SA Plastics Pact & the V&A Waterfront
The SA Plastics Pact secretariat team, in partnership with the Victoria & Alfred Waterfront (V&A Waterfront), decided to conduct a seed project to pilot reusable on-the-go beverage cups at the Oranjezicht City Farm (OZCF) Market to test the efficacy of replacing single-use packaging with reusable options. The pilot project was conducted during the 2022/23 financial year.
The OZCF Market runs three days a week, on Wednesday, Saturday and Sunday, and experiences high foot traffic, with anywhere between 2000 to 8000 visitors attending the market on any given day. As part of this pilot project, 4000 beer cups and 4000 coffee cups were purchased at the start of the project with the intention to trial reuse options for both coffee and beer purchases at the market.
A consultative process was used to develop the reuse model prior to implementing the pilot project, however, there were still many unforeseen changes from the various stakeholders which made this a dynamic project to coordinate. Certain aspects, like the loss rates and enthusiasm of customers were unknown before the project and required the project to be adaptive during implementation.
The initial reuse model (see “Coffee cup reuse model” in table 1) required the customer to pay a deposit and collect the cup separately at a kiosk at the entrance to the market before taking the cup with them to get their beverage of choice. The customer would receive a R5.00 discount on their beverages and a full refund of the deposit money when the cup was returned.
After poor customer engagement in the initial two-week roll-out, particularly on the beer cups, it was decided to split the delivery model. The model remained unchanged for coffee cups but was altered for beer cups. With buy-in from the bar, beer cups would be placed behind the bar, replacing single-use cups. Beer would be served in reusable cups at no extra charge (no deposit). This was understood to be the most convenient option for customers and vendors.
Table 1: Applied reuse models during the pilot project at the OZCF Market
|Method / Criteria
|Name & location
|Coffee cup reuse model
|Deposit-return system from cup dispenser
|Deposit money goes to reuse project. Reuse project refunds customers when they return cups
|Convenient to vendors. Central control to reuse project
|Inconvenient to customers who need to make 2 extra stops on their customer journey to purchase a beverage
|Beer cup reuse model
|Honesty system from vendor kiosk
|Vendors pay for “cups as a service” for the same price as they would pay for single use cups. Customers do not pay a deposit but are requested not to take the cups home
|Simple system and very easy to integrate. Can fully replace all single use cups and customer does not have to make a decision or make extra effort
|Cups can be easily lost without the cost being covered by a deposit, as customers are not incentivised to return the cups
Coffee cups were offered on the deposit-return method for 13 market days in which time 385 cups were rented, or on average 30 per day, with a deposit of R30 per cup. Many customers decided to keep this “relatively cheap” reusable cup, which resulted in an average loss rate of 18%. The economic model of the deposit return system for coffee cups was found to be very difficult to achieve. At the lowest break-even point of 6 uses per cup, the cup return rate would need to be 84% (assuming a 50 day/use lifespan) or 88% (assuming a 10 day/use lifespan) in order to break even in terms of cost. This does not include any of the peripheral costs such as labour, washing services, etc.
Consequently, due to technical and viability challenges, it was determined that the coffee cups should rather be made available for sale so that customers retain ownership of their own reusable coffee cups.
The total number of reusable beer cups used was 33 744, with a total loss of 2 997 cups, making the average loss rate ~11%. Although the observed loss rates fluctuated a lot, there was a general average decline in losses over the duration of the project.
Single-use beer cups cost ~R2.60 each while the reusable beer cups cost R7.00 each. In order to recover costs for running the project and to test out business model strategies, a usage fee per cup used was introduced, payable by the bar. In the initial stages of set-up, the bar agreed to pay a R3.00 usage fee for the reusable cups in place of the single-use alternative, however as the project developed, the bar was only willing to pay a R2.00 usage fee per cup. In these scenarios the break-even point for cost was lower and slightly higher than 3 uses respectively. This made feasibility much easier to achieve. The model could still break even with a loss rate as high as 30%
Key project insights
- The coffee cup deposit-return model was found to be unviable in these circumstances, the beer cup honesty system was found to be a viable business opportunity.
- Two staff were hired to run with the implementation of the project. This was seen as a major success of the project, as a new business was created out of this pilot project.
- One of the project staff took over the project to grow the pilot into a private for-profit business to offer cups as a service to markets and events – another major project success.
- It is clear that convenience and ease is important to the customer and they would not readily spend extra time and effort to fetch a reusable cup at a third party location
- It is believed that the beer cup method of reuse could be replicated at other food markets in South Africa and the method could also be expanded to offer cups as a service to events too.
To access the full project report, click here.