Mega Collaboration Announced by Leading Brand Owners- What Does it Mean?

Posted on 7/23/2012 12:58:25 PM By Jeff Timm

Last December Coca-Cola took a bold and innovative step when they announced a consortium of development partners to create, manufacture and supply raw material for Coke’s next generation bio-based PET 100% bio PlantBottle®.  Coke’s PlantBottle® is 30% bio-based today, the rest made up of traditional recycled petrochemical based PET (Polyethylene terephthalate).  That announcement opened a window for others to see how a brand owner with clout can form a partnership with not only one developmental partner but three!  While each of the three partners brings slightly different technologies to the effort, the amazing take-away from this is that common sense dictates only one technology will survive.  Thus, from the start the three companies-Virent (bio-based PTA/paraxylene using proprietary technology), Gevo (bio-based renewable para-xylene from plant based isobutanol) and Avantium (2,5-Furandicarboxylic acid (FDCA)  building block for PEF polyethylene furanoate polymers) are competing with each other within the framework of the development agreement.  Sounds like an ancient Roman gladiator fight.

This announcement, as already noted, brings collaboration to new levels but Coca-Cola seems to have outdone itself with the creation of yet another collaborative effort of even more massive proportions.  They have accomplished this by moving down the next step in the value chain by adding other household name brand owners to the mix to drive markets for bio-based PET/PEF.  Coke had previously licensed Heinz to join in the PlantBottle® parade but now has Ford Motor, Nike, and Proctor & Gamble in a partnership agreement designed to integrate 100% plant-based PET/PEF into their product lines at commercial scale. 

This collaboration’s rationale is obvious for Coca-Cola and the others. Coca-Cola’s objective is to eventually convert all petroleum-based PET products to plant-based alternatives.  PET bottles represent 31% of all PET usage (fibers is number 1 at 62%) in the global PET industry, a 54 million metric ton industry in 2011 according to CMAI (Chemical Marketing Association. Inc.).  Another staggering statistic is that PET bottles make up 52% of the total packaging within Coca-Cola.  Heinz and P&G have similar goals.  Ford has been using bio-based polymer technology for a number of years and has strong interest in using the bio-based offering for all sorts of PET fabric applications in seats, carpets and side door panels.  One must assume that Nike has similar fabric replacement strategies.

What does all this collaborative effort mean?  It has a number of far- reaching, game-changing outcomes: 

  • If you’re not in the “inner circle” will you be permitted to play?  Companies are always trying to limit their number of strategic vendors.  This gives an easy excuse to keep you out.
  • The owner of the effort is the brand owner.  This is a huge shift in the way development is done in the chemical industry. The chemical company, i.e. owner of the technology, has traditionally been the driver.  By being this intimately involved the brand owner gets to understand processes and costs and thus can affect raw material process choices along the way and control pricing outcomes.  Hopefully the end result will not be one based on cost alone at the sacrifice of the best technology.
  • This effort effectively squashes any other technology route to bio-based PET development.  If you are not Gevo, Virent or Avantium you have little hope of finding a market for your technology until results of this collaborative effort shake out.
  • This sets the bar pretty high for future collaborative efforts.  Will this effort be a road map for future collaborative efforts involving big corporate entities that have the clout and developmental dollars to become involved in something of this scale or is a one-off? 

Regardless of where this effort ends up the message is clear.  Collaboration is the future.  It is collaboration along the whole value chain that is occurring here-raw materials to end-use applications with brand owner involvement.  The model is sound-less time to market, more focus/limited distractions, probably lower cost and more eyes on the prize of a successful new disruptive technology.

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