In business terms, 2019 was a difficult year for Krones and many other companies. The company’s comparatively poorer results have been attributed i.a. to the issue around plastics. How important is PET to Krones?
Klenk: If we had made a different decision at the end of the 1990s, i.e. to exclude PET machines from our packaging portfolio, we would certainly not be where we are today. It was indisputably one of the most important business decisions Krones AG has taken.
From a technical perspective, PET is a highly innovative technology that was, and still is, primarily costdriven. The carbon footprint came into focus around 20 years ago as a key indicator for sustainability. Is the carbon footprint still as crucial today?
Klenk: The development away from the thick, heavy, sometimes complex beverage packaging made from PET in the early days, to today’s lightweight packaging has also led, indirectly so to speak, to sustainability. Sustainability was not originally the driving force but a result which, of course, has great significance today. And it is also true that although CO2 emissions are the subject of widespread debate in society as a whole, the various types of packaging are not in the public eye. Still, that is just one aspect. For our customers, the debate is very important and goes far beyond PET packaging. The focus is currently very much on secondary packaging such as shrink wrap, and on how to avoid such packaging. As a plant and machinery supplier, we are constantly striving to optimise the carbon footprint in light of the respective requirements.
Has this improved the image of plastic packaging in society?
Klenk: I realise that CO2 emissions are at the top of the agenda for our customers and many others besides. The retail trade, e.g. the big supermarket chains, is also taking an interest. It influences their purchasing decisions. Our customers commission independent institutes to analyse CO2 calculations, to put them under the microscope.
''We choose this sustainable packaging for our product. If you choose our product, you will also contribute to cutting CO2 emissions.'' - Christoph Klenk
The key goal here is to raise awareness for the topic among their customers, the end consumers. Their motto is: “We choose this sustainable packaging for our product. If you choose our product, you will also contribute to cutting CO2 emissions.” We also note that the debate is becoming more and more objective, in part thanks to such measures. It all comes down to knowledge about the facts. There is still too much “opinion” among the public, and still too little “knowledge”.
The major brands have all contributed to the success of the PET bottle, first by calling for a reduction in production costs, and then by moving to become more sustainable. Do they still believe in the PET bottle or do bottling companies not care whether it is PET, glass or can? Are filling quantity their main concern?
Klenk: Talking to our customers has shown that, on the whole, the industry treats the PET/sustainability/environmental protection complex with respect and reflection. The question everyone is asking is: How do we increase acceptance among consumers of PET as a packaging material? Particularly because it is just such an excellent material.
With around 17,000 employees worldwide, it may not be an exact statistical match, but the Krones Group reflects wider society. What is acceptance of PET like within the Group and how do you handle education internally?
Klenk: We have found that far more information is needed. This can also be seen on our internal discussion forums where opinions vary widely. It is important to us to transform opinion into knowledge through information and education. With this goal in mind, we use internal channels such as the intranet, employee magazine and our internal social media platform. The feedback has been very positive, our employees are interested and pass on the facts at home. Because the same debates are also raging in families and among friends. We support this and are glad if we can help achieve clarity.
Are there limits to acceptance?
Klenk: Of course. Litter, ocean litter can be traced back to plastic packaging to a great extent. It is entirely understandable that plastic packaging is subject to criticism. But the problem is not actually the packaging itself. The issue is collecting, sorting and reusing it. It comes down to the cycle. In my view, the future success of the PET bottle lies in separating the flow of used PET from other plastics and creating a cycle. This is the only way for PET to be seen positively across society. As I said, it’s an excellent material in terms of its carbon footprint.
The widespread feeling is that “plastic is bad”. Let’s talk about the end of the chain: Disposal.
