Will UAE retailers and F&B businesses make full switch from plastic to paper bags?
Hypermarket operators selectively bring back paper bags - but there is a cost element too
Dubai: Now that single-use plastic bags come with a cost attached in Dubai and Abu Dhabi, will retailers start thinking of bringing paper bags back?
Paper bags are already the choice at speciality retailers, as is the case at mass-market furniture brand Ikea and at the burger giant McDonald’s. For these companies, using paper is an extension of what they are doing across their global networks.
Some of the biggest local retailers too are giving a thought about a full or partial plastic-to-paper switch. Such a move, however, entails some serious costs, which is why retailers will not be taking any hasty decisions.
As a first step we reached out to our local suppliers (for non-plastic bags). But we are also exploring alternatives across the world to find the right source and long-term solution.
“Introducing paper bags is under consideration, but we will need to see how this can be done without passing on part of the costs to the shopper,” said a senior official at a leading supermarket chain. “When inflation has already increased consumer staples, shoppers may not be ready to pay extra.”
Plus, the business of supermarkets is all high volumes and thin margins. Marc Laurent is President at GMG Consumer – Retail, which recently acquired the Giant supermarkets in the UAE. He says: “We currently offer the paper bag option for free at select Géant hypermarkets/supermarkets. But in our upcoming store Monoprix at Gardenia, we are going paper-only, which will definitely add an incremental cost.
“Géant will not stop offering plastic bags as customer convenience remains a top priority. We will, however, be charging 25 fils per bag, which is certain to encourage regular shoppers to bring their own bags. We will be offering customers the option of purchasing cost-effective non-plastic alternatives at checkout including jute bags, woven bags and paper bags. We already offer paper bags in the produce section.” Bring their own Consumer psyche is such that for weekly purchases, a majority of shoppers will head to supermarkets with their reusable holdalls. Shoppers are turning cost-conscious, and spending the 25 fils per bag might seem like a needless cost to bear right now. Will bringing environment-friendly bags become habit forming?
Retail industry sources say that in grocery and supermarket visits, the change will be the most evident. As for other retail categories, consumers are likely to be less finicky.
Ashish Panjabi, COO at Jacky’s Electronics, says each category will have to come up with its own solutions in any move away from ditching plastic bags altogether. “For electronics, we use thicker grammage bags and hence these are considered reusable,” he said. “Abu Dhabi as well as Dubai economic departments have clarified this - so electronics retailers that have such bags can continue.
“In any case, because the packaging of most electronics products used has gotten smaller, the size of bags we use has also changed. We used to have three sizes - small, medium and jumbo.
We haven’t ruled out a switch to paper bags - but it is also to do with weight of the products and make sure they don’t damage the bags because of sharp edges. With weight, paper doesn’t always work well. We have been running various prototypes.
- Ashish Panjabi of Jacky’s
“Today, we don’t even stock the jumbo-sized bag because nothing we sell would need one. The proportion of medium has also been reducing as more appliances and gadgets fit into a small bag. So, our plastic consumption has been reducing with the packaging being more compact.”
F&B firms feel the cost heat
It will be the food and beverage operators and delivery firms that will need to rework their costs when sourcing their plastic bag needs. “On average we had usage of close to 70,000 orders monthly with single-use plastic involvement,” said Rohith Muralya, Director - Concept Cuisine at SFC Group. “We had foreseen this and ensured to have a supply chain in place to minimise the cost impact. But a majority of F&B operators will have to source at much higher prices and they will inevitably pass it to the customers.
“Our industry forces us to be adaptive and we have already received a lot of feedback from customers on early adoption of paper bags.”
The cost impact of these policy changes cumulates to an around 24% increase in our packaging costs. The F&B space leans on thin margins and this shift will add to higher cost of good sold, which will be driven down to customers by many operators in the industry.
- Rohith Muralya, Director, Concept Cuisine, SFC Group
Having got a taste of consumers getting more health- and environment-conscious, many F&B businesses reckon the moment is ripe to go in for more change. “We are considering weaning ourselves away from single-use plastic and already been focusing on using paper bags at our outlets, for delivery and takeaway” said Deepak Bhatia, CEO of Snowbell Restaurant Management Group. “Instead of plastic bottles, we are looking at glass water bottles to be used across the restaurants. In addition, we are also making changes to the back of the house with regard to eliminating plastic sources. Steel containers and cutlery are being used instead of plastic wear. “Changes like these for an organisation as big as ours come at a major cost. We are anticipating a variable cost of 20 per cent in the beginning, but gradually, it should work out to a reduced amount.”
We are already in talks with vendors who have edible cutlery and biodegradable options too. Orders are already placed for cane cutleries for delivery and takeaways and also for paper straws and edible straws instead of plastic
- Deepak Bhatia, CEO, Snowbell Restaurant Management Group
In any switch for the greater good, there is an element of cost. If, as Bhatia says, retailers and F&B operators can bring that additional cost down, it all adds up to a win-win. And the environment wins too...