The Coffee Cup Crisis: Starbucks Needs a Greener Solution

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People get used to grabbing a cup of Starbucks coffee before starting their day. But, would you mind spending more on your single-use coffee cup? Apparently, no one would do that. While since 2020, customers will be charged an extra 25 cents if you drink in a disposable cup at any shop in Berkeley, California. It sounds like a great way to cut down on disposable coffee cups, but for chains like Starbucks, which goes through about 6 billion cups a year, this represents no less than an existential dilemma, and Starbucks needs a greener solution to handle its cup problem.

Litter Reduction Ordinance, the policy passed by Berkeley’s City Council in January 2019, is designed to reduce single-use food ware from entering the landfills and 25 cents paper cup fee is part of it. By far, it is the first and the hardest line drawn to-date against single-use cup waste by any U.S. municipality. Although it is not the first worldwide policy to combat the use of disposable coffee cups, its emergence marks that the nation started to say ‘no’ to those environmentally-friendly single-use paper cups.

“Most people don’t know this, but Starbucks paper cups are not recyclable in most cities across the U.S. because the cups are lined with plastic. In today’s world, a paper cup is no longer just a paper cup. It’s plastic pollution,” said Ross Hammond, the former U.S. Campaigns Director for Stand.earth.

As Hammond said, the majority of customers reasonably think that Starbucks single-use paper cups are environmentally friendly and can be completely recycled. Starbucks, the most successful worldwide coffee chain, operates over 28,000 stores across the globe. People assume these cups with the green mermaid logo will get recycled and turned into new products after throwing them in the recycle bin. However, Starbucks disposable cups cannot actually be 100 percent recycled.

Why single-use cups are hard to recycle

While drinking a Grande size cup of Americano in the morning, look out for the statement at the bottom that reads “This cup is made with 10 percent post-customer recycled fiber. Do not microwave.” The main reason why Starbucks does not recommend the cups be put in the microwave is because each one is lined with a thin layer of 100 percent oil-based polyethylene plastic, a waterproof material to hold liquids safely.

According to research from Creative Mechanisms, a Pennsylvania-based engineering company that specializes in plastics, polyethylene is an incredibly useful commodity plastic. Because of the diversity of polyethylene variants, it is incorporated into a wide range of applications. It is always being used to make containers, plastic bags and wraps.

Although the polyethylene could be recycled the same way as paper, the current technology is not widespread across the country. This is what makes the polyethylene such a large pollution problem. According to the data from Stand.earth, a non-profit environmental organization also located in Seattle along with Starbucks, is one of the organizations and activists that is pushing Starbucks to pay more attention to environmental issues, only 18 of the largest 100 U.S. cities provide residential pick-up of paper cups for recycling. Most recycled paper mills are not able to separate the polyethylene from the paper cups due to the lack of the recycling capacity of polyethylene.

Credit to Jiajun Chen

Other research from the Carton Council shows that only three paper recycling mills in the U.S. can process plastic-coated paper. These mills make up less than 1percent of the over 450 pulp and paper mills in the U.S.

In the end, most cups end up in a landfill.

In addition to the landfill, those paper cups and other kinds of trash such as paper box, are wrapped and exported to China. Jim Ace, the senior campaigner for Stand.earth, explained that compared with landfills, China could process much of the waste and turned it into new products, and the price of shipping commodities to China is very cheap. China was the biggest garbage-importing country across the world, disposing of over half the world’s garbage in the past two decades. However, this changed after the Chinese government announced a ban on imported trash at the end of 2017.

Ace also pointed out that, as the fastest-growing market for Starbucks, China doesn’t want to receive more trash from North America. He says this is because China already has to dispose of large amounts of garbage from their local market. China’s restrictions on the import of waste will indirectly lead Starbucks and other companies to increase trash in landfills across the U.S.

‘To be charged rather than get discounts’

Besides the policy introduced by Berkeley, the current incentive plan in the U.S. launched by Starbucks allows customers to receive 10 cent discounts if they enjoy Starbucks drinks using their mugs or cups, but only 1.4 percent of Starbucks’ beverages were sold in reusable cups as of spring 2017. However, Todd Paglia, the executive director of Stand.earth, thinks that this is not enough of a discount to encourage customers to bring their own cups when they normally pay $4 or $5 to purchase a cup of coffee. He also suggested the discount should be increased at least 50 cents or even $1 per cup.

