Algramo’s model seeks to resolve two issues at once. First, what they call the poverty tax, a market failure that occurs when low-resource families buy products in small formats and pay up to 50% more than the products cost, and second, the overuse of plastic packaging.
The poverty tax is addressed through the implementation of vending machines and a dispenser system that enables customers to buy the exact quantity of products they need by weight and with bulk prices in reusable and returnable packages. By doing so both, the dying small local stores and the neighborhoods, are rehabilitated: through improved sales and storefronts, a culture of the local grocery as community meeting point is returning.
Additionally, reusable models are an important and necessary step in the reduction of single-use plastic packaging. Showcasing a circular solution to a global waste issue ensures that valuable materials are preserved for multiple uses. Their latest advancements into smart packaging, includes three key components: reusable containers with radio-frequency identification (RFID) chips to facilitate payment; Internet of Things (IoT) -connected vending machines to dispense products in bulk; and electric tricycles to deliver product refills. To accelerate positive consumer behavior-change so that individuals easily embrace a reuse revolution, Algramo applies technology-based solutions, circular design and human centred design principles.
Fast Company Magazine, 50 most innovative companies (2015 and 2020). Ocean Ventures (National Geographic investment fund) (2019). MIT Solve Circular Economy Winners (2019). Deloittes D2i Fellowship (2018). Circular Design Challenge Winner Ellen MacArthur Foundation (2017). B Company certification (2016). Jose Manuel Moller is an Ashoka Fellow (2014).
- More than 2,200 small local grocery stores with Algramo vending machines and products, reach over 321,000 end-costumers in Santiago de Chile.
- 10 electric tricycle work in Santiago with more than 3200 clients.
- The reusable packaging system saves low-resource families about 30% on the cost of daily essentials -while eliminating packaging waste.
- More than 200,000 plastic bags have been avoided (around a ton of plastic).
- The devolution rate of recyclable packages or costumer reuse rate has increased from 6% to 77%.
- More than 50% of Algramo 2.0 clients re-use their smart package within the first 2 months.
The model in local grocery stores (Algramo 1.0). At the beginning Algramo entered the small local bodegas offering the dispensary machine to sell basic household products and nonperishable foods for free. The condition for a grocer to acquire a machine was to join the networks of store owners. The bigger that network the more negotiating power they had with food providers. Bypassing the need for packaging with reusable containers, the savings were not only economic, but also environmental. Customers first have to purchase the reusable container, and then buy directly from the self-service machines. Once the containers have reached the end of their life, they can be traded in for a discount on a new one and will be recycled into new plastic feedstock. Since there is mostly no recycling culture, a big communication and sensitization effort was made to incentivize the reuse of packages. The model of smart and mobile dispensary machines (Algramo 2.0). To achieve more significative environmental impact, Algramo has developed alliances in 2019 with big plastic-generating companies such as Unilever and Nestlé. Their selling model has been enriched with its traveling mobile units, smart vending machines, mounted on a tricycle. These travel around and customers are able to page a tricycle home to buy and refill multiple products such as dish soap, detergent, lentils or rice. Customers transfer funds onto a digital wallet that is connected to their reusable packaging, which enables cashless purchases from IoT-connected vending machines. This system literally transfers value onto the packaging, so customers are incentivized to take care of it. Users also earn “sustainable consumption credit” discounts for reusing their containers. Applied to future purchases, discounts can range up to 11% off the original value. Also, the distribution system enables brands to digitally verify how much plastic is offset by reuse.