Mainz Reinhard Schneider lives up to his reputation. The owner of the frog cleaning agent manufacturer Werner & Mertz is known for vociferously criticizing his own industry. “Companies try to calm their green conscience superficially without really being sustainable,” he says in an interview with the Handelsblatt.
The family business is considered a pioneer in the field of circular economy among manufacturers of everyday goods. Werner & Mertz first used recycled plastic in packaging on a large scale, now even increasingly from plastic waste. Schneider received the German Environmental Award for his efforts.
“For many companies, virgin plastic packaging is a license to print money. Recycled PET is currently 70 percent more expensive than new plastic,” says Schneider, who welcomes the conversation with a green plush frog in his breast pocket. He prepares consumers for higher prices. “Sustainability is not available for free in a transitional phase,” he says. Anyone who claims otherwise is fooling consumers.
Read the entire interview here:
Mr. Schneider, do you still receive friendly greetings from your competitors?
How come?
Other managers hardly speak publicly about competitors. You do this on sustainability issues regularly – and extremely critically.
I think that the competition sees us somewhere between a provider of opportunities and a polluter. Opportunity provider because we have long been offering all market participants the opportunity to provide technological assistance in keeping environmental promises. I may have reduced my chances of having a career with a competitor, but I’m not a salaried manager.
In your new book, “The Deflection Trap,” you don’t skimp on criticism of business and politics. Why?
I am concerned with what blockages prevent the effective assumption of environmental responsibility in our economy, politics and population. It’s not just companies trying to appease their green conscience without really being sustainable. It’s like at a swimming pool: the companies stand at the edge of the pool and outdo each other with announcements. But hardly anyone jumps.
How important is climate and environmental protection in business?
I’m afraid for many companies there are other issues that seem more important. After Corona, the energy crisis and inflation, many companies have little interest in tackling the greatest of all enduring challenges. But the climate crisis cannot be solved by psychological repression. The later politicians and companies take action, the higher the sacrifice and the price that we all have to pay in the end.
In the industry, you are accused of criticizing your competitors in order to do your own marketing.
It’s about something much bigger for me: I want to bring the market as a whole towards the circular economy in order to solve our environmental problem.
“The problem is not the plastic itself, but how to deal with it”
They preach sustainability but sell products in plastic bottles. How does that fit together?
The problem isn’t the plastic itself, it’s how you use it. Plastic could be an ideal circular material. You can reshape it with little energy: glass melts at 1000 degrees, plastic at 200.
Your company is a pioneer in the use of recycled plastic, the so-called recyclate, in packaging.
We have made sustainability out of the niche and suitable for the majority. With 727 million bottles made from 100 percent recyclate, we hold the world record. We are 100 times smaller than some of our competitors. We were also the first to use plastic waste from the yellow bag in packaging. The proportion is now 50 percent.
How environmentally friendly is recyclate? So that plastic from the garbage is not contaminated, it has to be extensively processed. That costs a lot of energy.
It is much more energy intensive to make new plastic from crude oil. Just getting oil out of the ground and processing it takes a lot of energy. Not to mention the environmental impact of burning plastic. By contrast, around 80 percent of CO2 can be saved through recyclate cycles.
>> Read also: The plastic illusion: why manufacturers have such a hard time with packaging
Your competitors tell us it’s difficult to get quality recyclate. They also fear that ingredients will be contaminated by recyclate.
I consider these arguments to be preposterous. We have had the authorities show that high-quality recyclate is harmless. Even the five percent recyclate from the yellow sack for food packaging that is already permitted is not being used to the full. It’s simple: For many companies, virgin plastic packaging is a license to print money. Recycled PET is currently 70 percent more expensive than new plastic – the gap has never been so big. This can be explained by the sharp fall in the price of crude oil.
“Germany is taking a political stance against a circular economy when it comes to plastic”
Isn’t that a case for the legislature?
Actually yes. But Germany is politically opposed to a circular economy when it comes to plastic. Unlike heating oil or petrol, new plastic is exempt from mineral oil tax. This is a hidden subsidy. In addition, Germany is the only larger country in the European Union in which the taxpayer pays the EU plastic tax rather than those who place plastic on the market.
You have to explain that.
