How Digimarc is changing packaging and recycling

https://www.linkedin.com/in/ericrferguson/

https://www.linkedin.com/in/emily-e-stolarcyk-a4408569/

https://www.digimarc.com/

Why are water marks important for recycling? 

How can water marks increase sales? 

How to achieve a 99% accuracy rate when recycling? 

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I'm here to help you make your packaging more sustainable! Reach out today and I'll get back to you asap.

This podcast is an independent production and the podcast production is an original work of the author. All rights of ownership and reproduction are retained—copyright 2022.

Transcript

Cory Connors: 0:31

Welcome to sustainable packaging with Cory Connors . Today's guest has some incredibly innovative products and I'm excited to have them on. I'm going to let them introduce themselves. Emily, can you tell us about yourself, who you are and what your title is?

Emily Stolarcyk: 0:44

Sure. Hello everybody. My name is Emily Stolarcyk and I am the sustainability director of business development at Digimarc corporation.

Cory Connors: 0:53

Thank you so much. And Eric,

Eric Ferguson: 0:55

Mr. Ferguson. Yeah, I'm Eric Ferguson. Happy to be here. I'm a account director for food and beverage and Digimarc. I've been with the company for about two years.

Cory Connors: 1:04

It's a great company and I've been excited to have you guys on for a long time. So let's start first with a little bit of background and Emily, you want to go first and just kinda tell us, how'd you get into packaging. It's a unique field and I like to hear people's stories.

Eric Ferguson: 1:19

Yeah,

Emily Stolarcyk: 1:20

sure. So by background is more sort of the way of sustainability. I actually spent years working for. Smaller environmental non-profit in Alaska. Then I decided to get my MBA in sustainable business. And I went on to work right out of grad school for Dow chemical. So Dow chemical well-known in the plastic, plastic and packaging space.

Cory Connors: 1:41

So

Emily Stolarcyk: 1:41

I was a sustainability leader for Dow chemical, and then decided you know, 2020 was pretty transformative. So I decided to try something new. And I heard about Digimarc and I was really excited about the technology that we have and its ability to revolutionize its current systems. When we talk about packaging and sustainability. And so I was lucky enough to land the job and here I am.

Cory Connors: 2:04

Excellent. And Eric.

Eric Ferguson: 2:06

My career started in the mid nineties, I guess I was at Clemson university studying graphic communications which was not specifically focused on packaging, but I kinda got hooked into packaging during my internships that are required. So I did two internships at both the packaging firms and have been in the packaging field ever since. A long time,

Cory Connors: 2:28

that's a great packaging school. And I think you're the first person who's been on the show that said they, they went to that school, but that didn't study packaging. Cause a lot of people from that school have been on the show. So it's, it's a great show, but yeah,

Eric Ferguson: 2:42

printing, it was kind of my discipline. Right. But it's expanded quite a bit. Just like everybody's career has kind of get broader as they go. Yeah,

Cory Connors: 2:50

we all tend to do this and then this and then this. Yeah, absolutely.

Eric Ferguson: 2:55

Keep it

Cory Connors: 2:55

interesting. Well, let's talk about Digimarc. What makes you guys special? What makes you unique?

Eric Ferguson: 3:02

I'll take that, I guess, Emily this. Okay. So. Not a lot of companies. I think Cory were founded by an astronomer, especially in the packaging space. There's a mark. Not that I'm aware of, but you are in Portland, right? Yes. So Digimarc was founded in Portland in the mid nineties. So around when I graduated, I didn't know that. Yeah. By a guy named Jeff Rhodes, who was an astronomer and he was looking at ways as the internet was really kind of rapidly. Sort of coming as a commercial solution during that time to start protecting digital images. And so started filing patents and, and investigating, you know, new technologies for the protections of those digital images. The business really grew in to kind of. Sort of high security uses at that time. One was for various currencies around the world to make sure that those are not copied. And then the second is around driver's licenses and other kind of physical assets like that. So it started with digital images, grew slowly over time into physical assets. I think it was about 2014 or 2015 when we first started really getting involved in packaging directly. So marking packaging and the notion of connecting connected packaging really started around that time. So leveraging watermarks for packaging was a really novel way to do that. Yeah, there's three real benefits there. Right? So a watermark is number one. Like machines. See it, Cory is not supposed to see it. Right. But machines do the second is that because it's covert, it can kind of be ubiquitous within the design. We can put it on any panel, you know, or throughout the printer. Kind of layer which means that number three, it can be pretty request because that design is that sort of signal is repeated throughout the design. So you can kind of think about it. Like if I've got something, that's an object, that's a cylinder like this polar. I'm not hunting for that one location of the code. That code is everywhere. It's just not seen by humans. So that's really the, the basis of where digital market is. We've been transformed quite a bit over the last two years. I, since Emily and I both joined, there was a real change kind of in the way that. Was was kind of going to the market. I think some of that is driven by digital transformation largely. And some of it was, you know, out in necessity. So this merge with the company, everything that has just occurred. So we acquired everything in January officially of this year makes us a cloud software company. Right? So on top of being packaging people, we're now subject matter experts in, cloud.

Cory Connors: 5:35

Wow. Yeah. Well, and it sounds like it's a perfect fit. A vertical fit for you guys. Incredible. D do you want to speak to that merger, Emily? Or do you want to speak to what what is a digital watermark and how does it work?

