Is There A Future For Plastic Bags?
Counselor Presents An Analysis Of A Rising Trend
With many U.S. cities banning the use of plastic bags in retail stores, will it be long before the promotional staple also faces scrutiny? Counselor presents an analysis of a rising trend – and a new business opportunity.
Buy a few essentials in a grocery store (or almost any store, for that matter) in Steamboat Springs, CO, and you'll rarely be offered a bag in which to carry them. No bag at all.
The average cashier will simply hand you your items and your receipt and thank you for your business. When you stare blankly, the cashier will smile and wait for you to move on. Unless, of course, you ask for a bag, and then he or she may begrudgingly give you one. Left unsaid? Bring your own satchel or receptacle or anything to carry these items – and make sure to bring it again next time, because we don't want to hand you a traditional plastic bag.
This may seem like quirky environmental behavior relegated to an eccentric mountain town, but the reluctance to use plastic bags is gaining steam – certainly in the retail sector and potentially in promotional products – and not just in states like Colorado, which is known for its environmental activism. Many counties, cities and towns in California (the unincorporated areas of Los Angeles County, San Francisco, Ojai, Santa Monica and many more) have already passed laws banning single-use plastic bags in retail stores and supermarkets. Further, governments in 10 states (CA, CO, IL, MD, MA, OR, RI, TX, VA and WA) are currently debating similar measures in their legislatures.
For some, it's a fact that straddles the line between irritation and attack on business. "I understand wanting to eliminate any petrochemical product," says Ken Trottere, vice president of Regal Poly-Pak (asi/81350), a Melville, NY-based supplier that makes bags. "I get all that. But to tell me that I can't manufacture plastic bags, to eliminate my livelihood – I don't think that makes a whole lot of sense."
The legislative move to ban plastic bags is in part an effort to change consumer habits. In a bid to create a greener community, cities and townships nationwide (some 50 cities and counties so far, according to the Campaign for Recycling, an environmental advocacy group based in Sacramento, CA) have chosen to charge upwards of 5 cents for plastic bags or ban them outright. In Steamboat Springs, neither approach has been officially adopted, so the city's retailers are, for the moment, taking it upon themselves to lessen plastic bag use in the area.
The changes – with new ones proposed practically daily in cities across the U.S. – are beginning to rattle industry suppliers and distributors, as they view a traditional product category under attack. Indeed, suppliers who manufacture or sell lightweight plastic bags, like those used in grocery stores, admit their sales are down.
And yet, with every down product cycle comes opportunity for new items. Stores and supermarkets in cities that have passed plastic bag measures have been giving away nonwoven reusable bags, or charging nominal fees for them, expecting customers to leave the bags in their cars and bring them into the stores with them every time they shop. Since they comprise a category in the ad specialty market, sales of these types of bags have risen significantly over the past couple of years. In fact, some of the regulations "have positive implications for the near term," says Christopher Duffy, vice president at Bag Makers (asi/37940), a supplier based in Union, IL.
Starting in 2008, Duffy began to notice an uptick in orders for nonwoven reusable plastic bags – the kind you see in Whole Foods that feature quaint farm scenes and the like. In 2009 and 2010, he says, environmental initiatives and a raised awareness among end-users boosted inquiries for nonwoven bags significantly. Now, new plastic bag bans "are just another opportunity to keep the wave moving," Duffy says.
And many suppliers have jumped on the trend, launching new items that fit perfectly into the new sales opportunity for distributors. Enter the term "reusable bag" into ESP® right now, and 4,475 products show up. Every color, every size, every type of imprint can now be sold to stores and other companies running eco-friendly promotions.
Helping to Shape the Future
Reusable bags have a long way to go to match the prevalence of the traditional plastic bag, however. Type the keywords "plastic bag" into ESP, and a quick search unveils nearly 10,000 SKUs.
That's a lot of products that many feel are under siege right now at the legal level. The impact of those regulations are certainly starting to be felt in this market across the country, but how much of a long-term effect the ordinances will have remains to be seen. "We're very big in retail, and it's had a negative and a positive effect," says Trottere.
