Thomas CEO Tony Uphoff on Sourcing Alternatives to Plastic Drinking Straws, Regulations and Consumer Sentiment

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The year 2018 seems to be the beginning of the end of plastic drinking straws, and sourcing data from Thomasnet.com indicate that procurement professionals are scrambling to identify alternatives.

One of the top marine polluters, plastic drinking straws have been banned in various countries, cities and royal estates around the world, including Scotland, Taiwan, Vancouver and Buckingham Palace.

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But in the U.S., perhaps the biggest sign of the turning tide is Starbucks’ announcement last week that it would stop using disposable straws by 2020. McDonald’s is on a similar course, as the fast food giant announced earlier this year that it will be experimenting with paper straws in some of its locations and phasing out plastic drinking straws in all of its locations in the U.K. and Ireland by 2019.

Data from supplier discovery platform Thomasnet.com shows that sourcing activity for drinking straws and paper bags has increased significantly compared with the historical average. Spend Matters recently spoke with Tony Uphoff, president and chief executive at Thomas, to learn more about the industries behind this spike, the roles played by regulations and consumer sentiment, and those iconic red-and-yellow straws.

Spend Matters: In your blog post, you had looked at sourcing data for March, April and May. Has this trend continued?

Tony Uphoff: As of June 23, that rolling 12-week average has gone up to 89%. We were somewhat surprised by how significant [it was]. It clearly is gaining a lot of momentum right now.

drinking straws sourcing

Source: Thomasnet.com

Spend Matters: How many users are in this sample?

Tony Uphoff: We don't break out users by individual category, but we don't use sample sizes that are below 1,000 because we want to make sure that what we're seeing is what we think of as actionable data. So it's based on enough of a sample size that we believe is predictive of what's happening in individual markets.

Spend Matters: How important a factor are regulations in this?

Tony Uphoff: There's a fair amount of energy from regulations, either at a state level or a city level. I think that's what's driving this. I think the sustained lift we're seeing is really connected to recent announcements in New York City. The city council is introducing a bill that will ban public straws throughout the city. Similar restrictions have been passed in towns in California, and there's a broader initiative across the state of California to see if they can't get that done at a state level.

To a lesser extent, some of this could be driven by consumer sentiment. There's some evidence that some companies are feeling pressure from shareholders — in the spirit of do right by the environment.

Spend Matters: You found that the top industries that are driving the increased sourcing of drinking straws are the food and beverage, wholesale trade office supplies, and healthcare and medical. Are the same industries driving the increase in sourcing of paper bags?

Tony Uphoff: It is very, very similar. And I'll tell you what's interesting about paper bags, and this is somewhat ironic. You’re still seeing an increase, but while that was up a whopping 152% month over month on the platform, [now] it's only up 18%. Is that a reflection that there's less energy around that right now? There seems to be more regulatory energy around the idea of shifting to paper bags or certainly at least away from plastic bags, [but] the reality is that doesn't always line up with demand.

We're seeing a lot of demand, believe it or not, for commercial suppliers of polyethylene or plastic bags, which is actually up in demand, which seems ironic given what we're talking about. But we are still seeing a lift in paper bags even though the growth has cooled from the previous cycle of 152%.

Spend Matters: It seems safe to say that legislation is moving in the direction of plastic bans. Now, Michigan, which banned banning plastic bags, is of course an exception. Would you say that consumer sentiment is also steadily moving in the same direction?

Tony Uphoff: I'm going to give you a qualified yes. If you look more broadly at research on consumer behavior and interests, there's clear evidence that consumers will say that they really are interested in environmental issues. But if you actually look at some of the trends from recycling and actual consumers demanding an alternative to plastic bags, that's actually not happening.

The consumers are really interested in this, but I don't think consumers are voting en masse with their wallets. [Companies] are always doing consumer and brand surveys, and I'm certain those surveys are showing consumers are increasingly interested in an alternative to plastic. At the end of the day, if I'm a consumer of McDonald's or Starbucks, am I willing to pay more? Am I going to stop going to those places because they're using plastic and they're not using yet paper? I don't think so.

Spend Matters: This ties in well with the issue of cost. Is there a significant difference in cost between paper and plastic drinking straws?

Tony Uphoff: My guess is at a performance and volume level, the pricing's probably not dramatically different. I do think that there are some things between paper and plastic in terms of longevity. I'm a little out of my element on this, but I believe plastic provides you with the ability to hang on to materials that have been produced far longer than you would be able to, if you were stockpiling, say, paper straws. If you're a volume buyer, that matters a lot because you could buy in very large lots and perhaps hang on to that for years, versus a shorter life cycle for a product that's made out of paper.

Spend Matters: Given that McDonald’s shareholders overwhelmingly voted against experimenting with paper straws in the U.S. locations, should we be surprised that the company ultimately decided to go through with it after all?

Tony Uphoff: I imagine they are having internal conversations that are very similar to [this one]. Is there a cost benefit ratio? Is there a performance ratio benefit? Who are the suppliers who could produce paper straws in volume? Are there regional as well as global sources?

Part of what they might be doing is introducing and experimenting with paper as a way of seeing what kind of consumer feedback they get. Is the experience the same? Do they see any brand degradation? I think one of the reasons the shareholders might have voted down the proposal is that the red and yellow striped plastic straw is iconic. It may not quite be like the golden arches themselves, but it's iconic, [like what] the green plastic straw would be at a Starbucks. And I think you'd want to be very careful before you made that decision.

So I think they're probably analyzing the consumer experience, the whole supply chain and the logistics and dollars and cents of the supply chain. But probably also brand impact, and that's something that's particularly consumer companies study very carefully. You could make what appears like a very small change, and it can really affect people's perception of an individual brand.

Spend Matters: The U.K. seems ready to implement a ban on single-use plastic. And you mentioned the bans that are being implemented or proposed in various places in the U.S. Is McDonald’s betting that these bans will go through and thinking that it had better make the switch? In other words, do you think McDonald’s is being driven more by potential legislation or consumer demand?

Tony Uphoff: The answer is probably both. It would take a cynic to say it's a head fake by McDonald's to appease regulators, [that is, to] disclose that they're experimenting with paper to slow down regulators. That may or may not be accurate, but I think I'd be overly cynical if I came with that point of view.

But my guess is they're smart, they're doing their research and they can clearly see that there's consumer sentiment [and] increasing regulatory issues. [And McDonald’s] is probably also testing to see whether they can get that iconic coloring on a paper straw the same way they can on a plastic straw.

Spend Matters: Saving the most important issue for last, what is the experience of using a paper straw like?

Tony Uphoff: In my experience with paper straws, [it] isn't very satisfying because they don't hold up. The paper absorbs the liquid you're drinking, and it starts to collapse. The ‘user experience of a paper straw’ seems ludicrous to say out loud, but I bet you there is some testing you would need to do so that you don't inadvertently mess up a positive user experience, particularly of a high-volume product.

McDonald's serves up straws every day — probably in the tens of millions a day of straws. Probably in the hundreds of millions around the world. Think about it. It's got to be mind-boggling.

This interview has been edited and condensed. See Tony Uphoff’s original blog post on sourcing drinking straws for more information.  

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