Did these guys actually crack the code on making an environmentally-friendly paper bottle?

Six years ago, a bunch of scientists at the British drinks giant Diageo set out to create such a bottle, and now they're now opening a factory near Glasgow, Scotland, that will pump out 40 million of them a year.

Pulpex, a privately held packaging tech company created in 2020 as a venture between Diageo and the investment group Pilot Lite, has no illusions about replacing plastic bottles. The world is using some 500 billion of those a year. But Pulpex hopes to make a dent. "We're trying to solve a global [environmental] problem," says veteran Diageo commercial scientist Scott Winston, who has been guiding the work.

Pulpex isn't the first to take swing at paper drink containers. Prototypes have appeared for a decade or more, many of them for wine and spirits. But the Pulplex offering has one critical feature that its predecessors lacked: a sprayed on inner barrier coating that doesn't contain plastic-and doesn't have to be separated from the bottle to be recycled.

Good timing, it seems. Paper is experiencing something of a renaissance, says Amazon.com's John Sly in a recent blog post about the e-commerce company's shift to paper packaging. Sly, part of the e-commerce company's Packaging Innovation Lab Team, said in the post this month that paper is becoming cool again.

Paper bottles have clear appeal, and not just for the environmentally conscious. They are lighter and less breakable than glass, which makes shipping easier and less expensive. Little wonder that other companies are joining Diageo in the quest. PepsiCo, Unilever, and L'Oréal are all collaborating with Pulpex or rival companies like Pulpac and PA Consulting.

Making paper bottles is harder than it sounds. Liquid and paper don't necessarily play nicely together, as anyone who has tried drinking through a paper straw can confirm. Devising a barrier that keeps the paper container dry and the liquid contained is also problematic. Past efforts have leaned on plastic, which can't be recycled unless its pried apart from the paper.

Cambridgeshire-based Pulpex's secret sauce is something called wet molded fiber technology-wood pulp is mixed with water and poured into a one-piece mold and then thermoformed to harden and dry it. The inside of the bottle is sprayed or flow coated with a food-grade, water-based, nonplastic material. That lets the bottle hold liquid for as long as two years. The composition of that spray coating can be changed depending on the type of liquid being contained.

This molded fiber technology could be what pushes paper beverage bottles in to the mainstream. The molded fiber packaging market is expected to reach $4.7 billion in 2026 and $5.5 billion by 2030, according to market intelligence firm Smithers.

Sian Sutherland, co-founder of A Plastic Planet, which aims to cut plastic use globally, said the decades of work to solve the problem is finally coming to a head. "We need... a safe, affordable, guaranteed-to-work solution that reduces current plastic usage by 95%," she tells Barron's. "We need everybody to collaborate on this."

In the European Union, new packaging rules could boost adoption. Various paper beverage bottles have been tested in the past few years, including by Diageo's Johnnie Walker Black Label scotch and Carlsberg Beer.

The next biggest challenge for all these players: manufacturing at scale. Pulpex intends to do this as licensing partnerships. For instance, the company struck a supply chain deal with Chilean pulp maker CMPC and a collaboration on the inner coating with BASF and SciTech Adhesives. It also has investment backing from CMPC's venture fund, which went in on a $75 million funding last year to fund the factory's construction, led by the U.K.'s National Wealth Fund and Scottish National Investment Bank. It now has a deal with Switzerland-based paper maker Perlen Industrieholding to make the bottles in that market, and it hopes to have 10 such partnerships by 2030.

Purely Scottish Natural Mineral Water's CEO Ray Donovan met with Pulpex about two years ago to go over the concept. Already, their packaging was aluminum cans or boxed water. Single-serve paper bottles would complement those designs.

While made of paper, the outside of the bottles have a smooth rigid shape and can be customized to suit different brand designs. Prototypes have been on offer at various U.K. events, such as the Henley Regatta last year and this month at London Packaging Week.

"It's very much the cool factor," Donovan told Barron's, adding he hopes it catches the same social media buzz created by Voss water bottles, a luxury Norwegian bottled water brand known for its sleek cylindrical containers that were all the rage in the mid-2010s. "There's a novelty value."

The latest customer to sign up is British laundry detergent brand smol. It will start using the bottles this fall.

Is it perfect? No. While Pulpex's bottles are paper, brands can choose plastic or metal caps and lids, depending on their preference. There are companies developing caps and lids that aren't plastic or metal. The bottles themselves are fully recyclable materials, including the plastic or metal, but it remains to be seen whether local recycling facilities have the right equipment to process them. If they do end up in a landfill, they will naturally decompose-the paper part, that is.

"People want bottled water, we're going to do it as responsibly as we can," Donovan said. "We're trying to be the least bad we can be."