A fight is brewing over who gets first dibs on the plastic drinks bottles that consumers throw away.
Bottle trash has become a hot commodity as companies try to make their goods and packaging more sustainable.
The price of recycled polyethylene terephthalate, or PET, flake, which is usually made out of old drink containers, is up around 35% in Europe since January, according to data from Independent Commodity Intelligence Services (ICIS).
Higher oil and petrochemical prices have also pushed up the cost of virgin PET plastic, but not by as much.
Recycled PET became more expensive than virgin plastic in 2019 in both Europe and the United States, not long after big consumer brands such as Coca-Cola Co and Nestle SA began making green-packaging commitments.
The premium in Europe hit a record of €460 a metric tonne in late June this year, according to S&P Global Platts.
Prices for recycled plastic have eased slightly since then -- supply increases in summer months, when more bottled drinks are consumed and containers find their way back into the recycling system.
The relief will be temporary.
Government policies that set out minimum recycled content levels for plastic packaging are driving more companies into the market for recycled PET.
In California, companies will need to use 50% recycled material in bottles by 2030. The European Union has introduced deadlines covering all plastic packaging.
This will be challenging as bottle collection rates are low -- only around 27% in the U.S., based on the latest data available from the National Association for PET Container Resources.
To achieve 30% recycled content in bottles by the end of the decade, output of recycled PET needs to increase by an annual compound rate of 45%, ICIS calculates.
The trend points to higher plastic bills for consumer staples companies. One of their responses will likely be trying to prevent nonfood industries from taking all old bottles.
Around 70% of used bottles go to other sectors, often to make clothes, carpets or cosmetics packaging, leaving less than a third for the industry that produces them.
That looks unsustainable as the beverage industry currently faces tougher plastic regulations than fashion brands.
The rollout of extended producer responsibility schemes for packaging -- all EU countries must have one in place by 2024 -- means companies that put plastic on the market will pay for its collection and recycling after use in many places.
Trade bodies for the soft-drink industry say this could lead to a situation where clothing companies benefit from increased investment in bottle recycling infrastructure without any obligation to pay for it.
In Europe, beverage companies are already lobbying for priority access to bottle waste.
If they succeed, it would be a blow for fast-fashion chains such as H&M and Zara, who haven't figured out how to recycle their own waste at scale.
Only 14% of global polyester is made from recycled material, almost all of it spun from drinks bottles.
Sportswear giant Nike Inc uses over a billion plastic bottles a year in its goods.
Limiting access would force these industries to invest in technology to recycle old clothes and footwear into reusable fibers.
Any new rules would be resisted by other sectors such as carpet makers and auto companies, which also rely on bottles to manufacture goods and components.
The recycling industry, currently enjoying high prices after decades of poor returns, may argue that restrictions would deter investment and prove counterproductive.
Still, the more beverage companies step in to fund bottle recycling programs, the stronger their claim on the industry's increasingly valuable trash.
