On Wednesday the 24th of April, Parliament adopted new measures to make packaging more sustainable and reduce packaging waste in the EU.

The regulation, which aims to tackle constantly growing waste, harmonise internal market rules and boost the circular economy, was approved with 476 votes in favour, 129 against and 24 abstentions. Council still needs to formally approve the agreement, but the adopted text is available here: Texts adopted - Packaging and packaging waste - Wednesday, 24 April 2024 (europa.eu)

As an observer and consultant to the single-serve capsules industry, I have taken the time to study the text and understand a likely impact on future industry developments. Having spoken to a number industry operators at different roles in the supply chain, it is clear to me that the wording of regulations is confusing and (still) subject of debate. The text has changed significantly since the first draft on November 2022 – with capsules materials neutrality and removing mandatory composting for all single serve units. Some nuance still persists, however, and it will be down to individual member states interpretation of the regulation and due adoption that will provide a clearer view over what’s ahead.

This is the summary of how I interpret the regulation:

1. Capsules will fall in the definition of packaging 24 months after the law is in force, and that will mean that compliance with the EU recycling framework will be necessary. ¹

2. There is a distinction between permeable and non-permeable or soft-after-use single-serve formats, but no strict definition of what ‘permeable’ or ‘soft after use’ actually mean. I tend to think of this as soft pods versus rigid capsules. I would see the paper/moulded fibre capsules are soft-after-use, and I would see the Nespresso Professional capsules as non-permeable.

3. Permeable/soft-after-use solutions are mandated to be composted in industrially controlled conditions. Non-permeable (rigid) capsules will have to find their way to be recycled with better access to waste management facilities due to packaging taxes that will apply. ²

4. 12 months after the law is in force, the Commission will request that compostability standards be revisited to better reflect reality and technological progress. There is a need for a harmonised approach towards home composting that is scheduled for a more structured review. The industrial composting will include decomposition in anaerobic digestion, so in general there will be more formal changes in the compostable segment, including the need to re-test for compliance with standards as well as more harmonised labelling. ³

5. The new text grants Member States some flexibility over adopting compostable solutions. The way I understand the latest text is that depending on the existing waste management infrastructure, member states may choose to not allow compostable packaging, but that decision has no bearing over the use of plastic capsules. In other words, it’s not one or the other. It seems to me that plastics will be allowed in all Member States as long as they comply with design for recycling, while the compostable rigid capsules may not be allowed. ⁴

6. The only compostable solution for rigid capsules consistent across all member states is the soft-after-use route, which would favour paper/moulded fibre capsules over compostable plastic ones, as for these the destined end-of-life is compost.

7. Member States may require compostability of capsules, but I understand that this is only for newly launched systems, and not those that have been available prior to regulation. ⁵

8. The design for recycling guidelines will determine compliance with the regulation. We need to note that compliance will be measured based on the weight of materials in the packaging component (excluding the weight of filled product; and excluding labels, varnishes, inks, lacquers, glues, etc.) and classed as A (95% of one material in the mix), B(80%), C(70%). All three are OK until 2038 and only A and B afterwards. Sometime in the middle there will be an assessment of recyclability at scale, which may result in conclusion that the ground coffee contaminates the recycling stream and doesn’t work at scale. This could be avoided with upgrading sorting, shredding, washing technology for post-consumer recycling. ⁶

9. As an aside point, paper/moulded fibre capsules are unlikely to be accepted in the paper recycling stream, given more stricter guidance on labelling and likely non-compliance with design for recycling for paper stream.

10. There are targets of inclusion of recyclates (but I think only for plastics). The calculation is based on weight per plant/per year, and not on individual packaging formats. Eco-modulation will incentivise higher inclusion. For plastic capsules, the relevant target is 10% recyclate inclusion in 2030 and 25% in 2040, with a caveat that the recyclates available comply with food contact regulations and there is enough good technology to deliver targets. ⁷

11. For recyclate inclusion targets, one more thing worth noting is that partially bio-sourced but virgin-like plastics role in circular economy will still needs to be assessed, and could become part of the methodology. ⁸

12. In general, the EU is increasing targets for collection and recycling of all packaging formats and materials, and the sentiment is to avoid landfill. This means there will be initiatives to improve waste collection and develop infrastructure with a technology upgrade for plastics, Aluminium, paper/paperboard and glass; as well as mandatory separate collection for organic waste. This will help the capsules industry tremendously in diversion from landfill.

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About AMI: AMI has been instrumental in getting the single serve capsules industry together to drive sustainable progress via our specialist events and market research. The next Single Serve Capsules conference takes place in Malaga, 30.09-2.10.2024.

We are also working on the new market report that will help the industry and investors in strategic interventions to manage risk.