Actually, companies that put plastic into circulation would have to pay 800 euros per tonne of new plastic – that’s about 1.6 cents per standard bottle. Instead, each of us pays about 16 euros in taxes a year to keep new plastic cheap. The lobby has prevailed because there is a large new plastic industry. Nobody has to ask anymore which signals the economy hears from politics.
According to the family company, it holds the world record with 727 million bottles made from 100 percent recyclate.
(Photo: Werner & Mertz)
Wouldn’t a circular economy with recycled plastic be more expensive for companies in the long run?
In a transitional phase, sustainability is not available for free, but requires investment. Garbage from the yellow sack is free, but must be sorted and cleaned. Such technologies are only uneconomical until they are scaled. Only when many companies make recyclate the standard will the unit prices fall below that of conventional packaging. Germany could become a pioneer in the development and application of sorting technologies. So far it has been the brake on ecology.
“The rules of the stock market cannot save the planet”
These are bold visions. As a family company with its main business in Germany, don’t you have it much easier than global corporations?
When it comes to our sustainability efforts, we can actually be fortunate to be a family business. Because sustainable entrepreneurship is more expensive in the short term and the returns are lower, the stock market quickly loses patience. On the financial markets, the greedy are more likely to be rewarded with new financing options. The rules of the stock market cannot save the planet.
“The rules of the stock market cannot save the planet.”
(Photo: Rainer UNKEL)
How do you get large companies to really do business sustainably?
Corporations have to make the topic a top priority, beyond just PR, so that it is approached holistically. In addition, there must be unannounced on-site inspections by proven sustainability experts in the industry. Thirdly, environmental innovations must also be made accessible to competitors so that they can also use sensible technologies. We have made our know-how on recyclate from the yellow sack publicly available.
>> Read also: This is how the eco-brand Frosch fights for the circular economy
Do consumers appreciate the sustainability efforts of companies?
Consumers recognize that, but it’s taking a while. If manufacturers are serious about sustainability, word will get around. In surveys, our Frosch brand is named as the most trustworthy brand when it comes to environmental protection, with a growing gap to the competition.
Do people have to pay more for sustainability?
Temporarily yes – because of investments in new technologies. Anyone who claims otherwise is fooling consumers.
“Sustainability does not cost our prosperity either”
Many consumers are very price-sensitive in the face of inflation. Doesn’t sustainability fail for all of us at the supermarket checkout?
If there is trust, consumers are quite willing to pay 20 to 30 cents more for a sustainable product, depending on the product. So the large part of society is not excluded from sustainable consumption. That is why sustainability does not cost our prosperity, as is often argued.
The company is best known for its Frosch brand.
(Photo: Werner & Mertz)
Consumers currently pay attention to cent amounts when shopping.
We don’t even spend ten percent of our disposable income on everyday goods. Saving money in the supermarket seems to be part of the good manners. At the same time, for many it has to be a new smartphone once a year. This calculation doesn’t add up. Many people are saving in the wrong place. A few cents more for the circular economy would be a bigger lever for the environment.
>> Read also: Price wars between dealers and manufacturers are about to escalate again
Their products are significantly more expensive than the retailer’s own brands. Do you also notice that many consumers no longer buy your branded goods?
We notice a polarization. On the one hand we see the big trend towards private label. These are regaining market shares that they had lost during the corona phase, when many consumers increasingly bought branded goods. At the same time, those who currently remain loyal to the brand are increasingly buying our products. We continue to grow faster than the average brand manufacturer in our industry.
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Overall, not as quickly as you had planned. In 2022 you wanted to increase your sales globally by 18 percent. In fact, it was only six percent.
Yes, we are miles ahead of our plan. After the outbreak of war in Ukraine, the overall market developed much weaker than expected. In addition, many consumers still have cleaning supplies stashed away as a result of the hamster purchases of the pandemic. This year we want to achieve an increase in sales of 18 percent.
And mainly through price increases? Last year you increased your prices by a double-digit percentage – more than the competition.
Last year we had additional costs of 40 million euros. That’s a lot for a company with a turnover of 500 million euros. Because we didn’t have any lavish luxury returns before, we had to pass on the burden. Basically we are through with the price increases. Anyone who still comes up with the topic in retail now has a hard time.
Mr. Schneider, thank you very much for the interview.
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