Sustainable, Safe Packaging for CPG Brands

Sandy Almendarez Lara Dickinson Steve French Director, Content, Health & Executive Director & Co- Managing Partner, Natural Nutrition, Founder, OSC2 Marketing Institute (NMI) Informa Markets

Stacey Gillespie Jeremiah McElwee Derek McNamara Director of Product SVP Merchandising & Product Senior Purchasing Strategy, Development, Thrive Market Manager, Nutiva Gaia Herbs Inc. SupplySide West 2019 Trends in Food and Beverage Packaging October 2019 Steve French, NMI Managing Partner 1 Topics for Today

Consumer Engagement in Sustainability

The “Green” Consumer

Recycling Behavior

Packaging Trends

▪ NMI is an international strategic consumer insights firm, specializing in consumer trends and innovation since 1990. ▪ Our mission is to focus on the interconnectedness of personal health, sustainability, and whole living. ▪ Our goal is to help clients grow their business through the identification and validation of new ideas and solutions.

…and the increase in waste will carry serious consequences, both physical and fiscal, for global communities and humankind.

88% 85%

% consumers indicating they % U.S. consumers who think save and reuse things we live in a wasteful society whenever possible

© NMI. All Rights Reserved. 5 In fact, consumers are becoming more aware that the decisions they make can affect the sustainability of the world and its people and are altering how they make choices – especially Millennials…

When given the choice…. % general population “I make decisions with an understanding of the effect they will have on the health and sustainability of the world, its 45% environment, and people”

56% 32% 44% 34% 37% 31% 31%

2006 2017 2006 2017 Millennials Gen X Boomers

% consumers indicating it has gotten WORSE compared to the 1970’s

Amount of waste on land Amount of waste in oceans (plastic, landfills, litter, etc.) (plastic, trash, oil, etc.)

69% 73%

“I prefer to purchase products that are manufactured in a sustainable manner” 62% 57%

48%

2007 2013 2018

% general population indicating which of the following stages do you think the environmental impact is most important to reduce? The environmental impact ….

before I use the product of using the product of disposing of the product

Foods and beverages 41% 26% 33%

Household cleaning products 29% 42% 29%

Household paper goods 29% 26% 45%

Personal care products 33% 34% 33%

Packaging is relevant to all three stages!

% U.S. general population (GP) consumers indicating

BELIEF PREFERENCE ACTION

I think many products are I prefer to buy products When I see a product that is over-packaged from manufacturers that over-packaged, I look for use e-friendly packaging materials something else to buy

GP: 71% GP: 59% GP: 30%

% category users indicating they prefer to buy products from manufacturers that use environmentally-friendly packaging materials

GP 59%

Fair Trade Food/Bev 82%

E-friendly lawn 80%

Org Food/Bev 80%

Natural Laundry Detergent 76%

Natural/Org Personal Care 73%

Natural HH Cleaning 72%

© NMI. All Rights Reserved. 11 The consumer segment within the population which is considered the ‘greenest’ segment is the LOHAS consumer who is integral in helping to drive sustainability into the mainstream

LOHAS®: 23% • Personal and planetary health priority DRIFTERS®: 26% UNCONCERNEDS®: 17% • Sustainability is entrenched in lifestyle • Green followers • Less concerned about • Heaviest purchasers of ‘green’ • Newer to the ‘green’ marketplace the environment and society • Early adopters & influencers • In search of easy green changes

NATURALITES®: 20% CONVENTIONALS®: 14% • Green, but personal health drivers greater than planetary • Practical & rational health • Driven by cost savings

Packaging attributes that are VERY important to their food/beverage purchase decision 40% 35% 2012 2017 30% 25% 20% 15% 10% 5% 0% Recyclable E-friendly Minimal Compostable Plant-based

+40% +45% +16% +46% +72%

Packaging attributes that are VERY important to their food/beverage purchase decision

GP LOHAS 36% Recyclable 58% 32% Environmentally-friendly 56%

31% Minimal 53% 23% Compostable 41%

21% Plant-based 35%

A seal or certification mark indicating a product is environmentally friendly increases the likelihood I’ll buy it GP: 40% LOHAS: 63%

Packaging attributes that are VERY important to their purchase decision

42% 37% 36% 33% 32% 34% 27%

Environmentally-friendly packaging Recyclable packaging

HH Cleaning Personal Care Food/Beverage Supplements

% U.S Adults % LOHAS 77% 95% Of consumers feel something needs to be done immediately about the amount of plastic accumulating in the oceans

50% 64% Of consumers feel plastic bottles are “not at all” environmentally-friendly 46% 74% Of consumers feel plastic grocery bags should be banned

% indicating they take their own bag to the grocery store or other stores they shop frequently

54% 51% 41%

17%

2005 2008 2012 2018

In addition, 58% of the population indicate they are recycling plastic bags

Materials which consumers rate as least and most recyclable

LEAST MOST • Plastic bags • Plant-based plastic bottles

• K-cups or single serve capsules for • Paper (e.g., newspaper) beverages • Plastic bottles, jars, etc. • Corrugated cardboard

• Pouches • Glass bottles, jars, etc.

