Tapping into the Dairy Market

Tapping into the Dairy Market

Spout Alternatives

9. Industry, Innovation and Infrastructure 12. Responsible Consumption and Production 14. Life Below Water

Overview

New Zealanders consume more than 400 million liters of milk per year, most of which is distributed in plastic bottles that cannot be recycled within the country. The founders of Spout, Jo Mohan, Nick Jackson, and Luka Licul, have a vision of making one of New Zealand’s biggest industries waste-free by providing a plastic-free milk alternative to businesses around the country.

Author

Leena Tirrul

Leena Tirrul

School

University of Otago

University of Otago

Professor

Joe Cooper

Joe Cooper

Innovation

Spout was founded in New Zealand in 2019 by three young entrepreneurs, Jo Mohan, Nick Jackson, and Luka Licul, who met at a youth business accelerator in Wellington. The trio had a vision: to decrease the use of plastic in the New Zealand Dairy Industry, and to make this the very core of their business model.

The three Kiwis applied an existing technology to a novel problem: how can milk be transported and distributed without using petroleum-based plastic bottles?

“The innovation part is interesting. It’s not something we created out of the blue, we’re using something that is existing, in a different way. I think that sometimes this catches people off-guard.”

The trio have taken kegs, yes, like the ones used for beer, and have created a new sanitizing technique in order to make the existing technology available and safe for milk.

“We learned pretty quickly that you can’t just treat it like beer because milk has fats that require deep cleaning, … we developed a keg washer that stays on the farm […] it’s the only one of its kind in New Zealand. It’s a three-step program that washes, rinses, and sanitizes the kegs and associated equipment.”

The small, 10 Liter stainless steel kegs are the same ones used for making home-brewed beer. These kegs are first filled with fresh, pasteurized milk on the farm. They are then delivered to local businesses where the kegs are hooked up to a permanent tap system similar to how draught beer is dispensed. After the business has emptied a keg, it can simply be set aside for pick-up. The kegs are brought directly back to the farm where they are cleaned and refilled on site.

By repurposing an existing technology, Spout has been able to utilize existing systems, norms and skills already in place to distribute, store, and use kegged milk. Additionally, Spout’s order, pour, return model, and onboarding programming make it easy for businesses to switch to this no-plastic option. The Spout system works especially well for cafes, restaurants, hotels and large businesses who purchase milk in bulk; and this has the added benefit of targeting those who use the most plastic jugs per year. For example, a typical café uses 3000 plastic milk jugs per year, and this offers conscious businesses an alternative.

By giving businesses and farms the ability to reduce their use of plastic, Spout contributes to three of the Sustainable Development Goals: SDG#9 Industry Innovation and Infrastructure; SDG #12 Responsible Consumption and Production; and SDG#14 Life Below Water.

Spout is helping New Zealand reach Sustainable Development Goal 9, Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation, by addressing target 9.4, retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes. Spout is helping to reach target 9.4 by providing the dairy industry with an alternative form of environmentally sound packaging and a resource efficient distribution model.

Spout is helping New Zealand reach Sustainable Development Goal 12, to ensure sustainable consumption and production patterns by specifically addressing targets: 12.2 efficient use of natural resources; 12.5 waste reduction via prevention, reduction, recycling and reuse; and 12.6 encourage companies to adopt sustainable practices and to integrate sustainability information into their reporting cycle. In reference to target 12.2., Spout’s reuse of stainless-steel kegs ensures efficient use of a natural resource, steel, as the kegs can be re-used thousands of times. Additionally, by having a direct farm-to-business model, they use comparatively less fuel for transport than models with offsite bottling; fuel being another natural resource. In reference to target 12.5., Spout contributes to waste reduction by diverting five plastic milk containers from the waste system for every keg sold. In reference to target 12.6., Spout has encouraged their partnering cafes to report on waste minimization. Overall, Spout contributes to these specific targets by decreasing the material footprint of society via the reduction in production of plastic bottles.

Spout is helping the world reach Goal 14, specifically target 14.1: prevent and significantly reduce marine pollution of all kinds, in particular from land-based activities, including marine debris and nutrient pollution. It has been estimated that there is more than 150 million tons of plastic waste in the ocean posing threats to wildlife and the safety of human food chains. Though plastic milk bottles are collected for recycling, current waste management studies indicate that most plastics exported for processing are not recycled, and 7% end up directly in the ocean. Spout helps to reduce this marine threat by removing plastic bottles and their unrecyclable caps from the supply chain.


Tapping into the Dairy Market

Inspiration

According to Jo Mohan, one of the cofounders who now takes care of customer relations and ordering in Dunedin, the inspiration for Spout came from a friend. One of Jo’s housemates was trying to live plastic-free, but plastic free dairy options, in particular, were lacking. During a youth business accelerator Mohan found two others who shared her vision: Nick and Luka.

“Because dairy products were particularly hard to find plastic-free substitutes for, we recognized the opportunity and jumped in. We worked on the idea for a month up in Wellington and got really positive feedback… we thought we could really be onto something”.