Ace held similar perspectives to Paglia’s. He thinks changing the current incentive plan from a positive to a negative thing would have more of an impact on customers’ behavior. “If people want to use single-use paper cups, they have to be charged rather than get discounts when they bring their own cups,” Ace said.

The government plays a crucial role in reducing the use of disposable coffee cups. As an iconic brand, Starbucks does not want to revise their current market plan due to the fierce market competition and customer loyalty. However, Ace says that the government can push companies to change through establishing policies or drafting documents.

“They’re smart. They know that. If they don’t take action, it actually is worse for them,” Ace said. “I understand why they do it, but I think the example of the UK shows us that, as soon as either a city or a state government starts to take action on it, the private sector gets very active, very quickly. It’s an interesting dynamic.”

In July 2018, all Starbucks stores in the U.K. were required to add 5 pence, about 25 cents, to each single-use cup due to the introduction of ‘Latte Levy’ by the U.K. Parliament. This was to encourage people to reduce using disposable cups and cut down the enormous quantity of paper cups that could not be entirely recycled in the U.K. According to a report from the U.K. Parliament, more than 2.5 billion disposable coffee cups are used in the U.K. each year, but only less than 1 in 400 cups (0.25%) is properly recycled. Thanks to the rapid growth of coffee shops in the U.K. over the past 20 years, disposable coffee cups consumption will approximately reach 3.75 billion per year by 2025 without any regulation.

The trial worked. Six weeks after the ‘Latte Levy’ was introduced, the use of reusable cups in 35 selected Starbucks shops across parts of central and west London increased by about 150 percent, according to a preliminary assessment by Starbucks. Although the proportion of customers bringing in their own mugs was still modest – only 5.9 percent compared to 2.2 percent, the ‘Latte Levy’ was still seen as a long-term and effective way to control the use of disposable coffee cups in the U.K, according to a report by Independent.

“We are encouraged by the initial results of our trial that show that by charging 5p and increasing communication on this issue, we can help to reduce paper cup use,” said Jason Dunlop, the chief operating officer of Starbucks in the U.K.

In response to growing environmental problems, other European countries followed Britain’s lead in reducing the use of disposable coffee cups. Up to 200 million disposable coffee cups are thrown away every year in Ireland, according to MyWaste, an Irish government-funded organization. In November 2019, Ireland imposed ‘Latte Levy’ to cut down on single-use coffee cups. Customers would pay an additional 10 pence to the price of a takeaway coffee cup.

Besides, Germany introduced the ‘FreiburgCup’ scheme in 2016. The project aims to encourage people to use recycled cups in coffee shops. It is very simple for customers to participate. Customers only need to pay a deposit of one euro when ordering coffee to use the reusable coffee cups. After drinking the coffee, they can return the cups to any coffee stores and get the deposit back. For the convenience of the customers, around 60-70% of local coffee shops participated in the project in Germany.

South Korea, another leading country in coffee consumption, announced a campaign to curb the use of single-use at coffee shops in August 2018. Shop owners could be fined up to 2 million won ($1,780) if they are found to offer disposable cups to consumers frequently. In order to promote the implementation of the campaign, the government also provided financial support for recycling firms by 1.7 billion won ($1.5 million).

The cup of the future

Caption: Starbucks is experimenting with coffee cups in an attempt to reduce slowly decomposing waste. (Credit to Daniel Acker of Bloomberg)

Starbucks is taking action in the face of growing policy opposition.

In March 2018, Starbucks announced its new environmental plan regarding disposable paper cups. To create an innovative sustainable cup in the future, Starbucks and McDonalds pledged a fund of $10 million for the Closed Loop Partners, an investment platform that funds sustainable consumer goods, recycling and the development of the circular economy. As an essential part of investments, the NextGen Cup Challenge, an innovation challenge to redesign the fiber to-go cup, was created by the Closed Loop Partners.

The NextGen Cup Challenge attracted 480 entries, ranging from amateurs to industrial design firms. All 12 of the winning entries at the first stage came up with greener alternatives to the plastic lining, such as water-based coatings. Up to six of 12 winners will enter a business accelerator, where their innovations could be tested whether they can scale or not.

