Is the spirits industry today sustainable at all? How can it benefit from the circular economy? Are we moving at a pace that is quick enough to safeguard our future? We dove deep into these questions and many more with Anand Subramanian, the newly appointed Chief Operating Officer of ecoSPIRITS, on a mission to end single-use glass and create a sustainable business that strives to revolutionise the spirits industry with circular economy technology.
When life hands you lemons, consider adding vodka – ideally from ecoSPIRITS. As everyday consumers, we probably would have never imagined the immense amount of packaging waste generated in the process of preparing our favourite cocktails and party liquors. Thankfully, ecoSPIRITS – the world’s first innovative low-carbon and low-waste closed-loop distribution system solution – was launched in 2018 to combat this seemingly insurmountable problem in the premium spirits supply chain.
In this interview, we spoke to the Chief Operating Officer of ecoSPIRITS Anand Subramanian, about the motivations behind his symbolic career switch from investment banking to the sustainability sector, marrying the spirits industry with circular economy technology, and staying true to his values in times of adversity.
In search of greener pastures
In my previous roles as an investment banker and corporate strategist, one of the key focuses was optimising resources to deliver productivity – whether that was raising capital, consolidating companies to achieve synergies, or even eliminating inefficiencies to improve profitability. The circular economy is no different in the sense that it looks to eliminate waste by promoting products and materials that can be reused, repurposed, repaired, remanufactured, or recycled in order to improve resource productivity. Ultimately, the shift from a take, make and dispose economy to a more sustainable economy for the future is what really excited me to move into the sustainability space.
The dawn of ecoSPIRITS
ecoSPIRITS started in 2018 as a small division of Proof & Company, which was a distribution business per se. In fact, it arose from the business need of creating a solution that would provide a unit economic advantage and concurrently deliver green benefits to society and stakeholders at large. Henceforth, the idea was to move the spirits industry from single-use glass to a circular solution through the reuse of glass. In 2020, the world produced about 89 billion glass bottles, and the wine and spirits industry contributed a significant share of about 70 billion glass bottles to this tally. Given that glass by itself is a safe and natural product that has been used for centuries, it is a great product to have and one that should be reused habitually.
The ups and downs of circular retail for spirits
The spirits industry has witnessed virtual innovation at scale on the packaging and distribution side. In recent times, you may have chanced upon the bag-in-box type of paper packaging solutions, but the providers of these solutions have found it difficult to replicate the success that we at ecoSPIRITS have been able to achieve. As such, the opportunity is immense, especially with the forecasted 90 billion+ bottles to be produced in the industry by 2025, putting the sheer industry size of packaging alone at over $100 billion per year.
Nonetheless, the flip side of growth is the complexity of integrating into a well-established supply chain solution for brands, distributors and wholesalers who have been operating in a fixed manner for decades. Having said that, we definitely see a very strong push for the brands, bars, and consumers to become more sustainable and we expect this momentum to only increase going forward.
Understanding the ecoSPIRITS product ecosystem
At ecoSPIRITS, our mission is simple yet audacious; to eliminate single-use glass in the wine and spirits industry. As I mentioned before, our journey started back in 2018 when we developed the initial technology of the ecoPLANT and ecoTOTE. The ecoPLANT is a containerised, semi-automated bottling facility that allows beverages to be filled into the ecoTOTEs. The ecoTOTE is a 4.5-litre glass container reinforcing a chassis and covered with plastic moulding to allow easy storage, transportation and handling of liquids. Basically, the ecoTOTE replaces a case of six 750ml bottles and can last about 100 to 150 cycles, which eliminates up to a thousand bottles of wine and spirits in its lifetime. We are currently in the second generation of the ecoPLANT, which can handle up to half a million bottles of refills per year.