• Aseptic cartons (like juice boxes) • Paperboard boxes (like a cereal box)

% general population indicating they recycle each of the following materials all or most of the time

Aluminum cans Aseptic cartons 43% 71%

Gable topped 49% Plastic bottles/jars 65%

Plastic bags Paperboard boxes 61% 58%

Glass bottles/jars 60% Paper/newspaper61%

However, according to the Environmental Protection Agency… • 91% of plastic created today isn’t recycled • Americans recycle just 34% of all waste they create

A third of consumers indicate they are skeptical that the recycling they put on the curb actually gets recycled

• This meat packaging features a • The replacement of flexible plastic with paper is now tray made from organic becoming mainstream with Nestlé adding this material that is recyclable with strategy to a number of sustainable packaging paper waste, claiming to use initiatives. 60% less plastic. (Italy) • Recyclable in the paper stream and made from sustainable (FSC) sources.

Ch2oose: No Plastic Water: Just Water: • 100% plastic-free water bottle • Aluminum cans • Paper-based carton • Lining "beneficial to both marine • 52% of profits goes toward ocean • Bio-plastic cap made from and soil environments" protection sugarcane • Fully biodegradable • Aluminum has the highest rate of recycling in the world

Roberts Wholemeal Bread • The bag is paper • On-pack messaging about the reduction of plastic • Carries the OPRL (on-pack recycling label), which certifies the bag as "widely recyclable" in the UK

Renova Balance • Repackaged their white toilet paper in a paper pack

Florette Baby Leaf has been Ooho is made from Notpla, The packaging is 100% repackaged in a pouch which a material made from plastic free, recyclable features the same amount of seaweed and plants that and compostable. salad but less plastic. disappear, naturally.

Growth in number of product launches with environmentally-friendly packaging claim 2009-2018 355%

153% 131%

Food Household Personal Care products products products

“I do not want to sacrifice “-----” when buying environmentally-friendly products”

“Quality” “Price” “Convenience”

71% 60% 47%

© NMI. All Rights Reserved. 28 For today’s sustainably focused company, responsible packaging should be part of any new packing innovation to help encourage long-term viability and increased brand value

GP LOHAS % consumers indicating they are interested in learning what companies are doing to…

Use more recycled content in their 49% products and packaging 79%

48% Use less packaging 78%

“Knowing that a company is mindful of its impact on the environment and society makes me….”

Increased trial …more likely to try their products 60%

Brand loyalty …more likely to buy their products repeatedly 57%

Recommend …more likely to talk with my friends and family about the company 48%

• Product packaging is one contributor to the amount of waste the world produces • Changing the type of packaging material and amount of packaging are two ways to reduce the environmental impact of packaging • Certainly such efforts need to be balanced against consumers’ undying interest in convenience, which tends to come with a single-use or single-serving mentality • Look for successful business models of the future to eliminate some of the unnecessary peripherals – the package, the substrate, etc. – on their way to a less consumptive model

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© NMI. All Rights Reserved. 32 Packaging for the Next Generation October 18, Supply Side West The problem Many primary packaging options For carbon emissions – Flexible wins And here is what consumers are focused on Solutions  Minimize packaging- resources at climatecollaborative.com  Recycle – SPC – How to Recycle  Compost – OSC2 - this is focus of our presentation Designing for Recyclability Rigid Structures Post Consumer Recycled Plastic is a step in the right direction if you must use plastic bottles

Carlsberg wood fiber Prototype bottle is New option to explore Reusable containers are even better The Importance of end markets

60% OF HH MUST HAVE access to recycyling for something to be recyclable. American Carton council invested in recycling company collection. Now juice boxes can be re-used for building materials

Multilayer technology makes it likely impossible to recycle curbside

Flexible Film Supply Chain

Polymer Blown Film Film Print & Pouching Resins Extrusion Finishing Lamination Quantifying the plastic pouch problem

Nearly 50% of all municipal waste is packaging today • More Standup pouches are used every year, growing 9%

In the United States, 26 billion pouches are thrown into landfills with no regenerative potential

Source: EPA, Cradle to Cradle, William McDonough, Roland Geyer et al PACKAGING COLLABORATIVE OSC2 formed the Packaging Collaborative to remove petroleum based plastic from landfills, oceans, and our planet by securing compostable and renewable flexible film structures with appropriate barrier qualities. As with our other programs, we believe that the best way to address packaging is to share our learnings and steer the industry towards leading-edge solutions.