Caption: winning works of NextGen Cup Challenge. (Credit to NextGen)

“The level of interest we saw in the Challenge demonstrates a real appetite for long-lasting, sustainable packaging solutions,” said Kate Daly, Executive Director of the Center for the Circular Economy at Closed Loop Partners. “This level of industry collaboration in support of the NextGen Cup Challenge is really exciting, and we look forward to building on this momentum to encourage more innovative solutions. Fully recoverable fiber to-go cups are just the beginning.”

However, Starbucks was forced to make a promise to the public to quell the anger of people in 2008 that their paper cups would be 100 percent recyclable by 2015. Starbucks also promised that they would establish an incentive plan, which would encourage approximately one-quarter of their customers to bring their own coffee cups to the store. To achieve this goal for the environment, Starbucks also had a partnership with the Massachusetts Institute of Technology, aimed to develop new disposable paper cups.

But Starbucks failed to fulfill their commitments, saying that they were unable to find an available plan to execute after attempting for two years. Therefore, the company adjusted its promise for the number of customers they hoped would bring their own cups to the store from 25 percent to 5 percent.

Although Starbucks had failed to follow its commitments before, Paglia maintained a relatively optimistic attitude to this new environmental plan in response to the public pressure.

“There are more and more big Industry players working together to solve this problem, so I think that looks pretty promising,” Paglia said. “I would say that none of this would be happening if the public and if Stand.earth didn’t pressure Starbucks to live up to its original promise. I think that they are now going to do that.”

Hog Crisis in China

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  • A pig farm in Yiyang, Henan. China has culled 1.2 million pigs to control a deadly swine fever . (Credit to New York Times)

China’s pork prices hit record levels after an epidemic of African swine fever killed millions of pigs, triggering a severe meat shortage in the world’s top pork consumer.

Pork prices in China surged past 50 yuan ($7.1) per kilogram. According to the data from the Ministry of Agriculture and Rural Affairs in October, pork prices rose more than 100 percent in October from a year earlier, contributing 2.43 percentage points to the CPI rise, and accounting for nearly two-thirds of the year-on-year increase.

For more than a year, China has been trying to contain a vicious epidemic of African swine fever, a highly contagious disease that is harmless to humans but kills almost all infected pigs. The Chinese government announced the first outbreak of the disease in August 2018, and since then, outbreaks have been reported in several provinces across the country.

In response, the authorities banned farmers from feeding swill to pigs. Leftovers are seen as the main channel of transmission to healthy herds because the virus can live for days in feces and raw meat. Officials have imposed quarantine measures and transportation restrictions in areas where the disease has broken out.

However, safety and hygiene standards have been difficult to enforce in China’s millions of small backyard pig farms, which feed most of the country’s pigs. The government says 1.2 million pigs have been culled so far to try to stop the spread of the disease, which is a tiny fraction of the 700 million pigs slaughtered in China last year.


In a supermarket located in Beijing, the pork counter reads jokingly “pork supports installment payment”. (Credit to Abuoluowang.com.)

Analysts estimate that pork prices could double by the end of 2018. As officials prepare for bigger price increases, Beijing will be faced a growing number of challenges.

To offset the surge of pork prices, officials subsidized about 3.2 billion yuan ($452 million) to low-income families who are struggling to afford pork.

Chinese authorities have also asked local governments to free up money that could be used for artificial insemination technology, a way to encourage farmers and producers to breed more hogs. The Chinese government has also drafted plans to increase subsidies, loan support and insurance coverage for the pig industry in the country.

Moreover, the Chinese government released 1,500 metric tons of pig meat in the past two months, and the majority of those were frozen pork reserves. China set up a national strategic pork reserve in the 1970s as a way to deal with emergencies and stabilize pork prices.

Although the Chinese government hasn’t released a report on the amount of frozen pork in its reserve yet, experts warn that the Chinese government may not be well prepared enough to deal with the pork crisis.

“China’s pork shortage will worsen in the rest of the year, but the government doesn’t have effective methods to fill the gap in the short term,” said Chen Wen, the Wanlian Securities analyst.

Chen estimates that China will face a shortage of about 10.8 million tons of pork this year. She added that China’s supply of frozen reserves isn’t enough to make up for that.

