In this episode of the Venari podcast Sustainable Packaging CEO series, Tim Hartnell speaks with Malcolm Waugh, CEO of Frugalpac, about the company's innovative approach to sustainable packaging. Frugalpac, known for its ground-breaking Frugal Bottle, is revolutionizing the packaging industry with eco-friendly paper alternatives that significantly reduce carbon footprints. Malcolm shares insights into his journey to becoming CEO, the challenges of scaling a young company, and Frugalpac's mission to decarbonize the wine and spirits industry globally.
Transcript:
Tim Hartnell: So welcome to the Venari podcast. I'm Tim Hartnell, and in this episode of the Packaging CEO series, I'll be speaking with Malcolm Waugh. Malcolm is CEO of Frugalpac and Malcolm and his team are on a global mission to change how food and drinks get packaged, namely through their Frugal bottle, the world's first commercially available paper bottle. Malcolm, it's exciting to have you on the podcast and thank you for joining me.
Malcolm Waugh: Thank you very much, Tim.
Tim: In this episode we are going to be talking about Frugal Pack, Malcolm's journey to becoming a CEO, a little bit about leadership, and actually what the sort of future holds for the company. So let's get started. Malcolm, do you want to kick things off? Tell us a little bit about Frugalpac and how you're, yeah, changing industry for good.
Malcolm: Certainly, certainly. So Frugalpac's, a young British company been in existence in since 2011, had a name prior to Frugalpac. Frugalpac was came to life in 2016 and from probably 2018 we really moved into our own and started to industrialise and commercialise sustainable paper packaging that deals with predominantly carbon but also looks at ease of recycling. Frugalpac is it's an interesting company in terms of it's a little bit of a hybrid. So what we look to do is deal with problems caused by the incumbent packaging within fast moving consumer goods, which is a bit of a mouthful, but that's what we do. And so we identify a problem caused by a significant. Specific. Package and then we look to redesign that using paper. That's our material of choice. We believe in recycled paper. One, it starts life as a renewable resource. Two it's fast growing and replaceable three there's an abundance of it and four, when you start to recycle it and use it well, then it really does contribute to carbon reduction around the planet.
So the first product we brought to market was the Frugal Cup and that started to get a lot of traction dealing with the issues caused by on-the-go paper cups that are used within food service and quick service restaurants and the like, poorly recycled simply because the time to the recycle them is long. They're not actually commercially viable to recycle on mass, so they go to landfill. We introduce the product that didn't do any of that could break down in the in the paper stream and would. Would breakdown quite easily and then be recycled again. And had already been recycled. However, we missed a certain pandemic in our business plan, which really put pay to the frugal cup for a period of time. And that allows then to to sort of or we had to really as a young company really drive into some of the other products that were on the development burner, but not quite as advanced as they would have been had we gone through.
The Frugal Cup launch so we move very quickly to bring Frugal Bottle to life. And what we're dealing with here is within wines and spirits, predominantly it's the glass bottle that is used and glass has a significantly high carbon load when compared to other packaging. So we focus in on the wine and spirits category within major retail , 21 percent of a retailer's carbon from packaging is coming from beers, wines and spirits category. Therefore, there's something to deal with the. That we saw was really the the wine industry being hugely impacted by climate change, root cause of climate change of course being being carbon. And if you look in that industry there's various figures we tend to use 50% of the carbon within the wine industry is coming from the package itself.
So we set about creating a low carbon solution of which we've had many predecessors but, wine, particularly spirits, less so, but wine is extremely traditional and therefore the consumer is looking for something very similar to what they enjoy today. So we effectively learned to shape paper into a wine shaped bottle of the Bordeaux shaped bottle. And what we created is a package that six times less carbon than your average wine bottle, five times lighter, four times less water to make sorry four times less water to make and most importantly I think from a brand perspective is the fact you can you've got 360 degree canvas to print and promote your product on shelf.
Wine is in, I wouldn't say a dramatic decline, but it's, it's not growing currently and in the fast moving, sorry, in the traditional markets of wine, it is shrinking far more than it is in maybe the emerging markets for wine. And that's because young people just see this as too traditional and they're looking for something a little bit more in keeping with them. And that's where the frugal bottle is also starting to hit the spot with your traditional
Tim: When you just separate those two, don't you? You can you when, when you finish with your wine bottle, you separate the carboard?
