What is it? Based in Chile, Algramo offers a smart, refill packaging system that enables users to “pay for the product, not the packaging” (Ellen MacArthur Foundation, 2022). Users can order what they need and pay via the Algramo app; then they can refill their containers either from an electric tricycle at their door or at an in-store vending machine (World Economic Forum, 2021). The containers are tagged with radio-frequency identification (RFID) and internet of things (IoT) technology to deliver products ‘by the gram’ to customers’ (Algramo, 2022a). Currently, Algramo is working closely with Walmart, Unilever, Nestlé’s Purina and other partners to expand their operations. Beyond Chile, the circular packaging system is also available in Columbia, the UK and the US (Ciravegna, 2022).
Why is this important? Since the 1950s, 8.3 billion metric tons of plastics have been produced, of which half of that in the past 15 years alone (NRDC, 2021). If this trend continues, by 2030, the emissions from plastics could reach 1.34 gigatons per year—equivalent to the emissions released by more than 295 new 500-megawatt coal-fired power plants (CIEL, 2019). There is also a worrying shift towards single-use plastic products, items that are meant to be thrown away after a single short use. According to UNEP (2022), an estimated 85 per cent of plastics produced end up in landfills. Additionally, around 98 per cent of these single-use plastic products are produced from fossil fuel, the emissions of which are forecast to grow to 19 per cent of the global carbon budget by 2040 (UNEP, 2022).
Main resource strategy: Slowing and closing loops with refillable packaging that minimises plastic waste
Business model aspects:
- Value Proposition: Refillable packaging system that allows users to buy food and other goods from vending machines in small quantities at wholesale price.
- Value Creation & Delivery: Customers can buy refills of food and everyday household goods (e.g. detergent) from on-the-go or retail-based vending machines at an affordable wholesale price. Customers can save up to 30% when using this system (Algramo, 2022a). More popular items are sold at the refill stations through Algramo’s close collaboration with retail chains such as Walmart and Aldi (Ellen MacArthur Foundation, 2022).
- Value Capture: In the UK, the Algramo Smart Packaging for detergent costs £0.20 and £1.49 for Bio Concentrated Laundry Detergent 980ml. Compared to buying the same item off the shelf, this means savings of at least 10% (Algramo, 2022b).
Business model experimentation practices: The idea of Algramo is to create a vending machine for bulk products with affordable wholesale prices but providing only the exact amount of product and client needed. The first prototype was installed in the almacenes de barrio – district shops in Santiago and only sold washing power and food staples such as lentils and beans (Ciravegna, 2022).
Sustainability outcomes: Since its launch in 2013, Algromo’s refillable package system has saved 97,539 kg of plastic leading to an avoidance of 362,845 kg of CO2 (Algramo, 2022a).
Sources:
Algramo (2022a). Algramo. Accessed 29th August 2022 at: https://uk.algramo.com/
Algramo (2022b). FAQ’s. Accessed 26th August 2022 at: https://algramo.com/en/faqs/
CIEL. (2019). Plastic & Climate: The Hidden Costs of a Plastic Planet. Accessed 12 April 2021 at: https://www.ciel.org/plasticandclimate/
Ellen MacArthur Foundation (2022). Refill solutions to keep packaging out of the environment: Algramo. Accessed on 25th August 2022 at: https://ellenmacarthurfoundation.org/circular-examples/refill-solutions-to-keep-packaging-out-of-the-environment-algramo
Ciravegna, E. (2022). The story of Algromo. Accessed 29 August 2022 at: https://fondazionecartaeticapackaging.org/storie-di-etica/the-story-of-algramo/?lang=en
NRDC (Natural Resources Defense Council) (2021). Single-Use Plastics 101. Accessed 11 May 2021 at: https://www.nrdc.org/stories/single-use-plastics-101
UNEP (2022). The world is choking on plastics. Accessed on 29th August 2022 at: https://www.unep.org/interactives/beat-plastic-pollution/
World Economic Forum (2021). This Chilean start-up is revolutionizing reusable packaging. Accessed on 25th August 2022 at: https://www.weforum.org/agenda/2021/04/algramo-reusable-smart-packaging/
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About project Circular X
Project Circular X is about ‘Experimentation with Circular Service Business Models’. It is an ambitious research project funded by the European Research Council (ERC) which supports top researchers from anywhere in the world. Project CIRCULAR X runs from 2020-2025. The project is led by Principal Investigator (PI) Prof Dr Nancy Bocken, who is joined by a multidisciplinary team of researchers at Maastricht Sustainability Institute (MSI), Maastricht School of Business and Economics, Maastricht University. The project cooperates with businesses who want to innovate towards the circular economy.
Project Circular X addresses a new and urgent issue: experimentation with circular service business models (CSBMs). Examples of such new business models include companies shifting from selling products to selling services and introducing lifelong warrantees to extend product lifetimes. However, CSBMs are far from mainstream and research focused on experimentation is little understood. The research aims to conduct interdisciplinary research with 4 objectives:
- Advancing understanding of CSBMs; their emergence and impacts
- Advancing knowledge on CSBM experimentation
- Developing CSBM experimentation tools
- Designing and deploying CSBM experimentation labs
Funding source
This project has received funding from the European Research Council (ERC) under the European Union’s Horizon 2020 research and innovation programme, grant agreement No. 850159.
Using of this information
When you refer to this case, please use the following source:
Circular X. (2022) Case study: Algramo - Circular refill packaging system. Accessed from www.circularx.eu
