Investing in a new usage model to cut plastic packaging

Designing and scaling new usage solutions is one way to transform the plastic value chain to reduce waste and greenhouse gas emissions. In this case study of 900.care¹, our private-equity team considers how the company’s concentrated and refillable personal-care and household products help tackle plastic waste while enabling favourable investment prospects.

Reducing plastic waste

Volumes of plastic waste can be significantly reduced by rethinking how we use plastic, thereby cutting the greenhouse gas (GHG) emissions associated with generating new plastic.

Our Plastic Circularity strategy aims to find scalable solutions to the plastic waste problem. We invest in private companies that are transforming the plastic value chain into a circular model in three areas:

• Innovative materials that use lower-carbon feedstock and no fossil fuels
• New usage models incorporating repair, reuse and refill models
• Improved collection, sorting and recycling

The first and second areas include companies specialising in innovative materials and new ways of delivering products to consumers without single-use packaging. In December 2023, we completed an investment in 900.care, a French company selling concentrated and refillable personal-care and household products online by subscription.

In this case study, we consider how 900.care contributes to reducing plastic waste, why we believe it benefits from favourable growth prospects and what measurable impact it makes.

Concentrating on the product

By producing and selling purely active ingredients rather than diluted products, and by enabling packaging reuse, 900.care generates significantly less plastic waste and greenhouse gas emissions during production and transport.

The company ships a variety of products. Bestsellers include refillable shower gel, shampoo and deodorant, as well as toothpaste in tablet form. It also offers household products including laundry detergent, dishwasher tablets and washing-up liquid.

Typically, the products are in concentrated powder form that consumers dissolve in water at home. Because conventional products contain 90% water, the shipping volumes associated with the company’s products are smaller. So are the resulting carbon emissions.

Through its subscription service, the company dispatches top-ups directly to customers’ homes at the desired frequency. Its products are price-competitive and appeal to a large market, with over 235,000 active subscriptions in France alone. The ingredients are more than 95% natural.

The investment rationale

900.care has a proven track record of growth that we believe is likely to further benefit from favourable tailwinds. For instance, the company almost tripled its turnover in 2023 and exceeded EUR 10 million in revenue by the end of the year².

In future, we see a favourable demand outlook for the 900.care’s differentiated offering and a propensity for the company to quickly scale up. Its ability to combine product expertise and sustainability can also positively impact the playing field. Key attributes include:

	A promising demand outlook. The very large and addressable market in Europe for hygiene and personal-care products is increasingly penetrated by online and zero-waste models. For instance, the bath and shower category is experiencing an increase in digital penetration, while product composition – involving natural products – and packaging are increasingly important considerations for consumers
	Differentiated products. The company provides a differentiated offering with strong potential to achieve mass-market appeal. Its powerful brand is already listed in the top 10 ‘most loved’ brands by Gen Z consumers in France. Its competitive pricing – at EUR 2.49 per shower gel refill3 for instance – appeals to a wide range of consumers
	Expansion prospects. The strong potential for quickly scaling up the business stems from 900.care’s online sales model, both in France and internationally. This supports the company’s predicted path to profitability in France by 2025 and paves the way for international expansion. For instance, its existing manufacturing and logistics set-up should enable it to serve other countries in Europe
	Cutting-edge know how. We see 900.care’s robust R&D and pioneering product expertise also standing it in good stead. It plans to introduce new products and take advantage of cross-selling opportunities in the personal-care, household and skin-care segments. These areas typically benefit from high gross margins that are in line with this market
	A strategic area. Personal-care and household products are increasingly attracting private-equity investors, with many innovative companies being acquired by leading corporates. This provides multiple exit routes for investors

The impact rationale

Refillable models are key to transitioning away from single-use packaging: the principal contributor to plastic waste and pollution.

By supplying concentrates, refill pouches and solid products that would typically be in liquid form – such as shampoo or soap – 900.care reduces the volume and weight of the products shipped, as well as the overall required packaging volumes. Here, there is a direct link between economic success and impact because less waste lowers costs.

Source: LOIM, 900.care. For illustrative purposes only. Figures are net of the reusable containers that have been put on the market. As at December 2023.