Globally, there are 39 plants in their second generation, which are capable of processing both wine and spirits. With increased R&D on the third generation of the plant, it will be fully automated and can handle up to almost three million 750ml bottle refills. Our ecoTOTEs are in their third generation of design, which has dramatically reduced weight and improved ergonomics for easy transportation, specifically designed to carry both wine and spirits. What we are most excited about is Smart Pour 2.0 – our latest launch of intelligent pouring devices, which basically allows venues to dispense wine and spirits directly into a glass, a cocktail shaker or a refill of a full 750ml bottle for reuse. In addition, we also recently launched the smart kiosk retail solution, which runs on the back of the same technology as a smart pole, but allows consumers to refill and reuse their choice of spirits and wine. These new technologies are fully IoT-enabled through our Circular One software backbone, which we have piloted some time back in Bali, Jakarta and 38 other venues.
By-products of eliminating single-use glass
Essentially, the technology at ecoSPIRITS offers stakeholders an economic unit advantage capable of reducing 60% to 90% of their carbon footprint across the supply chain. By eliminating the packaging and associated waste, we are also helping our alcohol producers reduce 90% of their packaging costs for the importers, distributors and wholesalers because they transport liquid in bulk rather than single-use glass bottles. This way, we are able to save about 30% to 50% on their freight and insurance costs, which would further reduce the price of delivering alcohol to the outlet by 5% to 20%. Hence, the entire value chain benefits from shifting to this circular solution rather than sticking to the original single-use glass solution.
Extending the proprietary technology to other industries
We have been approached by companies in the consumer sector to look at a similar solution for fast-moving consumer goods, like cooking oil and detergent. Having said that, I think we are still far away from perfecting the technology in the wine and spirits industry. Hence, I think the vision for us in the next couple of years will be to focus on perfecting our craft in the wine and spirits industry, bearing in mind that there is inevitably a use case which can be extended across multiple industries once we have conducted the relevant pilot studies and amassed the necessary R&D capabilities for that.
Integration with brands, distribution channels and hospitality chains
The core of our solution lies in the fact that the consumer experience should not change and the brand identity must be preserved. This is why we have worked very conscientiously with the alcohol brands over the last couple of years, striving to onboard brand managers and brand companies into this format. We ensure that customers at the bars are presented with the exact same bottle of spirit or wine that they are used to seeing. With our technology, these refill bottles have the same standards of hygiene and authentication that would allow customers to enjoy their favourite drink in a sustainable manner.
Going a step further, our recent partnership with Pernod Ricard – the world’s second-largest spirits and wine company – to pilot circular spirits in Hong Kong and Singapore demonstrates that brands are willing to move into sustainable low-carbon spirits via establishing a co-branded space. With this first-of-its-kind collaboration for a global brand portfolio, we will witness Pernod Ricard’s iconic brands, such as Absolut Vodka, Beefeater Gin and Havana Club Rum, becoming an integral part of ecoSPIRITS’ innovative closed-loop packaging technology. We have a similar partnership with Diageo’s prestigious brands, namely Smirnoff and Captain Morgan Rum, and are currently in the process of rolling out collaborations with multiple brands globally. At the present moment, we have hundreds of brands on board with a waitlist of over 500 brands, signalling the validation of our business model, as well as the ability to preserve the customer experience and the brand identity.
All in all, our program comprises three components. The first part is the brands, which are the producers of spirits and wine. The second part is the channel distributors who come onto the platform to distribute our products. Last but not least, we have partners in the form of major hospitality chains and outlets, such as Rosewood Hotel Group, ACO Group and Hilton Worldwide. These are our global counterparts who have adopted us as a strategic partner in the journey to achieve their sustainability goals. In fact, one of their best-selling low-carbon cocktails in London is actually on the ecoSPIRITS platform. With the push from brands to become more sustainable and conscious in managing their waste via end outlets, hotels and restaurants, it has certainly been a key contributor to our success, to say the least.
Are we moving quickly enough?