Klenk: The end of the chain is where a real effort is needed if we want to persuade people. This is best achieved through positive results in disposal. Improved disposal results are necessary not just to ensure PET packaging survives, but also as a highly effective way to help improve the health of our planet. Proper waste disposal and reduced pollution are musts. From the Supervisory Board down to our various departments, we have discussed the figures: Worldwide, 20% of plastics are not disposed of in a regulated way. Of this, 3% ends up in the oceans. It’s a gigantic quantity. If we do not solve the disposal problem, it won’t just be PET that comes under pressure. At the end of the day, it is not a question of whether plastic is good or bad, but that plastic waste is generally handled badly. In our opinion, PET only has a long-term future if the disposal and return systems function properly around the globe to ensure it stops ending up in the oceans. These are the most compelling arguments.
So persuading consumers is just one small step? How can Krones contribute?
Klenk: Of course, we are always asking ourselves: What do consumers think? What do they know? And what role can Krones play? Our customers, the bottlers, are positioned between us, as technology suppliers, and the consumers. The fact is: People with technical knowledge think differently about PET than those from other backgrounds. And we cannot ever expect consumers to have our level of expert knowledge. What we can do is make a contribution to clarifying the facts. In a neutral way, not for or against.
Do you see yourself as a lobbyist for PET? You also serve customers who use glass and cans as well as PET in their product range.
Klenk: No question, PET has many advantages. But of course we also provide technology for glass and cans. I recently heard on the capital market that “Krones only does PET”. That’s an interesting perception of us.
Can the mechanical and plant engineering industry itself help educate the public? Is that something you can do?
Klenk: The fact is we are pretty far removed from consumers. Our job is primarily one of technical optimisation, which can also pay an important contribution: We can continue to work on lightweighting, avoiding labels, developing tethered caps, etc. The aim is to reduce the volume of material, the weight and thus to reduce the amount of waste
Are the issues around plastic more a trend or a hype? How are the issues viewed in different parts of the world? Where do you expect new regulations and what sort?
Klenk: Taking all of the information we have about the discussions, regulations and optimisation going into plastic around the world, what we observe is that quite a lot is happening in Europe. North America is also active. Otherwise, things are mostly quiet. Indeed, the impression we get is that our international customers bring the issue to regional markets more than the consumers themselves. China, for example, is more open to PET. Europe is the most critical market, despite the fact that Europe has the best return systems and disposal and sorting works well.
So the issue is with the disposal companies, the recycling industry? Disposal companies are almost entirely absent from the public debate, among consumers, and also among NGOs.
Klenk: It is quite true that the circular economy is not the main focus of the discussion, nor is consumers’ own use of the product.
Brands’ attitude towards recycled materials has changed in recent years.
Klenk: Yes, the use of recycled materials in bottle production is a growing trend among brands. The current sustainability targets are full of them and rates are rising. And this is not just the case in our value chain either. Unfortunately there’s a key stumbling block: Many customers ask us for support to procure recycled materials. But there is a shortage of supply and prices are climbing.
That brings us to Krones’ recycling activities. What can you tell us about them?
Klenk: We took our first steps in recycling in 1999. The decision to enter the waste disposal industry took us into a completely new sector with considerable challenges. So far we have sold about 20 plants. Demand has picked up recently.
For example, we are currently building a whole plant in California, including delivery of a lot of equipment. We are particularly good at washing PET flakes, and we are continuing to expand this. And we work with Stadler Anlagenbau GmbH in the field of sorting.
You mentioned selling about 20 recycling plants so far. Could or indeed should you have done even better?
Klenk: At Krones we are never satisfied. There are companies in the recycling technology sector who cover the entire, broad range of plastics recycling, whereas we have so far specialised exclusively in PET. And we’ve now added polyolefins. In this respect we are expanding our recycling activities.
Recycling technology comprises both the plant and the process. It also includes the products themselves, i.e. PET packaging containing a proportion of recycled material.
Klenk: Yes, exactly. Our in-house knowhow now extends to both areas: Plant engineering and the optimisation of bottle quality with recycled content. It makes a big difference whether you use a bottle with 25, 50 or 100% recycled material or whether you only use new material. It is very important to us for this connection to be properly understood. This is another reason why we decided to acquire MHT. It was not primarily a matter of including injection moulding technology in our product and service portfolio, but of understanding what happens in the injection moulding machine. At present, we are being held back by the inadequate return flows. The same applies to our customers: The return flow of recycling material just isn’t sufficient. It is simply not available in the quantities and quality required to recycle efficiently and economically.
