In-depth interview to BN Americas - "Bioplastics packaging in Brazil doesn\'t have the same appeal [as in US, Europe] for the customer because they are very price orientated"

1. Monday, June 21, 2010
In-depth interview
"Bioplastics packaging in Brazil doesn't have the same appeal [as in US, Europe] for the customer
because they are very price orientated"
Alessandra Lancellotti
Latin America research team leader for chemicals, materials and food
Frost & Sullivan
BNamericas spoke with Frost & Sullivan research team leader for Latin America's chemicals, materials and food division, Alessandra
Lancellotti, about developments in Brazil's bioplastics market.
BNamericas: What exactly does the term bioplastics cover?
Lancellotti: We use the same definition as the European Bioplastics Association. Bioplastics are plastics based on renewable sources
and biodegradable, for example, PLA; based on renewable sources but not biodegradable, for instance, green PE; and based on fossil
resources and biodegradable, for example, Basf's Ecoflex.
BNamericas: How big is the bioplastics market in Brazil?
Lancellotti: Brazil is a nascent market for bioplastics compared to Europe and the US. It's a very small market based on pilot scales in
small companies and last year totaled about 1,500t, representing revenues of some US$4mn-5mn. The market in 2009 was composed
mostly by the resins PLA, starch-based and PBH.
BNamericas: What are the leading applications for bioplastics?
Lancellotti: The major applications today are for food packaging, agricultural products, mainly films, and plastic bags. Food packaging and
films for agriculture represent about 50% of the market.
Consumer products, such as disposable plates, cups and utensils, decorative items and toys, account for about 10% of the market.
BNamericas: What are growth forecasts for the market in the coming years?
Lancellotti: Next year the market will be very different from today, as Braskem, Brazil's largest petrochemicals company, enters the
market with the startup in October or November of its 200,000t/y green PE project. The market for bioplastics in Brazil next year is
estimated at around 65,000t.
Initially, as the market in Brazil is less developed, Braskem will export the majority of its green PE, to the US, Europe and Asia.
In 2015, the market in Brazil is projected to reach 250,000t, considering Braskem's green PE project, [Belgian chemical group] Solvay's
bio-based PVC, which is expected to enter the market in 2012, Brazil PHB Industrial, which today has pilot scale production that is
expected to be commercial in two years, as well as increased imports of PLA from NatureWorks [owned by US agribusiness company
Cargill].
BNamericas: In 2015 will the market for bioplastics still be dominated by packaging applications?
Lancellotti: Yes, the market will continue to be dominated by food packaging and agriculture applications but with some diversification into
cosmetic packaging and healthcare, which are promising markets for bioplastics in Brazil. In healthcare care, for example, about 45% of
equipment and disposables are made from plastics, mainly PVC.

2. Green PVC and polyethylene have the same technical properties as conventional plastics so they can also be applied in construction.
Electronics is another market that can apply bioplastics, for example, in the US the casing for the iPhone is being made from bioplastics.
BNamericas: How is the development of the bioplastics industry affecting the traditional plastics industry?
Lancellotti: There is no major concern from the traditional plastics industry because the bioplastics industry is not expected to have a
huge impact on conventional resins. Even if you consider the volumes projected for 2015, it will still only constitute about 5% of total
demand for plastics in Brazil. However, for specific sectors, for example food packaging, the percentage will be higher, but not enough to
be considered a threat to the traditional resins market.
At least in the beginning bioplastics will be more for niche applications, for example, cosmetics packaging for premium products because
of the higher cost associated with the materials.
BNamericas: Why does the market in Brazil still lag behind the US, Europe and Asia?
Lancellotti: It's a combination of factors but it has a lot to do with customer awareness, which is more developed in the US and Europe
than Brazil. Bioplastics packaging in Brazil doesn't have the same appeal for the customer because they are very price orientated. In
Europe and the US customers take into account the cost effectiveness of the product, the environment effects.
Customers in Brazil are also less exposed to marketing. For example, in supermarkets in Europe and the US there are areas dedicated to
the sale of biofood and bioproducts, and in Brazil that simply does not exist.
BNamericas: How much more costly are bioplastics to produce?
Lancellotti: In Brazil it is estimated that bioplastics produced from sugarcane ethanol such as PE and PVC will have an initial cost 15-20%
higher than traditional PE and PVC.
BNamericas: And what about the true environmental benefits?
Lancellotti: It is estimated that for green PE there will be a reduction of 2.5t of CO2 for each ton produced. There are also cost savings in
other areas, for example, energy consumption which is about 50% lower.
BNamericas: What other issues present themselves, for, example, recycling and regulation?
Lancellotti: Both these issue are very important. Regarding recycling, in Brazil there are about 400 companies solely dedicated to plastics
recycling, a market that is worth about 1bn reais [US$549mn] a year. These companies could also recycle bioplastics but there are
problems associated with collection in Brazil which result in companies not having enough material to process as recyclable material ends
up in the conventional garbage.
As the bioplastics market grows in Brazil it's necessary to invest in infrastructure to collect bioplastics for recycling or for composting.
BNamericas: And regulations?
Lancellotti: PHB Industrial, for example, follows international regulations because in Brazil there aren't tight regulations for the industry.
But last year saw the foundation of the first bioplastics association in Brazil, Abicom, and they are beginning work on drawing up a
regulatory framework which will be very important for bioplastics exports, which have to meet international standards.
It is also important to create a logo identifying bioplastics products in Brazil, especially because of the collection issue.
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By Linus Hoggett