Selling $1 billion in 68 seconds: Alibaba hits record on Singles’ Day

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A screen shows the value of goods being transacted during Alibaba Group’s Singles’ Day global shopping festival at the company’s headquarters in Hangzhou, Zhejiang province, China, November 12, 2019. REUTERS/Aly Song

After 24 hours of frenzied shopping, Chinese e-commerce giant Alibaba said its sales for its annual Singles’ Day shopping reached 268.4 billion yuan ($38.3 billion) and hit another record high.

Singles’ Day shopping is also known as “Double Eleven”. Akin to Black Friday and Cyber Monday in the United States, as the largest e-commerce retailer in China, Alibaba began its annual sales promotion on November 11 in 2009, with merchants offering attractive discounts. But Singles’ Day is much larger. The Black Friday gained less than $25 billion in sales last year and less than $8 billion on Cyber Monday. Alibaba Group only spent 68 seconds to sell $1 billion of goods on their Tmall and Taobao and sold the first $10 billion in half-hour.

The event has been replicated at home and abroad, with promotions from rivals in China such as JD.com Inc and Pinduoduo Inc as well as South Korea’s 11th Street and Singapore’s Qoo10. JD.com Inc, the second-largest e-commerce giant, sold a total of 204.4 billion yuan($29.2 billion) of goods on Singles’ Day.

(Credit to Jiajun Chen)

According to the data from Alibaba Group, in the first year of Double Eleven in 2009, China’s online shopping market was not yet mature. Chinese people were not familiar with online shopping, and some remote families even did not have access to the internet. Most consumers lived in first-tier cities such as Beijing and Shanghai, so the sales were only 50 million yuan ($7.1 million).

However, an increasing number of people began to get access to the internet and enjoyed the convenience of online shopping with the rapid development of the internet in China. By this year, the sales increased by more than 500 times compared with 2009 and hit 268.4 billion yuan ($38.3 billion).

According to a report released by China’s Office of the Central Cyberspace Affairs Commission, 854 million people were actively using the internet in China by June 2019, and China’s internet penetration rate was 61.2 percent. Among the significant number of internet users, online shoppers accounted for 74.8 percent and reached 622 million.

“The younger generation is buying more, and the customer from rural areas, the customers from lower-tier cities, they are buying imported products,” Tmall General Manager Alvin Liu told reporters.


Alibaba’s massive 11.11 countdown party included American star Taylor Swift on a moving stage with LED lights that required 300 people to operate. (Credit to Alibaba)

To attract more people to participate, especially younger generations, Alibaba hosted a “Countdown Gala” featuring a performance by pop singers, including Taylor Swift. This year, Alibaba also focused on live-streaming through its platform. Over 200,000 brands from all over the world took part in the promotion of Singles’ Day, and some retailers hired social media influencers or celebrities to promote their products before the shopping festival.

Influencers are promoting products vis live-streamed video. (Credit to Alibaba)

“Nearly all our brands have opted for live streaming promotions some times this year,” says Josh Gardner, who helps overseas companies sell products on Tmall as CEO of Kung Fu Data.

Kweichow Moutai becomes the first 1000-yuan stock in China

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The iconic baijiu produced by Kweichow Moutai.
(Photo credit to Kweichow Moutai’s official website)

After exceeding 1,000 yuan ($145) per share, Kweichow Moutai, the Chinese liquor giant’s share became the most expensive stock in China’s A-share market on June 27, 2019, aided by ever-growing demand.

While investors and analysts were not surprised by the strong performance of Moutai. Analysts from both Bloomberg and China International Capital Corp. Ltd. were optimistic about the continuous growth of Moutai’s share and raised their expected price of the stock.

A last-year forecast from Bloomberg predicted that Moutai’s share would hit the 1,000-yuan mark in 2019. Moreover, Tingzhi Xing, an analyst of China International Capital Corp. Ltd., also forecasted that 1,250 yuan would be the target price within 12 months.

Kweichow Moutai is a distillery from Moutai town in southwestern China’s Guizhou province. Moutai is famous for its iconic premium baijiu, a sorghum-based liquor, and it is usually used to serve at business meetings and official banquets. In 1972, Moutai was used to entertain President Richard Nixon on his historic visit to China.

President Richard Nixon and Prime Minister Enlai Zhou were tasting Moutai at the reception dinner in 1972. (Photo credit to news.ifeng.com)

Just as the western world’s obsession with premium wines, Chinese consumers are fond of baijiu. Thus, the consumption of high-quality baijiu in China is vast and still growing. As a representative of high-end baijiu, Moutai creates considerable profits.