Are you perceived as a complete supplier of PET recycling plants?
Klenk: Demand for recycling is skyrocketing at the moment and we can hardly keep up. Just in the last few weeks we have received two big orders. The market is going through enormous changes right now. Indonesia, for example, has a collection rate of 80%. They will need at least 40 recycling plants in the short term. Worldwide, there is talk of 500 additional plants being needed in the coming years. It would be great to get a slice of that pie.
Developments in recycling technology are picking up speed. And they aren’t coming purely from material, chemical or biological recycling, but also via new technologies. One example would be the direct route from flakes to preforms, as Sipa presented using a rotary press. What is Krones doing in this field?
Klenk: We are working on a range of topics. Systems integrated into the rotary process are interesting for preform production. Five or six years ago we developed a machine based on rotation and we have many patents for it. In the end, we decided not to pursue the development for now, as we reached the conclusion that it did not yet make economic sense. Sure, there are advantages, but in our opinion they were not strong enough.
How do you assess the potential of the flakes-to-preforms system in terms of sustainability?
Klenk: The system certainly has potential. In principle, it is a very positive concept for reducing the carbon footprint. It cuts steps out of the process, thus saving energy. That has a positive effect on CO2 emissions.
You mentioned eliminating labels. What is the alternative?
Klenk: Yes, you can eliminate labels by printing straight onto the bottles themselves. Even though direct digital printing is still in its infancy, it is a technology worth watching for the future. There are also recycling advantages to bottles not featuring labels made from another material as you no longer have to separate them. And there are many new possibilities for bottle design when you no longer need a cylindrical component to stick a label on.
''Supply chains cannot just be switched to glass or cans at short notice on a very large international scale. And there are no alternatives in sight. The current debate, including the youth initiative – Fridays for Future – must be taken seriously, they raise awareness.'' - Christoph Klenk
Especially in the field of cosmetics or other exclusive packaging this new printing technology offers many interesting applications. Label-free direct printing is also great for small batches, for example to print ingredients in accordance with regional regulations. And all this without having to interrupt or re-set the machine. If we assume the use of recyclable ink, there are enormous advantages.
The end of PET by 2025. Do you think that’s conceivable?
Klenk: It is a bold statement. But it is inconceivable from my perspective. Firstly, the emotionally charged debate is centred on Europe. The situation is different elsewhere in the world. Kenya, for example, once banned plastics for a short time but the supermarkets soon had empty shelves and they reversed the ban. Supply chains cannot just be switched to glass or cans at short notice on a very large international scale. And there are no alternatives in sight. The current debate, including the youth initiative – Fridays for Future – must be taken seriously, they raise awareness. Southeast Asia has already begun to rethink its approach and is implementing a circular concept. If we take a path of consistent collection, sorting and recycling, then PET has a bright future worldwide.
Should we expect a ground-breaking alternative to PET technology in the short or medium term?
Klenk: I do not see any concrete, revolutionary developments in the industry yet. We follow the startup scene and move quickly when an interesting new development appears. We also focus on material developments. Bottles made of paper and renewable raw materials are currently being presented. But there are still many unanswered questions. Personally, I think the next big environmental debate will centre on paper replacing PET. Our systems are technically able to handle and fill paper bottles. But to survive in the market, they need to also meet other requirements, in terms of transport, storage, stacking, etc.
How will Krones be positioned in 2025?
Klenk: Krones remains apolitical. We see the social challenges and serve the beverage industry with technologies for glass, cans and PET. That includes the continuous development of sustainable beverage packaging and the closed-loop plastic cycle. In addition, the potential of glass and cans is still on our innovation roadmap. This enables us to focus consistently on our core business. And that’s exactly what our customers expect.