Though they initially thought about using glass bottles and targeting households, the trio decided to target cafes when, during their initial market research, they found that Wellington cafes alone used more than 6000 plastic milk jugs per day. Taking inspiration from beer, and repurposing kegs seemed like a natural progression.

The entrepreneurs ran with their idea and haven’t looked back.

Overall impact

Spout’s potential impact is clear when you consider three factors: the sheer volume of milk that is consumed in New Zealand, the way milk is currently predominantly packaged, and New Zealand’s proximity to recycling facilities.

Dairy is not only one of New Zealand’s most important industries, it is also a part of the Kiwi café and coffee culture. A typical New Zealand café will use more than 6000 liters of milk per year, and with more than 8,000 cafes and restaurants nationwide, the opportunity for a positive impact is obvious.

New Zealand milk is predominantly packaged and shipped in petroleum-based High-Density Polyethylene (plastic) milk bottles, ranging in size from one to three liters. The plastic that comprises these milk bottles, even if recycled, is only reused to a maximum of 7-9 times. Though recycling is preferred to simply tossing plastic in a landfill, it is still energy intensive; and due to New Zealand’s small population size and remote location, all plastic for recycling must be shipped overseas to processing plants throughout Asia. Furthermore, due to contamination and other factors, it is estimated that only about 10% of this plastic actually gets recycled, the rest is likely burned or diverted to landfills.

Unlike plastic bottles, Spout’s kegs are washed and reused locally; on the very farms that refill them. Additionally, the kegs can be used thousands of times. Each 10 liter stainless steel keg takes 5 plastic bottles out of use and with cafes in Dunedin, Christchurch, Queenstown and Wellington, Spout has taken the equivalent of 11,000 plastic bottles out of circulation so far.


Business benefit

Spout has partnered with businesses and farms in Queenstown, Wanaka, Dunedin, Wellington and Christchurch, and is planning to expand into other markets.

Given Spout’s close partnerships with the hospitality industry, it wasn’t smooth sailing during the pandemic, however, they survived and have used the opportunity to expand. On reflection of the Covid-19 lockdown, Jo Mohan said it gave Spout the opportunity to think about what was going to come next, and where else Spout could make a difference.

“We started looking to corporate businesses… onboarding offices.”

Spout has successfully expanded from cafes and taken on corporate clients, partnering with those concerned about their waste.

“When people approach us, they’re really looking at all aspects of their business and where they can eliminate waste and reduce their plastic consumption.”

Since then the company has received a lot of positive media attention. Environmentally responsible businesses proudly brand their buildings with Spout stickers; alerting the public that they carry local, waste-free milk.

When asked to impart knowledge to other young entrepreneurs, Jo said “Starting a business sounds really daunting,[..] but trying something that you’re passionate about, and that can make a real difference is worth it.”

Social and environmental benefit

By providing an alternative to plastic, Spout creates benefits for both the environment and New Zealand society; as they are inextricably linked.

New Zealand is ranked among the top developed nations in waste production; every year producing more than a million tons of plastic waste. Unfortunately, its not only local municipalities that are grappling with the New Zealand plastic waste problem, we have outsourced this problem to municipalities overseas. Currently, New Zealand lacks the ability to recycle any plastic on shore, thus the plastic needs to be picked up by local municipalities, then repackaged and shipped to other New Zealand cities, then put on shipping vessels to bring overseas to Asian processing plants. Not only does this amount of transport require money and fossil fuels, it has been reported that in many cases this plastic is never actually recycled, but burned in open pits, or diverted to landfills.

By introducing their kegged milk, Spout has been able to distribute more than 11,000 plastic bottles worth of milk to cafes and businesses. Small cafes have reported a shift from recycling more than 50 plastic bottles per week, to none.

Spout doesn’t stop at simply plastic waste minimization. Spout takes pride in partnering with local farmers who use best practices with their herd. Their current business model is to identify and partner with a local farm which resides near to interested cafes and businesses. This not only ensures a fresh product for the customer and ongoing support for the local farmer, it also reduces transport associated emissions and impacts.

“We try to incorporate all our values into Spout..[.]We’re definitely not just profit driven.”

In a time when businesses' perspectives and values matters most to our collective shift to sustainable living, Spout has stepped up to support local, protect the environment and inspire other businesses to step up to the challenge.

Interview

Jo Mohan, Co-founder

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Spout Alternatives

Spout Alternatives

Dunedin, Otago, NZ

Business Website: https://spout.co.nz

Year Founded: 2019

Number of Employees: 2 to 10

Spout provides high-quality, local milk in 100% reusable stainless steel kegs. The New Zealand company is dedicated to reducing plastic in the dairy supply chain and gives businesses a plastic-free milk alternative. Spout works closely with local farmers who follow industry-best practices with their herds, ensuring they supply creamy, non-homogenized, local milk directly from happy cows to the businesses who want to make a difference.