Upcycling hits The New York Times

This article about Terra Cycle appeared on April 29, 2009 in The New York Times:

‘Upcycling’ for Not-So-Green Consumers

By most accounts, a growing number of consumers appear willing to pay the so-called “green premium” for environmentally friendly products.

A report released in January by the Boston Consulting Group, for example, found that of 4,000 consumers surveyed worldwide, almost a third said they were willing to ante up a bit more for green products — especially for fresh and prepared foods, and large appliances.

That survey, conducted last October, dovetails with previous consumer studies.

But one high-profile eco-capitalist disputes the notion as wildly out of touch with mainstream America, which mainly shops in big-box stores. “The reality is that people don’t pay the green premium,” Tom Szaky, the founder ofTerracycle Inc., said in an interview on Tuesday. “People in this economy buy on price, price and price.”

Founded in 2001 by Mr. Szaky while he was at Princeton University, Terracycle, which characterizes itself as an “upcycler,” is a kind of perpetual motion machine, producing a range of products, including bird feeders, planters and pouches made from recycled materials like used soda bottles and juice boxes.

The company pays volunteer groups from churches and schools and other organizations to collect the waste materials on a per-piece basis, and it also buys “post-industrial” packaging from partner companies like Kraft Foods. Terracycle’s packaging, on products like its household cleaners, can also be recycled once they are no longer needed.

Mr. Szaky’s disdain for the green premium is grounded in Terracycle’s rock-bottom raw material costs. In 2008, the company and its corporate partners paid out only $100,000 for 1.6 million juice boxes, one million wrappers and 750,000 yogurt cups. Last month, the company announced a joint venture with Mars, the candy-bar giant, which is expected to bring in 3,000 tons of wrappers in the first year.

The low input costs result in low price points. So, unlike many companies that produce eco-goods, Terracycle can sell mainly in large chains, including Wal-Mart, Target and Petco. “People who shop at boutiques already buy green, so you’re not making an incremental change,” says Mr. Szaky.

The people who have to be convinced are those who don’t care about the evnironment, he added.

In the coming months, Terracycle is also gearing up to expand its operations into Brazil, Mexico and Britain. In Brazil, the company will recruit groups to collect Frito-Lay’s Sun Chip bags, which will be shredded and turned into clip boards.

Mr. Szaky allows that his company expends energy in its shipping and production processes, and notes that Zero Footprint, of Toronto, is currently working up a formal consumption analysis. But, he adds, “You’re not using virgin material. The impact is huge.”