“The Ocean Plastic Innovation Challenge” is a global competition organized by National Geographic. Launched in February 2019, and lasting for one year, the objective is to develop solutions to deal with the generation of plastic waste. The competition is divided into three major themed tracks, with prizes totaling $500 per track as well as opportunities to receive investments. One of the themes concerns the circular economy, with the aim of developing business models and scalable technological solutions with a focus on reducing the environmental impact generated by plastic packaging.
The competition is in the final stretch, with 10 finalists from 5 countries in this thematic track, only 1 from Latin America: Algramo, a Chilean company created in 2012 by José Manuel Moller and Salvador Achondo. The idea for the startup came about when they realized how poorer families, who live on the outskirts of the city, end up paying excessive prices for essential goods because they can only buy small quantities at a time. According to the company, products in smaller packaging can cost from 30% to 50% more compared to larger packaging.
Algramo sells food products (rice, beans, sugar, etc.) and hygiene products (powder and liquid detergents) in bulk format through vending machines: to make the purchase, simply place the package in the indicated location, select the product desired, insert the coins and press a button. Customers buy the packaging, which is reusable, but when it reaches the end of its life cycle, it can be exchanged for discounts or new packaging, and the old packaging is sent for recycling. On the consumer side, the desired quantity is purchased without loss of scale in the price per gram.
Figures 1: Algramo vending machine. Source: Algramo
Thus, the startup operates not only in an environmental aspect, but also socially: it encourages the reuse of plastic packaging and at the same time provides the possibility for families with lower purchasing power to buy products at the same price per gram, even in smaller quantities. In 2015, Algramo was present in 350 local markets in Santiago, having scaled the operation to 2 thousand stores in October 2019. It is estimated that the company reached 350 thousand consumers.
In addition to vending machines, the company started, in early 2019, to provide the service in mobile units (basically vending machines mounted on top of electric tricycles). In May, it started a partnership with Unilever to distribute OMO and Quix products in this mobile format, and nine more vehicles should be launched by the end of 2019. The vehicles circulate through neighborhoods with the proper equipment to fill reusable bottles. According to the company, OMO sold in tricycles is about 30% cheaper than on supermarket shelves.
The next steps for Algramo include a partnership with Nestlé, for the distribution of pet food products (Purina Dog Chow and Cat Chow), in addition to expanding operations to the US until the second half of 2020.
References:
Recycling Today – Sustainability alert: Finalists advance in Ocean Plastic Innovation Challenge. https://www.recyclingtoday.com/article/finalists-advance-national-geographic-ocean-plastic-innovation-challenge/
Context – Chilean sustainability startup Algramo competes in Ocean Plastic Innovation Challenge. https://www.contxto.com/en/chile/chilean-sustainability-startup-algramo-competes-in-ocean-plastic-innovation-challenge/
The Guardian – How one Chilean startup is bringing an end to single-use plastics. https://www.theguardian.com/business-call-to-action-partnerzone/2018/jul/04/how-one-chilean-startup-is-bringing-an-end-to-single-use-plastics
Sustainable Brands – Chilean Startup Eliminating Packaging Waste, 'Poverty Tax' in Latin American Product Market. https://sustainablebrands.com/read/defining-the-next-economy/chilean-startup-eliminating-packaging-waste-poverty-tax-in-latin-american-product-market
America Retail – Chile: Algramo introduces new intelligent, sustainable and reusable packaging. https://www.america-retail.com/chile/chile-algramo-presenta-nuevos-envases-inteligentes-reutilizables-y-sustentables/
Thatiana Nomi
5 years of experience in consulting projects in Logistics and Supply Chain. Worked on logistics network optimization projects, service cost, logistics master plan, inventory policy definition, sales forecast, S&OP (Sales and Operations Planning) and transportation planning and management.
