Dive Brief:

• PepsiCo will start using paperboard packaging instead of plastic rings on beverage multipacks in the U.S. and Canada, saying in a Thursday announcement that it is “the first beverage company to commit to a North American roll out” of this approach. 
• The paperboard wraps and clips are made from an unspecified amount of recycled material and are recyclable. The change affects brands including Pepsi, Pepsi Zero, MTN DEW, Starry and Gatorade as well as 7Up in Canada.
• U.S. markets will begin to see the new packaging later this year in a “phased, regional approach,” PepsiCo said, noting the shift has already started in Canada.

Dive Insight:

PepsiCo has multiple 2030 plastic reduction goals, but its latest sustainability report showed it has made limited progress on them. This latest announcement is expected to “eliminate millions of pounds of plastics” from the company’s packaging.

The beverage giant cited business growth and limited access to recycled content as reasons why its use of virgin plastic increased in 2022 instead of decreasing. The company did see the amount of packaging that is “recyclable, compostable, biodegradable or reusable” increase to 88%, toward a goal of 100% by 2025. Plastic rings and multipack wraps are typically not permitted in residential recycling streams, meaning that a shift to paperboard could advance its progress on this goal. 

PepsiCo did not respond to a request for comment prior to publication about which packaging supplier it is working with on the new paperboard design.

The company previously worked with WestRock to convert from plastic to fiber-based packaging for its Frito-Lay 18-count snack packs, with multipacks being an area which is seen as a fast-growing part of its portfolio.

WestRock is among multiple players in the fiber space that see the potential to expand market share via plastic replacement. In its latest earnings report, the company said it is targeting $400 million in revenue from plastic replacement in FY23 (up from a prior estimate in Q1) and could reach $700 million in revenue by FY25. Its clients in this area include Molson Coors, which intends to replace plastic rings on all of its beer packs in North America by the end of 2025.

Graphic Packaging is also growing sales of its paperboard can clip. According to Beverage Daily, major brands such as AB InBev and Coca-Cola have adopted this product in Europe and other countries since it launched in 2019.

Last year, Graphic announced that bottler Liberty Coca-Cola would begin using the product for beverages distributed across markets in parts of Delaware, Connecticut, New York, New Jersey and Pennsylvania. In its latest earnings report, Graphic also previewed that paperboard clips for PET bottle packs are parts of its “short-term development window.”