution for something like legos?
For lego?
Not yet?
We should have those folks call PA and we can help them.
The medical industry is moving more sustainably.
That's another key area that's been problematic for safety reasons and regulatory Yeah.
But again, technology is here to save us. There's a lot of amazing discoveries on the horizon.
So when I really hurt myself on the lego, I will be given a medical solution.
That will make sugar sugar.
Yeah, yes, exactly, that's what you say when you step on a lego.
Those things really really really hurt. Tony. Thank you so much, really appreciate it. Certainly a space that we care about, and it is great to get some time with you. Tony Parata. He is sustainability and regenerative economy expert at PA Consulting Jettings from Westport, Connecticut.
Those things hurt.
They've been, to be fair, they have been trying to make them more sustainable. They can't figure out any way to make My understanding is they can't figure out a way to make them with a material that's plastic that has the same precision.
Now I get it right, so that it's still a toy that kind of works.
All right.
More to cum folks, this is Bloomberg.
Well, there are a few certainties in this world, Carol, Yes, death taxes, and the styrofoam cup that you pour your hot water into when you make cup noodles.
Ramen totally get it.
We've all been there, boiled that water, pour it in the cup. Get yourself from the middle college. Yeah, who didn't survive on this stuff in college or at some point? Right Well, I'm talking about it because it turns out that after all these years, Cup Noodles is finally getting rid of that polystyrene foam cup and releasing a microwavable paper cup. I've actually got it in my hands right now because Brian Huff is CEO and president of Nissing Foods USA. It's the maker of cup Noodles. He's here
with us in the Bloomberg Interactive Broker's Studios. Brian, good to have you here.
How are you Thanks for.
Having me, Yeah, definitely, thanks so much for joining us. So, first question, what took so long? Because we haven't been using this type of material and things for a long time, you.
Know, as we were looking at our business, and we obviously have had that styrofoam cup since nineteen seventy three when we started producing in California. So we continue to look to evolve the brand, to involve the evolve the business, you know, and certainly the cup in the packaging is a big part of the brand. So we want to
continue to lead in this space. And it was a great time for us to start to look at alternate materials, not only you know, from a sustainability perspective, but also now it's microwavable.
Yeah, so was it a concern? Was did it take so long to make the change because you were concerned about changing the brand. And forgive me, I know you've only been at the company for a few months, so you can't speak to totally the history of it, but I'm just curious, you know, it's why a change like this comes now versus twenty years ago.
I think A big part of it was finding the right materials. So you know, it's not as easy as just moving from where you were to paper in terms of how that product and that experience you have are But secondarily is retooling our entire manufacturing process to be able to deliver something like this to the marketplace, which was a significant investment for us, but we think the right thing to do for the business and the brand.
Well, you know you and to be fair, like you said, only a few months at this company, but you are at Kellogg's for twenty four years, Like you understand this consumer package good space in a big way. You've worked at several different companies. I'm never quite sure what the margins are on these things. But to change packaging, like, what is it that in general kind of why it takes a while to make some changes in it?
Is it?
Like to help walk us through it?
Well, I think ultimately, especially a large consumer package goods companies, they're built on efficiencies and effectiveness. So our manufacturing plants are manufacturing about nine hundred cups per line per minute. So to be able to make a change, to have to shut down the lines, retool the lines in this particular case, almost seven weeks of not producing on our manufacturing lines to be able to retool and rebuild the lines to convert from styrofoam to paper. So it's a pretty big undertaking.
So see, you have two factories here in the US FU facilities that make these when you were retooling them. How do you make up for the factories that are shut down?
Well, ultimately we move from a five day schedule to a seven day schedule, twenty four to seven, sleep on.
The factory floors like Elon would.
Do as you can imagine every you know, in building up inventory and making sure we've got the right inventory levels around the country, pulsing the business as we as we could to make sure that we could make this move effectively and continue to service our customers.
And fair to say that the decision and the change was in effect or in process before you joined the company, it was, yes, But in.
General, I guess what I'm trying to understand, because you are someone who understands this space and have been in it for a long time. Prime is that consumers. You and I talk about it all the time, Tim, and I know what. I've got a daughter who's about to be twenty one, And just like the importance of understanding what a product stands for, the materials, the impact on
the environment. This is not a new discussion, So I'm just trying to understand, Like, when does a company like Nissan or somebody else finally decide, Okay, it's time for us to change this product because either consumers care or some other dynamic or financially it finally makes sense.
Yeah, and I think the way you suggest it makes makes perfect sense. It takes a while for you to continue to read what that consumer is saying. Is it really cool what they're.
But is it consumer based that ultimately makes you, guys make the change?