In its sixth year, the Packaging Collaborative is comprised of over 25 companies. Why compostable?

• Plastic/PET pouches are laminated with different plastic layers that cannot separate, making them impossible to recycle

• Recycling facilities aren’t set up to accept recyclable flexible plastic

• Industrial composting is harder for consumers to access; yard waste programs and company take back programs can support home compost

• Backyard Composting can promote a virtuous cycle replenishing biological nutrients Compostable pouches = lower emissions and address end of life issue

Flexible Pouches Have Major GHG Benefits 2 1000 OSC 900 Focus 800 700 600 500 400 300 200 100 0 grams CO2e literper producterof Based E.1. E.2. E.3. Based HDPE C.HighBio- Stand-up Closure Plastic PET Flexible Flexible Pouch Compostable-… Compostable-… Compostable-… AluminumCan Bottle and Bottleand Cap B. B. MediumBio- A. ConventionalA. Glass Bottle Glass and D.Recyclable #2

Calculated from data from LCA by Flexible Packaging Association, 2009. While options have been expensive, technology is improving Collaboration Is the Key

Sustainable Packaging R&D Partners

Brands: 20+ leading natural foods Material Partners: brands Brand Owner Manufacturer Futumura & Murphs & BioBag, Recology

“I come from an environmental conscious background and being in this industry was quite a contradiction to my beliefs; to the point where I was ready to get out of the industry. Then Jeanne came along and it “clicked” this is the Converter reason why I should stay in the industry and this Associated is my deeper purpose/calling of why I’m in this & Elk Packaging business. “ Brett Shaffer, Elk Design OSC2 2019-2020 Shelf Life Study

Objective: Qualify newly commercialized compostable materials to determine the following: •Fitness for use •Appropriate Barrier (shelf life under ambient and challenge conditions) •Co-packing compatibility •Package Integrity post challenge

End result will be knowledge if we are heading in the right direction per structure, per category Participating Brands 2 1 2 primary packaging workstreams for shelf study

Stand Up Pouch – multiple Overwrap for Tea & Bars versions and 14+ ingredients 10+ + ingredients tested tested First major compostable launch

“Compostable Package*” “*Third party compostable certification in progress*” Other Brand Examples – Biobag and Ziploc Compostable

“compostable” qualified by

• “for use in municipal facilities where applicable”

FTC guidelines say that statements about municipal facilities should make it clear that not all municipal facilities accept compost

http://biobagusa.com/products/retail-products/food-scrap-products-retail/

23 Getting to Certified compostable is hard and still more expensive.

Here are Some good “one step close solutions” Numi New Plant Based Packaging (not certified compostable)

• New packaging is compostable (original packaging had to be put in landfill) • New overwrap uses renewable bio-based plastic instead of petroleum-based plastic • New overwrap features responsibly grown paper rather than post-consumer recycled paper – guarantees no eco-toxicity when it breaks down ORIGINAL STRUCTURE NEW COMPOSTABLE STRUCTURE (3 layer)

 Paper + Ink + Coating  Paper + Ink + Coating (100% recycled paper made from (100% FSC certified paper grown in high-gloss magazines) Scandinavia) (paper thickness – 54 gsm) (paper thickness – 45 gsm) (Solvent-based ink, coating) (Compostable ink, coating) + Solvent-based + Water-based non-compostable adhesive compostable adhesive

 Metallized eucalyptus layer 80 gauge metallized Natureflex  Metallized plastic layer (1 micron thick metal layer) (70ga white BOPP made from petroleum products)  Bioplastic layer (36ga Non-GMO PLA made from renewable sugarcane)

25 Another approach Make it simple for consumers How do we go further, faster? Progress has been slow and limited to a few pioneers We are not innovating well off a siloed, outdated system Petroleum is a 60 year old system optimized for efficiency and overengineered to last for 500 years when we just need to last for 18 months. The system is not designed for innovation…yet we are trying to innovate off the current system.