In a nutshell, many towns have banned plastic bags because of their potentially harmful effect on the environment – as lightweight as they are, they often get stuck in trees, roll through streets like plastic tumbleweeds, and cause other environmental nuisances. Since many consumers are unlikely to reuse something that flimsy, the bags are often perceived as wasteful scraps for landfills.
"Grocery stores use them because they're extremely lightweight" and store more easily and with fewer space demands than paper bags – plus they cost just pennies, says Trottere. In fact, plastic bags take up less space in a landfill than paper or reusable nonwoven bags, he says. They "really do have a minimal effect on the environment."
However, a public warned about potential plastic bag drawbacks starts looking for alternatives, and, in today's marketplace, suppliers say they're sensing that. All of this has been fine for supplier business so far, experts say, since they have been able to answer the call with reusable bags that meet end-user standards.
Still, the market shifts caused by environmental concerns over plastic bags is causing some suppliers and distributors to adjust their sales and marketing efforts, uncertain of the long-term effects ordinances may have. Anticipating a greater need for reassurance among end-users, three years ago Bag Makers began developing its own definition of "green" to assure distributors and end-users that Bag Makers' products are environmentally responsible. In the past two years, the supplier has had "an important conversation with our salespeople and distributors and their clients," Duffy says. Today, that means its products (bags) can be reclaimed, reused and recycled.
Like Bag Makers, other suppliers are realizing that bag ordinances don't necessarily mean the end of business as they know it. Instead, many are finding opportunity in new regulations. At Pacific Western Sales Inc. (asi/75731), inquiries for plastic bags have dropped as much as 15%, while interest in paper bags has risen just as much, if not more, says Lyndsey Tidwell, owner of the Brea, CA-based company. Though Pacific Western sells to retailers, "most of our clients are selling products for some promotional event or golf outing," Tidwell says.
As for the ad specialty market, for the moment, suppliers say bag sales within the industry tend to be for trade shows and promotional events, which have yet to be hit by any ordinances; the regulations focus almost exclusively on retailers and supermarkets. "We still sell tens of millions of those plastic bags every year" to trade show organizers and event managers, Duffy says.
Still, others like Tidwell concede that the movement to ban bags is gathering steam and could spill over into other areas, such as the ad specialty arena, where there's an ongoing need for plastic bags. "In San Luis Obispo County, where they are banning plastic bags in a more widespread manner, you have over 100 people show up to talk about this," says Tidwell, who has followed the area's ordinance debate. "This is an issue."
And one that's not likely to go away, experts say. Certainly, the statistics are daunting: It's estimated that plastic bags can take anywhere from 15 to 1,000 years to break down in a landfill. Upwards of 500 million bags are used worldwide each year, and environmental groups stress that they litter waterways and oceans and create health hazards for wildlife.
Those kinds of messages, suppliers say, are being driven home with consumers, and, ultimately, end-users, so much so that many are demanding alternative bag solutions.
That said, Trottere and others predict the industry won't suffer lost business from bag bans, if for no other reason than most bag suppliers aren't selling to retailers affected by the bans. Independent suppliers outside of the ad specialty market are more likely to be involved with massive orders for grocery chains and big box retailers.
While suppliers we talked to said they do get orders for plastic bags, they're anticipating further bans and shifting their sales focus to more promotional events, where plastic bags aren't banned, as well as to different product lines to meet the demands of end-users and new regulations.
According to many suppliers, one obvious step is to focus on mid-level retailers who often fly under the radar of plastic bag ordinances, or who tend to order laminated paper bags. In addition, increasing regulations that may inspire end-users to search for plastic bag alternatives are "creating a marketing opportunity for the nonwoven category," Duffy says, since they're reusable and cost-effective. "You can put a lot of them out there without spending a lot of money," with pricing that rivals that of a basic coffee mug, he adds.
The fact that they're reusable not only raises the perceived value of the bag, but also helps end-users and bag recipients feel as though they're involved in making their towns more environmentally friendly.
If anything, suppliers say they see new bag regulations as an opportunity to push another product niche in the marketplace. "The regulations are going to get stricter, no doubt about it," says Tidwell. "Do I see plastic bags going away? I personally don't."