Well, I mean I think it's consumer based. Sometimes it's company based as well, and what your company's values and mission are. So our company is doing business in about one hundred countries, and I would say that in some countries they're much more progressive the cares of sustainability. Europe is a big one. So Europe is leading in this particular space and the US is probably behind in a
lot of these different packages and packaging types. So for US, as a global company, we spend a lot of time looking at our global footprint, looking at potential regulation that may happen over time, and for US wanting to be a leader in the space.
Talk toors, we're Bloomberg, So we like numbers. Here, Sure, a publicly held company based in Japan more than eight billion dollar market cap at this point here in the US. How big of a market is it for your products versus other countries? I mean, how important of a market is the US?
For Essen?
It's becoming more significant every year. But the raman category globally is almost fifty billion dollars, So it's a very very large category internationally and globally domestically about three billion, So a sizeable food category here in the US, and you know, we are starting to be a material part of the overall organization in the US.
That means that three billion dollars does that include that includes CpG and restaurants.
It does not include restaurants, so this is just retail.
Oh wow, Okay, so that's that is pretty big.
All right?
So I'm going to go there because I kind of asked you about it. So when do we get the sodium down fifty percent?
Like I've talked about what consumers.
Want again a younger you know, whether it's my daughter or other people are looking at these things and being like, oh wow, like taking a second thought. I didn't really think about it so much in college.
Did not cross my right eart.
But I mean, and I know you said you guys are working on it.
We are, and there's a lot of good technology out there in terms of reducing sodium without lessening taste. Right. So a big part of this is we are a product that is consumed each and every day, right, and consumers vote, and a lot of what they vote on is not only nutritionals, but it's also taste. So you
have to have both. So we've got a global team in R and D. We also have a domestic team in California that's continually looking at the new technology of how that sodium hits your taste buds, how you can simulate a higher level of taste and flavor and reduce the sodium, and something that we continually operate and work on. And the product has gotten much better over time and will get much better in the future. But that's a great question.
Talk a little bit about product category in the US, and like the most popular products, this is this I'm holding for the people listening on radio, cup noodles, chicken. I'm really I feel like, yeah, you don't need hot water, you just need water.
We've been on air for a couple of hours.
There go get some We love that, so thank cute. But is this, I mean, is this the flagship product? The chicken chicken, cup noodle.
Chicken category is the flagship?
What portion of revenue does that account for for the company? For for us, so I want.
To say us, it's about forty percent of our Wow, that was amazing. Now there's multiple one products within that proc that was total brand.
Okay, total brand, not just chicken flavor. Okay, So it's and then and then the top ramin category two is certainly a big one for.
You, huge categories, yeah, and great brands.
And that's sort of almost the remainder because yes, when I was struck by looking at the website, how how much the products haven't changed in a long time. There's still the classic products, which says, okay, wait a second, there is that loyalty here.
There certainly is, and there's certainly other flavors. Yeah, and it's an iconic brand and as we innovate, we want to continue to keep innovating too. On our traditional and our original, which in this particular way, we looked at packaging as a way that we continue to deliver new news and innovation.
That's what I was going to go to, right. We spent so much time talking about the tech world and the tech community and innovation disruption. How do you guys think about it in the food space? What it means for you? Where it is a well known brand, kind of iconic if you think about it, Carol.
There's a band store where you can buy a cup Noodle's trucker hat and a cup of Noodle's beanie.
Very cool, by the way, I should have brought one with me.
Yes, we're here next time, Carol. Okay, I might get you some top romin socks.
Okay, just get about forty five fifties.
Oh those are still doubt.
I'm sorry, All right, stuff?
What's innovation or disruption for you, guys? As you think about this space, you.
Know what we look at is when on a three year rolling basis, about fifteen percent of our revenue actually coming from innovation. So we're continuing to look at other premium spaces that we can go more different and unique ingredients, certainly authentic Asian and hotter flavors today are big sellers. So it is a constant investment that we're making in innovation and truly is the future growth of the business.
We'd be remissed. We usually start this way twenty twenty five seconds. You are CEO of and Foods here in the States and so on and so forth. How would you describe the global market environment the economy right now?
I think the I think the economy is really challenging, and you know, I think there's a lot of mixed signals as it relates to the economy. But consumers today, especially in the US, are continuing to be you know, are hurting. So for us, you know, we have seen some different changes in in our channel mix. So we see more people moving to the value channels, the clubs and the dollar stores. We've got a big business in the value the value channel or dollar stores across the country.
So we've certainly seen some of that migration and we believe part of that is the economic conditions in the US.
That's fascinating, great stuff. We covered a lot of ground. Brian, Thank you, thank you so much, pleasure meeting you both same here. Safe travel soon. Brian Huff he's CEO and President of Nison Foods USA, joining us here in studio