“If the System is not working, we need to change the system.” ◦ ------Greta Thurnberg Redefining Flexible Packaging OSC2 Hosted Design Thinking Workshop Produced by RCD

WHAT: A unique industry-wide innovation event focused on solving our industry’s pressing packaging pollution problem.

HOW: This workshop consists of a series of webinars and interactive events leading up to the 2-day workshop. We only have 64 total spots, 12 of which are being held for OSC2 members at a discounted rate.

WHO: We will have representatives from across the value chain – including NGOs and customers - Brands, material suppliers, manufacturers, distributors, retailers. THE ROLL OUT

FOCUS QUESTION: How can we deliver food products to consumers in a way that generates zerowaste and still allows brands to differentiate themselves in the market?

The answer lies in both material innovation and infrastructure innovation. SPRING 2020 – THE TIMELINE THE MISSION

OUR BIG WHY: We are coming together to break through barriers to innovation, become a catalyst for change and make sustainable packaging the norm by 2030.

WE ARE THE CHANGE MAKERS: Within our industry, we have the brilliant minds that have the creativity and innovative intelligence to make exponential change in the next 5 years.

Each of us in a change agent, and we are each responsible for the future of this planet. In this unprecedented, collaborative event, we have the opportunity to be a seed crystal of change for the rest of our industry. Thank you to our partners! Learn more at

WWW.OSC2.ORG APPENDIX INPUTS & END-OF-LIFE: Multi-Layer Flexible Film Accomplishments

o Created Industry movement of leading brands toward advancing compostable packaging o Developed Key partnerships throughout compostable package supply chain process: Associated Labels, Elk Design, Futumura, BioBag, Novamont, etc. o Developed & Tested 4 compostable pouch versions with 18+ ingredients o Line tested overwrap applications and optimized structure for triplex teabags o Presented Certifications guidelines for compostable structures o Advanced Compostable packaging Advisory board o Helped Launch Gone4Good (Alter Eco) & Leaf No Trace (Numi Tea) o Flexible Packaging Comparative study for Climate and end of Life What our are current sustainable packaging initiates, including motivations, challenges and consumer response. Stacey Gillespie Brand Strategy Director What Will Be Covered Today

 Introduction to Who is Gaia

 Share What 3 R’s of Packaging Gaia Herbs is Focused On  Research  Reduce & Recycle  R&D #1 Herbal Supplement Brand Natural Channel

Industry Pioneer Since1987 Seed to Shelf

350 Acre Organic Farm 64,000 sq ft Green house

Privately-owned manufacturing & testing facilities on-site H100010002

H100010002 The 3 “R’s” in Packaging 1 Research • Conduct Research – do you know your consumer & how they shop/make decisions?

• When was your last rebrand?

• Performed both QA & QT consumer research, insights influenced final • Design • Claims - Benefit • Key takeaway - Simplify Updated Claims & Product Category

Study Showed New Design Reinforced Gaia as Premium & Distinctive • Benefit forward – who need’s this & what’s it for? • Key ingredients – what’s in it 2 Recycle & Reduce • Maintained glass which is infinitely recyclable • Remains one of the best barriers for supplements

• Switched to 100% recycled paperboard – Craft vs bleached - Paper sourced from responsibly managed forests

• Reduced thickness/weight of carton paperboard

• Reduced chemical consumption - switched to FSC approved varnish (substrate)

• Transitioned new inventory with MINIMAL waste 3 R&D for Future Innovation & Out of the Box Thinking! • Removal of Carton or Seal-it Band? • Consumer & Retailer said no!

• Replace plastic cap to metal/ bio-plastic? Alternatives to Glass? • Need to serve nomadic/omni-channel shopper • Cost • Feasibility • Supply chain • Stability • Innovation e.g. Hemp composite, dyed w/herb marc • Compostable packaging –major hurdles • Reusable - major hurdles

• Collaborate! Member of the OSC2 collaborative

• Research! Lifecycle Analysis & Consumer Transparency in Packaging is needed!

Change in Packaging in Mandatory As Shoppers turn on Digital Shopping vs Retail Shelf

Industry today is an ocean of single use plastic!

Together we can make an impact Contact [email protected] Thrive Market Supply Side West 2019 Journey to Zero Waste

 We’re making big strides towards achieving zero waste by diverting more than 90 percent of waste to a recycling stream or reusing it in some way. It’s the first step in our journey to raise the bar on what it means to be an environmentally responsible company.  Environmental Protection Agency’s WasteWise program, “zero waste” means 90 or 91 percent of material that comes into a facility must leave it in a sustainable way.  How?

