By Chris Betros

Executive Impact Dec. 28, 2009 - 06:00AM JST ( 5 )

TOKYO —

In Japan, many retail outlets such as supermarkets collect food packaging, and sometimes other items, for recycling. Some, like in Tokyo, co-operate with municipalities to also collect beverage containers – in particular PET bottles. But containers and packaging collected at retail outlets quickly fill up the collection bins and bags which often need frequent emptying.

This is where companies like Norwegian firm Tomra come in. Originally established as a wholly-owned subsidiary in 2001, Tomra Japan started a commercial business co-operation with Sumitomo Corp about four years ago. This culminated in a formal 50-50 joint venture from July 1, 2008.

Tomra develops and implements modern recycling systems and supports the operation of those systems within retail outlets. Consumers simply put their used beverage containers into a reverse vending machine (RVM), and the RVM automatically identifies, separates according to material type, and compacts the containers – all in a matter of seconds. 

Heading up the operation in Japan is Norwegian Trond Varlid. Before joining Tomra about 4 1/2 years ago, Varlid spent 15 years with a Swedish bank (9 years in London and 6 in Tokyo). Japan Today editor Chris Betros visits Varlid at the Tomra Japan office in Tokyo’s Ota Ward to hear more about the latest recycling technology and trends.

How big is Tomra in the beverage container recycling industry?

Tomra was a pioneer with machines to collect, sort and process beverage containers such as PET bottles and cans and has always been at the forefront of the industry. We are the market leader globally, with around 80% market share. However, since the deposit markets (where you receive a deposit for returning an empty bottle) only account for about 15% worldwide, Tomra decided to focus on non-deposit markets in 2001. Japan and the UK were the first non-deposit markets we went into.

Do you work with partners?

Yes, we work with two kinds of partners because in order to conduct and sell the technology solutions, we need to organize the whole recycling flow with customers, even if we ourselves don’t do it. We have technical partners that can help with installation and service maintenance, while and the other type of partner are companies that collect the materials from the machines.

How was business in 2009?

Sales grew this year. Business is progressing in a positive direction, although we are still at an early stage of business development.

Which part of the Japanese market do you focus on?

In non-deposit markets like Japan, we have so far focused on municipalities because they have a legal obligation to collect household waste, including beverage containers. They bear most of the associated costs with collecting and recycling. In Tokyo, our biggest customers are Adachi and Nakano wards, and business is growing with several other wards. They install our RVMs at supermarkets and provide staff who empty machines when they are full for collection. By using our machines, they can achieve significant cost savings due to the compaction of the containers and therefore reduced transportation requirements – which is also better for the environment.

Currently, we have machines at more than 120 supermarkets in Tokyo, and we are spreading our reach to Kanagawa and other areas. Tomra Japan also has a local distributor in the Chubu area with more than 100 installations.

How much does a RVM cost?

The most sophisticated machine model costs around 3 million yen, while we also have a simpler model at bit over 1 million yen. Most customers buy them on a leasing basis; they get a leasing company to finance them over 5-7 years.

How advanced is the beverage container recycling industry in Japan?

In some areas, it is quite advanced. At the level where the material is being converted, Japan is quite sophisticated. But at the collection end, there is little or no technology. Once consumers separate the different containers when they are discarded, workmen come along and empty the containers into the trucks and take them to processing plants. At many of those plants, a lot of processing is done manually. They are still very labor intensive.

Do you have to modify your machines for Japan?

The machines are the same as were originally developed for other markets. However, because we have continued to make progress in Japan, about two years ago, we decided to make a completely new machine for Japan, which is now in the last stage of development. Its size, shape and some functionalities are more suitable for Japanese market conditions, especially in cities where space is at a premium.

Where do you see the business going?

Our long-term vision and hope is for these machines to be a common sight in supermarkets, malls and on street corners. There are about 5-6 million vending machines in Japan now, of which around 3 million are for beverages. The number of vending machines per capita is the highest in the world, so there is a big potential for recycling machines as well.

Up until now, we have dealt mainly with the municipalities, but one of the challenges in dealing with municipalities is that they work on annual budget cycles, and we have to follow that. If we miss out on the current cycle, we have to wait another year for the next chance. So we are now also developing business with the private sector in parallel with our on-going municipality business. To that end, we are regularly talking to big store chains, beverage makers and major companies. This year, we have done our first commercial installations with Kirin, Pepsi Japan, Asahi Beverages and Tokyo Coca Cola, installed at amusement centers, outside supermarkets and at a high school in conjunction with the respective companies’ vending machines.

There are also opportunities at leisure facilities and sports arenas. Last summer, our machines were part of a three-day demo event at Jingu Stadium.

Do most consumers even know what the recycling machines are?

Initially, some customers don’t even know what the machine is for. And that’s one of the challenges that we have when we install machines at new locations. There is a certain learning curve for both consumers and supermarket staff.

There are other issues from time to time. For example, somebody might throw something in that they shouldn’t. If it is not a beverage container, the machine will reject the object but it will remain on the in-feed conveyor belt.

Vandalism has not been a problem in Japan yet, compared to some other countries. Overseas, there have been cases where some people think there is money inside the machines, which is not the case.

What are some of the more advanced features of the machines?

The recognition technology. There is a camera that takes 25 pictures per second of the object to analyze its shape, which is sent to a shape database. There is a bar code reader and material sensors to check if it is PET material. We have metal sensors to determine between aluminum and steel. There is also a weight sensor. Almost all our machines are online which means we can download the data about collection volumes, error data, and so on. If a machine stops, it sends an error email to the service engineer’s cell phone.

Is Tomra involved in any CSR (corporate social responsibility) activities in Japan?

Yes, that is natural for our business. Tomra took part in an eco-event in Omotesando Hills recently. We had two RVM machines there. In Adachi Ward, we are part of the Eco-Point program that allows participants to earn money by recycling their empty PET bottles using Tomra machines. Residents who sign up are given a special Smart card by the ward on which points can be registered every time they return PET bottles to designated RVMs. Card-holders are awarded four eco-points per bottle and are given a coupon worth 100 yen for every 1,000 eco-points accumulated. The coupons can be used as cash when shopping at participating supermarkets.

What is a typical day for you?

I show up here most mornings between 8:30 and 9 and often leave around the same time in the evening. I am out and about a lot.

Any weekend work?

I try not to, but operational staff may have to, since our machines are on 24 hours a day. Service level expectations are high in Japan. We have field technicians and we can outsource, if needed.

What do you like to do when you are not working?

I like classical music and jazz concerts. Tokyo is a great place for both. I also enjoy squash, bicycling, skiing and playing with my family.

For more info on Tomra Japan, visit www.tomra.co.jp