The Supply Side: Omaha manufacturer gets eco-friendly coolers into Walmart

Jon Ehly, CEO of Omaha, Neb.-based Plastilite Corp., said the company is eager to make its first shipment of eco-friendly foam coolers to 500 test stores in the next couple of weeks. Ehly was one of 500 people who pitched their products to Walmart at the retail giant’s Open Call in June.

Ehly made the drive from Omaha to Bentonville in mid-June and wasn’t sure what to expect. He and Randy Chalupa, national sales director for retail at Plastilite, set up at the private brands’ expo Walmart held the day before Open Call. Their agenda was to meet with the buyer of sporting goods to pitch their new Refoam picnic coolers. They are biodegradable within two to five years.

Ehly said the buyer loved the product because of its uniqueness. He said Refoam is trademarked by Plastilite, and the additive used in the blending process breaks down the bond between the carbon and hydrogen in the mixture. That makes it biodegradable. Ehly said the product looks just like a regular Styrofoam cooler, but the color has a slight khaki green hue, as opposed to the standard white. He said the coolers perform just like other versions that aren’t eco-friendly, and they cost only a few cents more.

“We think the price will be somewhere around $3 for the standard-size Refoam cooler at Walmart, which compares to about $2.67 for the white Styrofoam coolers they sell,” Ehly said in a recent interview with the Northwest Arkansas Business Journal. “There is not anything like it in the market at this time. Igloo has come out without a paper pulp cooler that costs about $10.”

Walmart will be the first retailer to sell the Refoam coolers. Ehly hopes the product is in stores in time for football season. He said much of the summer picnic season has already passed, but there is still a window this fall to do meaningful sales. He said the product for the Walmart order has been made and is ready to ship when the company gets the word.

There is one step holding the 15,000-unit shipment back. Ehly said getting set up in Walmart’s ordering system has been trickier than he expected, but the process should be finalized soon.

Walmart is not Plastilite’s first attempt at brick-and-mortar. Ehly said the company already sells standard Styrofoam coolers to Kroger and other grocers in the Midwest, convenience chains Kum & Go and Casey’s, and specialty fishing and tackle retailers.

Ehly said he expects to approach additional retail customers next year.

PRIVATE BRAND
Ehly said Plastilite already manufactures all the minnow buckets sold at Walmart through various distributors. He said during Open Call he met with the private brand buyer for outdoors and pitched the idea to convert the minnow bucket manufacturing to Refoam to make it biodegradable.

“The buyer was very receptive, and we have since been talking to Walmart about the possibilities for making this conversion,” Ehly said. “Walmart could buy the Reform products and put their Ozark Trails label on them, and that would be fine with us. The difference is we would be making the products directly for Walmart and they could better control the price and quality.”

Plastilite is already making the Refoam minnow buckets and has sold a few of them into specialty retail this summer. Ehly said if the company can work out a deal to manufacture the Refoam bucket for Walmart’s private brand business that would be a nice boost in volume next spring.

OTHER BUSINESS
Ehly said much of the company’s business involves commercial shipping materials. He said the company works with Omaha Steaks and provides boxes used for shipping to customers. He said other meat companies use their insulated cooler boxes for shipping turkeys and chicken.

The pharmaceutical industry is also using the company’s insulated coolers for shipping medicines to patients, doctors and hospitals. He said some of the drugs shipped can cost $10,000 or more, and the companies have to know the medicine has been kept at the right temperature during transit.

“We pitched our Refoam coolers to several of our pharma customers. But for them to make a change, they require lots of testing on their own because they simply cannot risk the loss or compromise the products being shipped,” Ehly said. “We have done testing in our labs and paid for third-party tests as well, which have found the Refoam coolers perform as good or better than the Styrofoam coolers being used. Maybe in time, they will consider the change.”

Plastilite also is a collector of used Styrofoam products, which it recycles in its Nebraska facility. Ehly said the company grinds up the material and heats it to a hardened plastic that is sold into the secondary market. He said customers buy the plastic to make picture frames, screwdriver handles and other items.

Because Plastilite doesn’t want to see Styrofoam coolers in landfills, the company has more than 500 receptacles across the country that allow consumers to drop off unwanted coolers or Styrofoam products. The company has joined with Alliance to become an official EPS (expanded polystyrene) foam drop-off and mail-back recycling location in Omaha. Ehly said consumers have to find the closest drop-off center in their locations to return the Styrofoam, which cannot have any packing peanuts or other material inside.

Just 15% of the population is recycling Styrofoam because the drop boxes are often not convenient. Ehly said Plastilite continues to add boxes, and the company recycles 100% of its Styrofoam. But the greener alternative is the biodegradable Refoam products.

“This really is the solution consumers are looking for, a product that performs like EPS Styrofoam, but has a greener footprint with minimal impact on the environment over two to five years. And the cost to buy green is affordable by everyone,” Ehly said.

Walmart CEO Doug McMillon has advocated for the retail giant’s sustainability goals, which include buying more products that have a greener footprint without penalizing the customer at the register.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.