Coca-Cola Plans To Have 100% Plant-Based Bottle In Few Years
December 15 2011 - 12:22PM
Dow Jones News
Coca-Cola Co. (KO) expects to have a plastic bottle made
entirely from plant-based materials ready for commercial use in the
next few years as it looks to reduce its reliance on petroleum used
in traditional plastic bottles.
Coca-Cola on Thursday disclosed multi-million-dollar agreements
with three biotechnology companies--Virent Inc., Gevo Inc. (GEVO)
and Avantium--to develop a new version of its PlantBottle, which is
currently made with up to 30% of plant-based materials. Specific
terms of the deal weren't disclosed.
Coca-Cola believes it can have the plant-based bottle developed
by 2015 so that, by 2020, all of Coca-Cola's plastic bottles can be
using the new material, said Vice President of Commercial Product
Supply Rick Frazier.
Coca-Cola's chief rival, PepsiCo Inc. (PEP), has already
developed a plastic bottle made entirely from plant-based materials
and plans to start producing the bottle in tests next year before
determining whether to move into full-scale commercialization.
Coca-Cola has distributed more than 10 billion PlantBottles
worldwide since 2009. The bottle costs more to produce than the
petroleum-based bottles primarily because it is produced in much
smaller quantities than the traditional plastic ones. Coca-Cola
hopes that gap will eventually narrow as PlantBottle production
become more efficient.
"As we improve the supply chain, we will continue to reduce the
premium," Frazier said at a press conference in New York. He added
that the goals for the program are to make a bottle that is derived
from sustainable materials and then make it competitively
priced.
Coca-Cola hasn't passed on the higher cost for the PlantBottle
by raising prices for consumers, Frazier said. The bottle is used
on all Dasani bottled-water products in the U.S. Coca-Cola has also
collaborated with H.J. Heinz Co. (HNZ) on ketchup bottles that use
the PlantBottle.
The new bottle can potentially help Coca-Cola to achieve
more-predictable costs for plastic bottles. The plastic material
currently used in bottles is difficult to hedge, leaving the
company susceptible to the swings in costs that are typically tied
to volatile crude-oil prices. A 100% plant-based bottle would rely
on various feedstocks for production, and the cost won't be linked
to one material.
"It gives us choice that we didn't have," Frazier said.
Coca-Cola shares were up 1.3% in recent trading to $67.15. Gevo,
one of the publicly held partners with a market cap of around $180
million, saw shares jump 23.6% to $6.97 upon word of the
partnership.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;
paul.ziobro@dowjones.com
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