According to the data cited by China Daily, an official Chinese English-language newspaper, the total revenue was 75 billion yuan, and its net profit was 34 billion yuan in 2018. Both its total revenue and net profit increased 23% over the previous year. Furthermore, the sales of Moutai rose 14% over 2018 to 100 billion yuan in total, and its net profit achieved by 45 billion yuan.

Another report released by China’s Guizhou province shows that the overall GDP of Guizhou province is 1.48 trillion yuan, and Moutai’s value now attained 1.24 trillion yuan in 2018. It means that the value of Moutai dominates nearly 85% of provincial GDP.

(Photo credit to Bloomberg)

Besides being the most valuable stock in China’s A-share market, Kweichow Moutai also surpassed Diageo in 2017 and became the most valuable liquor company in the world, according to Refinitiv, a financial technology and data company based in London. Diageo is a British multinational drinks company and the owner of Johnnie Walker.

Due to the generous profits and ever-increasing demands of Moutai, analysts foresaw that the price of Moutai’s share would keep going in the future. “I can’t see any growth cap on the company in the long run, unless the Chinese don’t drink one day,” fund manager Dai Ming told WARC, the global specialist information company, in a marketing report. “The liquor culture is deep-rooted in China, and when you do business here, you drink. It’s a product with demand outstripping supply, so growth is quite visible.”

Men’s underwear may tell you how the economy is doing

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Photo credit to Global Times

A rise in men’s underwear sales might be part of the signal that the Liaoning Province in northeast China’s is on the path to recovery.

The economic growth of Liaoning Province was 4.2 percent in 2017 and 5.6 percent in 2018. At the same time, according to a report released by JD Big Data Research Institute, part of one of China’s biggest online shopping sites, sales of men’s underwear in Liaoning rose 42 percent in 2017 over the previous year and went to another 32 percent in 2018. The rate of increase in underwear sales in Liaoning was greater than in any other province. An analysis of consumption also shows that Liaoning’s consumers pay more attention to the quality and color variety of clothes.

“The recovery is mainly due to coal and steel prices rising during the period, and the recovery can also be seen in the volume of railway and road freight, electricity consumption of industry, volume of business and employment,” said Liang Qidong, vice president of the Liaoning Academy of Social Sciences, on a Global Times report.

Liang also addressed that the Men’s Underwear Index and similar indexes like “yogurt index” and “bread index” could be taken as an economic indicator.

Liang was not the first person to come up with the concept. Back in the 1970s, Alan Greenspan, the former chairman of the Federal Reserve, first introduced and popularized the Underwear Index. Greenspan found that there was a close connection between the economy’s performance and the sales of men’s underwear. Declines in the sales indicate a weak economy, while upswings predict a recovery in the economy. Behind the theory, a basic assumption is that men’s underwear is a necessity instead of a luxury item, so sales of men’s underwear will keep relatively stable except in times of a sluggish economy. Therefore, men’s purchasing habits for underwear is thought to be an effective economic indicator that can detect the beginning of a recovery during an economic downturn.

The sales of men’s underwear dropped in an economic recession in the United States. Data show a 2.3 percent drop in sales of entire men’s underwear products in 2009, according to Mintel, a London-based market research firm. While as the economy recovers, sales of men’s underwear in the United States have risen. As reported by Quartz, U.S. underwear sales grew by nearly $1.1 billion between 2009 and 2015, after falling in the wake of the 2008 financial crisis. Hanes, a popular lingerie brand, has seen a similar trend.

“If you look at sales of male underpants it’s just pretty much a flat line, it hardly ever changes,” economist Robert Krulwich told HuffPost in an article after the publishing of Greenspan’s book, “The Age Of Turbulence.” “But on those few occasions where it dips that means that men are so pinched that they are deciding not to replace underpants. And [Greenspan] said ‘that is almost always a prescient, forward impression that here comes trouble.’”

However, the concept may be not academically accurate, even though the Underwear Index can be used to reflect the economic situation from a province to a nation. Several reasons presented by critics on Investopedia should be considered, including the frequency of women purchasing underwear for men, and an assumption that men would not purchase new underwear until it is threadbare, regardless of the economic condition.