Malcolm: Yes. So I talked about being focused in on the on carbon reduction from a recycling perspective the frugal bottle is already recycled from the paper perspective. So this is a complex number, not it's made from 94% recycled paper, which is the equivalent of 84% of the content of the bottle being already recycled. That's significantly higher than than most packaging in the in the wine industry on mass. I mean, people believe that glass is 100% recycled content. It's far from it if indeed there's any recycled content in there at all. But that's that's their problem. We've got a solution. The the, everything that we make is designed to separate. So if we go back to the cups, that's the issue. You're bonding plastic to paper. It's very difficult to separate it. So we, we keep it easy to separate. We are still using plastic. We're not ashamed of that. The plastic enables the all the benefits that the frugal bottle brings. But likewise, plastic is not significantly well recycled in the UK particular or anywhere frankly. There's better markets, but in UK it's very low recycled. But and the plastic element of of soft plastics, particularly in the UK is not well recycled. That's more about infrastructure rather than the fact it can or cannot be recycled. And that leads back to commercialisation. The company's making film aren't yet demanding recycled content. That will change as governments move with legislation and and various other things.
Finally, if I may, just the disruptive nature of our business is one where I mentioned we're an engineering company and a packaging business a bit of a bit of a hybrid. So we engineer the machines that make the bottles. Our business model is to sell those machines into the wineries and the contract packers and local packaging businesses to get the packages close to the bottle. Sorry to the wineries as. Possible stops transport reduces carbon for the lowest possible cost to make the package. Really it's difficult for other acceptable formats for wine to do something like that. You're not going to put a small glass making furnace in your in your winery. I mean go back in time and in every wine making area there would have been a glass blower long gone now as the industry's consolidated. So our model is sell the machine and then we take a royalty for for each bottle that's sold in market. So a very cash generative model that allows us to reinvest back into to new technology. So I'll be quiet now on Frugalpac because I'm sure people have fed up.
Tim: No, it's exciting to hear and you know, not all of our listeners will be aware of, you know, how the sort of, you know, company, you know what the company is doing and yeah, what the technology is behind it. So no, thank you for that. And in terms of sort of your journey leading up to becoming CEO, do you want to just talk to the listeners about that?
Malcolm: Certainly. So I started life as an apprentice. In mechanical engineering and decided that wasn't quite for me in the where was that the early 80s just to date me. So I'm an old man now. And really changed direction into more commercial. Went into another business after completing my apprenticeship but wanted to move away from hands on engineering more into business and started to grow through organisations. In those days I was remember nowadays with recruiters. You, you, you set a brief and you guys will find somebody. Those days it used to be the Daily Tele(graph) or the Sunday Telegraph or The Sunday Times was the hunting ground for most ambitious people at that point. And I managed to secure a role in, in, in a big food processing company called Alfa Laval and grew up with them. Luck plays something in in people's journeys. I think. So while Alfa Laval is a great company. It was then acquired by, as good if not greater company in the form of Tetra Pak. So then I started to learn a lot about about packaging. And really it's about absorbing the environment for me, constantly learning and constantly trying to move forward in my sort of position and and where I wanted to be in, in the in the business. Sort of setting goals every year was a key thing for me in terms of personal development but also achieving something for the business. So delivering what you are tasked to do and whatever that may be has been crucial in my just in the way I think and do things, but also in maybe being able to move up through the organisations. I had some great managers and leaders that really assisted me, frankly some good mentors in there that allow me to grow and develop. And you learn so much and you absorb from that. I tried to to do that as I moved into to better roles and also had some great bad managers. A contradiction. I appreciate but they they had their own assets that were useful, but actually some of them shouldn't be doing what they were doing. And you learn the opposites of you, you basically learn what not to do in that environment. And I've tried to take that with me as well as I've started to move into leading people and building companies and, and the various other things that go with it. There's certainly a desire to move into something like this as in terms of sort of general management and, and a rounding that's required and being able to think across all different functions. And then to sort of finalise that there's a sort of relentlessness that I think is required to to move up through through the organisation, not standing on other people. I think I could probably was guilty of that in the early days, but you learn very quickly that I mentioned good managers spot people like that and the good good ones basically direct you into a slightly different way of trying to move forward in an organisation and you and you learn from that. But finally it's always about delivery and if you don't deliver you. It's a harder journey. Let's put it that way. Yeah, no, absolutely. And yeah, it's an interesting, interesting insights there and it sounds like you've learned from from a lot of people along your journey.
Tim: So, yeah, thanks for sharing. And then just in terms of growing your team considerations for scaling a company, any thoughts on that?