Representing the least disruptive ‘reuse’ model for the consumer, refills are likely to scale up first in the transition to a circular model for plastics, in our view. The personal and household product market is particularly well suited to this model, with 900.care’s refill-at-home service even more convenient.

Refill models are also gaining regulatory favour. In France, by 2030 large supermarkets are required to make 20% of floor space dedicated to bulk purchases and product refills. Such laws represent a positive driver for the overall refill segment and an opportunity in retail for 900.care once the brand is more established.

Increasing circularity in plastics through refill solutions mitigates the industry’s impact on climate and biodiversity. Some of 900.care’s key impact performance measures are:

• As of December 2023, 900.care has reported avoiding 2.8 million units of single-use plastic and not shipping 500m3 of water⁴
• By the end of 2024, 900.care aims to increase the recycled content in its refillable packaging from 50% presently to closer to 100%

Catalysing change

Rethinking how plastic is used is critical to reducing plastic waste overall and mitigating GHG emissions. We believe that refill models such as the one being harnessed by 900.care can help catalyse system-level change in end-to-end plastic value chains, ensure scalability and generate market returns.

Sources.

For professional investors use only

This document is a Corporate Communication and is intended for Professional Investors only. 

This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.

This document is issued by : 

Lombard Odier Asset Management (Europe) Limited (hereinafter the “Company”). The Company is authorised and regulated by the Financial Conduct Authority (the “FCA”), entered on the FCA register with registration number 515393. 

This document is approved at the date of the publishing. The Company is clustered within the Lombard Odier Investment Management Division (“LOIM”) of Lombard Odier Group which support in the preparation of this document and LOIM is a trade name.

Any opinions or forecasts provided are as of the date specified, may change without notice, do not predict future results and do not constitute a recommendation or offer of any investment product or investment services.

This document is the property of LOIM, is provided for information purposes only and is addressed for the recipient exclusively for its personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. It is not intended for distribution, publication, or used for any other purpose without the prior written permission of LOIM. 

The contents of this document are intended for persons who are professionals and who have been vetted by LOIM and assessed as suitable to the investment matters set out in this document and in respect of whom LOIM has received an assurance that they are capable of making their own investment decisions and understanding the risks involved in making investments of the type included in this document or other persons that LOIM has expressly confirmed as being appropriate recipients of this document. If you are not a person falling within the above categories, you are kindly asked to either return this document to LOIM or to destroy it and are expressly warned that you must not rely upon its contents or have regard to any of the matters set out in this document in relation to investment matters and must not transmit this document to any other person. This document contains the opinions of LOIM, as at the date of issue or completeness of the information contained in this document, nor does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices indicated may change without notice.

The contents of this document has not been reviewed by any regulatory authority in any jurisdictions and does not constitute an offer or a recommendation to subscribe for any securities or other financial instruments or products.   

It contains opinions of LOIM, as at the date of issue. These opinions and information contained herein in this document does not take into account all the specific circumstances of the addressee. Therefore, no representation is made that the information presented in this document are suitable or appropriate to the individual circumstances of any investors. Tax treatment depends on the individual circumstance of the investor and may be subject to change in the future. LOIM does not provide tax advice. 

The information and analysis contained herein are based on sources believed to be reliable. While LOIM uses its best efforts to ensure that the content is created in good faith and with greatest care, it  does not guarantee the timeliness, accuracy, validity, reliability or completeness of the information contained in this document, neither does it warrant that the information is free from errors and omission not does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices indicated may change without notice. Particular contents of third parties are marked as such. LOIM assumes no liability for any indirect, incidental or consequential damages that are caused by or in connection with the use of such content. 

The Source of the data has been mentioned wherever it was available. Unless otherwise stated, the data is prepared by LOIM. 

Not for US Person: This corporate communication is not intended for any "U.S. Person" as defined in Regulation S of the Act, as amended or pursuant to the 1940 United States Investment Company Act as amended and will not be registered pursuant to the 1940 United States Investment Company Act as amended, or pursuant to other US federal laws. Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.
 
Data Protection: You may be receiving this Communication because you have provided us your contact details. If this is the case, note that we may process your personal data for direct marketing purposes. For more information on Lombard Odier’s data protection policy, please refer to www.lombardodier.com/privacy-policy 
 
©2024 Lombard Odier IM. All rights reserved.