In my opinion, there is a lot to be desired. First and foremost, there needs to be a collective push from policymakers and a collective pull from consumers to create a sustainable world in the future. Having said that, I definitely feel that the momentum is picking up. If we look back at the last couple of years, sustainability was just a good conversation over dinner, but today I see companies implementing sustainability as a core concept of their products and services to customers and businesses. Hence, it has indeed gone from a boardroom conversation to the grassroots level, which is necessary to ignite a change in the world and achieve the sustainability goals that everyone has now set out to achieve in order to make the planet more sustainable for future generations. In fact, we can already see that many retailers and producers are trying out solutions, such as the push to eliminate single-use plastic packaging at supermarkets and other things like straws, which have long been embraced by consumers. Therefore, the adoption has definitely taken place, and if the right policy push is accorded, I feel that by 2030 or 2035, we will be well on track to create a more sustainable world for the future.
The balance of the three levers: consumers, businesses, government
From the government’s standpoint, there needs to be a focus on prioritising sustainability. In the case of South Asia, we were able to roll out our solution rapidly across multiple markets because the governments have shifted into high gear by approving regulations readily to facilitate the swift implementation of our solution in the region. In fact, I have witnessed this trend globally, both in the western and eastern worlds. On the business side, it has gone from board-level discussions to implementing sustainability at every level of the business, where corporates are embracing sustainability not just as a governance aspect but as a fundamental way of doing business. Having said that, there is much more to be desired and done.
On the contrary, I do feel that things are moving a tad slower on the consumer side. It is no doubt that consumers have moved away from single-use plastic to a large extent, but in terms of reusing, repairing or remanufacturing, there is always going to be that question of cost versus convenience. In that regard, our solution addresses this dilemma for consumers, making it cheaper for them to refill what will eventually be required. While we can push and impose tax on consumers for not recycling or reusing their bottles and plastic just like in Europe, it naturally makes sense for consumers to adopt sustainability as a part of daily living and hence be drawn to lower-cost alternatives whenever they consider the cost element attached to it.
Striking a balance between cost and convenience
If a sustainable solution is not more economical or not equally priced as compared to its other traditional counterparts, we are likely to face resistance when it comes to consumer adoption. Notwithstanding the pool of conscious customers in the world, the population at large always goes by convenience and cost. Thus, for sustainability to happen at scale, we need mass adoption, which again comes from the push and pull theory. Having said that, I believe as innovative technology kicks in over time, we will be able to lower the cost of providing sustainable solutions, which, for example, is already happening in the energy sector.
Keeping things going when the going gets tough
For me, it is all about focusing and breaking your problems into smaller parts. There are always going to be a million problems to solve, but prioritising and attacking the ones that really matter is what differentiates a good corporate or individual in terms of surviving and thriving through tough times. I always believe that doing the small things and doing them consistently can bring about the change and perfection that we desire to achieve. Therefore, it is about doubling down to focus on things that matter and cutting out the noise in relation to the things that are associated with businesses or personal issues happening inevitably over time.
One piece of advice to his younger self
The one piece of advice I would give to my younger self is to believe in yourself and take risks. We often fail to embark on a journey because we think it is too tough or we fear failure and that applies not only to the younger generation but also to older people as well. I do believe that the journey is a reward and everyone should embark on it, face the failures, as well as trust themselves in getting to where they desire to be. This is also something I had to learn over my life. My career has always been very steady with large corporations, so embarking on this sustainability journey is audacious because trying to change the world was indeed scary at the beginning. However, as I ventured further and became more motivated by what we are trying to do as a company along with like-minded people all over the world, I would only look back and say that I should have done this way earlier.
Living wide awake
To be honest, I would say that it is all about being conscious from within and towards the environment around us. We are often preoccupied with the past and worry about what the future holds, to the extent that we forget to be present. By living in the moment and making the small changes that we ought to on a daily basis, we can truly live wide awake and strive to be sustainable for the future.
FEATURED IMAGE: via Pexels | IMAGE DESCRIPTION: A wide front view of assorted liquor bottles on three shelves.
