3. The Case of Terracycle
In 2001, two Princeton students, Tom Szaky and Jon Beyer founded
Terraycle in Trenton, New Jersey. Initially the main product was a liquid
fertilizer, “Plant Food”, made by a continuous flow composting system bought
for $ 20,000 (Piazza, 2002). For packaging used plastic bottles were used. These
were collected in schools and local organizations through TerraCycle’s “Bottle
Brigade” campaign: schools and other organization collect used soda bottles and
sold them to TerraCycle for five cents per bottle. In 2007, more than 3100
organizations were involved in this campaign (Walker, 2007). In a few years
sales increased and thanks to the media interest Terracycle became increasingly
known among consumers. In 2005, following the beginning of the sale of its
products in the large-scale retail trade, through Wal-Mart in the United States
and Home Depot in Canada, the sales increase up to $500,000, which became $1.6
the following year. An amazing result. No coincidence that at the end of the
first year the sales were already $ 77,000.
Since 2007, TerraCycle begins to establish
relationships with other companies. TerraCycle extended the collection program
for used bottles and began distributing them to some food industries, such as
Honest Tea, Stonyfield Farm, and Kraft Foods, as well as developing innovative ideas
for them (Young, 2010). Another important partnership is the one with the
American discount retailer Target, for the sale of bags obtained from recycled
Tom Szaky decided to switch from direct
production to licensing system in 2009, developing further relations with other
TerraCylce has invested heavily in upcycling
that means to use waste materials, destined to be thrown, to create new objects
with greater value than the original material. Around 200 products were
ideated, such as smartphone cover, laptop cases, backpacks etc.
Another innovative and challenging project launched
by Tom Szaky is “TerraCycle Cigarettes Brigade”, in joint venture with Santa Fe
Natural Tobacco Company (Matt Hickman, 2012). The purpose of this partnership,
started in 2012, is to collect and to recycle cigarettes butts, rolling papers
and cigarette, and then recycling them into plastic pallets. Obviously, the materials
obtained by recycling the butts are used only in industrial context, due to the
dangerous residues of nicotine. The collection takes place “home by
house”, through a free UPS courier paid by TerraCycle. In the first year, as
many as 5 million of cigarette butts were recycled (Bradford, 2013).
In 2017, TerraCycle establish a partnership
with Suez Environnement for the production of shampoo bottles for Head &
Shoulders. These will be made recycling plastic that had been thrown into the
ocean, the rivers and into the lakes. This initiative was very successful: for
this project, TerraCycle received the United Nations Momentum for Change
Lighthouse Activity award in June 2017 (Waste 360, 2017).
Few months after, the same kind of relationship
was establish with Procter & Gamble for the production of bottles for a very
popular dishwashing liquid: the Fairy Ocean Plastic bottles. This will be made of
recycled plastic (90%) and recycling plastic that had been thrown into the
ocean. This bottle will be on sale
starting in 2018 (Waste 360, 2017).
The relationship with the French company Suez Environnement
(that is the second world group in the field of water and waste management), is
not only commercial, it is strategic as well. In fact, Suez owns 30% of
TerraCycle’s activities in Europe, collaborating with Tom Szaky’s company to
develop innovative ideas for recycling and upcycling in Belgium, Finland, France,
Netherlands, UK and Sweden.
After 16 years of business, in 2017 TerraCylce expects
to reach $20 million of revenues.
It is possible to combine the traditional
commercial logic with the no-profit logic? If you ask to Tom Szaky he will answer to you that he is “in this to
show that you can be a very successful social enterprise with the key goal of
eliminating as much waste from being burned or buried as possible, while being
profitable” (Bradford H., 2013).