Malcolm:
Yeah, most certainly I mean for us as a as a young company and and in young, that counts across ages, experiences and also just in terms of the size of the organisation , and and making sure that as we scale, we do it in a, in a controlled way where everybody's got a, a fighting chance of success. And coming back to my original point delivery. So for me, it's, it's that we always start, I always start with robust processes in place or the identification that they're missing. So whoever you're bringing in to a new role or a bigger role, actually is tasked with getting good, good firm processes in place, but assuming they're there then then we look to location. So for us, we're UK based, but as your listeners will know, most of our market for wines and less so spirits, but wines are in other markets around the world. So we need to to adapt to grow more quickly in those markets when as sunny as Ipswich is, it's not going to be the. We're not going to succeed to our capabilities if we're not on the ground in in markets. So we've got to do that. So we need to find locations that work for people and make sure that they are happy with those locations. So if we're moving people out of the UK as loosely as expats, if you like, then they know what they're in for when they're going the other way. And also then if we're recruiting locally that they understand some of some of our culture. So there's there's definitely going to be challenges in doing that. I always like to think there's a clear progression path for anybody coming into the organisation. We don't really want people to sit or either want people that want to be simply in one place all the time. There's a place for that, but not in a fast-moving business like ours at the moment. And I also want to be able to deliver that opportunity to send people to really grow within the organisation and to a and a degree that's the attraction of where we are at the moment. We're 28 people. We were six people five years ago. And if you're in early, then you tend to rise with the tide and and it's giving people the opportunity to do that and make sure that there's also anybody coming into the business is right for succession. And that so they can move forward, but also that that we've got succession behind them to allow them to grow through the organisation quickly and we don't sort of hold them up in any way. Yeah, that that's sort of the the key things I'm looking for in in currently scaling the business, not to mention a good partner to help me in terms of recruitment.
Tim: Of course, of course and decisions around. Yeah, hiring. Obviously you've got a board there. Does it, is it very much a balance between your, you know, your own this is where I think we should go versus their inputs as well or do you share that sort of.
Malcom: Yeah, I think it depends clearly on the role. So anything. Operational tends to be with myself but I have a built a good management team, classic structure of around the functions so they will take the lead in any recruitment. There I try to meet everybody in the organisation, mainly to say hello, answer any of their questions. Not really. I'm not involved so much in the interview process, but it gives them an opportunity to see who we are. We try to build a culture in the company that people understand quickly and hopefully it's a positive culture. I think it is because our retentions are reasonably good. And we seem to attract talent wouldn't say easily, but because of what we do in the products, there's a great interest beyond maybe other packaging elements within the organisation and the board come into play at senior positions, so we're replacing me at some point.
Tim: Succession planning underway. Noted. And then look, just appreciate we're getting towards the end of our time here. But yeah, what's sort of next? What's on the horizon? What do you want to achieve?
Malcolm: Yeah, I mean for us. Really it's continuing the growth journey that that's what we're here to do. If you break it down into the the what are the the rationale of the company, it's to decarbon, decarbonise the wine and spirits industry. So we want to get more and more bottles into market. Clearly we've got to internationalise. So we need to put my phrase, boots on the ground in the markets that we are prioritising which are North America, Europe and Asia Pacific, we've got new machines about to hit the market. So that brings new challenges from the engineering perspective and how we support that. And then we've got some new products outside of the the current frugal bottle. Frugal bottle is, is important. It frankly is a make or break of the company in the short term. Everything's positive in that area, but we don't want to be known simply as a paper bottle company. We've got other formats coming along. Paint pots, we want to relaunch the cup and then there's various other concepts that we've got coming down the pipeline. So it's growth as we know it in existing categories with existing products and then new categories, new products as we move through towards the end of the century or sorry, the end of the decade even.
Tim: Busy times ahead then exciting. We talked about some of the supermarket chains like, Sainsbury's and Morrisons. We talked about the EasyJet partnership, are there any others that you feel like it's worth mentioning or?
Malcolm: Well, I mean we're, we're reasonably big in the US. We've got, we're running a big trial in Whole Foods in North America at the moment and there's some other major retailers coming on board there. We're about to, we're just closing in on a machine in Australia, which will then make product available into Coles and into in demo, which is Woolworths in in Australia. So yeah, lots of lots, just so much happening. I could talk to you all day and and bore you further, but I won't.
Tim: We might have to, we might very well do a part two. But Malcolm, thank you so much for coming on and sharing those those details. It's going to be super interesting to, you know, once we air this, see, see, see, see what people's feedback will be. But yeah, thank you. And yeah, let's catch up soon. Look forward to hearing about progress and seeing your products in different places, no doubt soon.
Malcolm: Thank you, Tim. Take care.
Tim: Thank you.