 Color coded containers throughout our facilities to denote cardboard/paperboard, plastic or wood scraps- Managers audit daily to ensure compliance

 Recycle all cardboard & plastic via compactors on site

 Audit invoices of recycling and waste management companies regularly to ensure we are complying with zero waste goals on throughput

 Recycle all pallets either through re-use or for firewood during winter months

 Communication with supply chain partners on any areas of concern ongoing- It takes a village! Cardboard & Plastic bailed to send to recycling center- 2 tons daily Segregating materials for recycling- a perpetual process Teamwork and Focus of our Fulfillment Center teams Packaging

 We know that one of the most direct ways we can impact sustainability is packaging. So we have and will continue to be deeply committed to diminishing & improving that footprint.  Two primary focus areas:  Orders  Products Packaging

 Orders- How?  Efficient packing- Tetris in your box!  All shipping boxes are made of 100% PCR paper (including the tape) so all can be curbside recycled  No styrofoam or other ‘peanuts’- all packing materials used are 100% PCR paper material as well- uses more labor & skill but worth the impact savings  Reducing the usage of plastic bags- where we do use them they are #2 HDPE plastic which is curbside recyclable  Upcycled denim used for insulation on frozen/perishable shipments  Wine packaging all 100% PCR (newspaper) & biodegradeable materials *Note: Reduced carbon footprint by shopping e-commerce with Thrive Market as your products arrive to your door without so many ‘middle men’. Efficient packing Thrive Market vs. Competition Wine- No styrofoam! Packaging

 Products- How?  620 Thrive Market branded products-built with our core values in mind—from sustainability and social impact to nutrition and the environment.  Evaluate all aspects of packaging opportunity for each item prior to launch  Recyclable, Highest PCR content, Lowest Carbon Footprint  Non-Food items a minimum of 50% PCR content  Paper products a mix of PCR (100% on paper towels) and a blend of Bamboo & PCR on facial tissues & toilet paper  Soft recyclable film vs. rigid formats wherever possible- reducing carbon footprint, shipping weights and, as a last end of life alternative, landfill by 70% Note: Always partnering with 3rd party brands to innovate as well Nut butters, Beans and Personal Care So many examples… Let me count the ways…

 Other areas of focus  Water conservation- Wine, Tomatoes etc  Deep commitment Biodynamic & Regenerative agriculture- Organic is no longer enough!  Philanthropic Efforts focused on Food & Water security in the USA and beyond- Clean water to local Food Banks & Animal Shelters- Nothing goes to waste  Zero waste efforts at our Home Office (Recycling, Composting & donating any leftover foods to local food banks ongoing)  Partnership with Carbonfund.org to support 173K acres in Minnesota to offset additional carbon impact of our business THANK YOU! Sustainability in Supply Chain Derek A. McNamara - Nutiva Sustainability

 Defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.  What is your organizations mission statement?  Who owns the Sustainability?  Who will carry it out? Mission Statement

 Social and environmental responsibility is a core part of Nutiva’s culture and business.  From sourcing organic products, to obtaining fair trade certification, to greening our facilities and operations, to funding tree planting at schools in our local community, we are constantly seeking ways to better protect our environment and ensure a better quality of life for employees, customers, and the communities we serve. Triple Bottom Line

 People, Planet, & Profit  TBL “focuses corporations not just on the economic value they add, but also on the environmental and social value they add — and destroy. At its narrowest, the term “triple bottom line” is used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters.”  Cost  Consider Total Cost of Ownership TCO – Web Sales – Glass vs. Pouch The Consumer & Recyclability Considerations for Recyclable and Compostable Packaging

Recyclable Compostable  Available in high barrier and low barrier  Available in high barrier and low barrier  Available in white and clear  Available in clear or metallized (high barrier clear not possible yet)  Recyclable at store front locations only - recycled into products like TREX  Compostable only at industrial composting facilities that accept food ware and  Made up of HDPE/LDPE compostable packaging  Limited structure/shapes available (SUPs)  Must pass ASTM 6400  Seal Bar issue  Many formats and shapes available (not  Good option for high-moisture content just SUPs) product  Good for dry, shelf-stable goods Implementation

 Supply Chain may be the driver  Personnel is key  Sustainability may have to be “sold” to other parts of the organization  Take a leadership role in the industry  Do not let a lack of recyclable or compostable definitions or regulations be a deterrent  Several large CPG’s have announced Sustainability objectives to be implemented by 2023 or sooner.  Government Mandates are coming…..  Don’t go it alone  Join the OSC2 Packaging Collaborative  Rainchild, Elk, or Servoartpack