Emily Stolarcyk: 5:51

Yeah, we'll start there and then we can, we can go more into the murderer. So Eric said a bit about what a digital watermark is. So digital watermarks are visually imperceptive. We try to stay away from the word invisible, because then someone will say, well, I can see it visually imperceptible. And they're about the size of a postage stamp so they can change a little bit bigger or smaller depending on what they're put on. And then they're replicates. Throughout an image. So as Eric said, they're kind of put around and they're covert, so they're almost hidden in the packaging. So what that does is it can basically turn any object provided that it's not handmade or grown. So any man-made object, as well as digital files, it can turn that into an IOT object. So now that object is intelligent and we can do all these different things with it. So one of the things that we can do is we can connect that COVID. To a database and that database can have virtually unlimited attributes or categories and what we can kind of do and slice and dice and categorize those objects. So when we think about it, they're, they're imperceptible to human eyes, but they can be seen with machines. So, whether that is a barcode scanner at a point of sale or your mobile phone, or now as we're getting into recycling, that can be that technology to read a digital watermark can be put into recycling setting. So the packaging says to the camera, hi, I'm this, this is what I am. This is where I've came from. These are all the things about me. And then we applied to them in two different ways. So in packaging and it can be applied in many ways, but just for packaging. But it can go into the print. So this is a subtle modulation of the artwork, really the dot colors. So if it's black, you know, Make it a little bit purple. So when a machine sees it, it can see what the difference is. And then really my more area of expertise is taking that and applying that same sort of watermark, but not in a, not in a color variation, but instead in a texture variation directly onto the 3d substrate of the plastic itself. So if you think about the trend to go label. Right. So we want to get rid of labels. If we talk about the issues with recycling, like pet shrink sleeves, right. We don't need those anymore. So you can go. Or if it's maybe a meat tray or something that doesn't have a barcode on it, it's not a GTIN or skew. We can identify these objects without needing a bar. So we can apply them in print and then we can also apply them directly to the substrate as a texture that you can't really see or feel. And then there's all these different things that we do with it, depending on the type of plastic molding, the type of resin we change the depths and so we can make it. So you. Maybe see it more if that's what the customer wants or you can see it less if that's what they, if they want to go for invisibility or something like that. So there's all of these different variations or what we call enhancement strategies of ways to apply this digital watermark. I

Cory Connors: 8:49

like that enhancement strategies. That's that makes a lot of sense. You mentioned an acronym. I wasn't familiar with IOT. Can you explain that? Oh sure.

Emily Stolarcyk: 8:58

Internet of things. Yeah. So now it's internet internet of things. So yeah, my, my mother would be very proud, but I use the lingo. So yeah, it's just a connected object now. It's it's connected. So in our. Most of the time we talk about an in a consumer engagement setting. So you can take your smartphone, just like a QR code, think of a similar, like an invisible QR code, and you can scan the can or a piece of packaging. And for us, we can actually take you to any sort of customizable digital experience. So your customers can be directed to a website where they could read about how to use the product, how to dispose of the product, how to buy more of the product. Really, again, limitless

Eric Ferguson: 9:40

options. Corey, this is why I'm so jazzed about this, right? Like it kind of coming from this space of being a printer at heart and then a package you're also right in my career. This is a new discipline, right? Where we're creating a data carrier out of the package. So what data do we want to imbue into the package? What data do we want to harvest from it like that data science benefit is brand new and it should be really exciting for kind of everybody that's in the packaging field. I think even for students that are coming out right.

Cory Connors: 10:10

I think it eventually be required. And for you guys to be a leader in this space good for you. I mean, wow. With the onset of extended producer responsibility this is, this is going to be critical. Do you guys agree? Do you think that's part of the, the issue.

Emily Stolarcyk: 10:25

We certainly hope so. So we are, we are very tied into what's going on in Europe with EPR, and then we're looking at the development of different EPR schemes globally and , how we're going to tie into that. I mean, the heat, the big benefit that we see now, you can ideally with our solutions on packaging brands would be able to drastically reduce their EPR. So we'll, but we need a little bit more systemization before that. Right now it's CPR field is pretty fragmented. So we'll see how that's developing over the next couple of years

Cory Connors: 11:00

kind of way of saying it,

Eric Ferguson: 11:02

the basis of EPR there, right. Isn't just like, what am I producing? But what's happening to that, you know, at the end of life and if you don't have visibility to it that's a big problem. So that is something that we need to do.

Cory Connors: 11:48

Absolutely a hundred percent. And I, it's interesting that you mentioned the cost of it. Emily I haven't really thought about it as, as it's going to cost companies. I thought about what are the positive effects to the environment and, and both aren't incredibly important, but that makes a lot of sense.

Emily Stolarcyk: 12:08

Well with this technology you can now. So there was a recent press release with our results in the detection side, and we didn't get into this, but on packaging that has a digital watermark when it's coming through the waste stream. So this isn't a mixed waste setting on a belt moving at either three meters per second, or 4.5 meters per second. The detection rate of our packaging is actually 99%. Across both flexibles and rigids. And then the objection. So the, so is it correctly identified? We call that that's the detection side and then it, is it correctly sorted. We call that EG section. And so for that, we are somewhere threshold is 95%. So we're at 95%, both objection. And then purity. So we can reduce contamination in a recycling. So when we think about not only what these companies can do, so there's a huge gap right now with that EPR is like, if you produce it, you should pay because you're essentially , you're polluting. But when you think about applying a digital watermark, you can now correctly identify 99% of what is coming into this recycling stream.

Eric Ferguson: 13:21

That's awesome. That's that's, by the way that that rate is based on packaging, that's been crushed. It's been mixed with waste. It's got stuff all over it. Right. And so that's why it's important for it to be kind of ubiquitous or throughout the design, because if it's just in one little spot and you squash it can, then you won't be able to detect it.

Cory Connors: 13:42

So. Absolutely. I was at a waste 360 last year I spoke there about sustainable packaging and they had several machines there that sorted plastic on a line. And that it was like a puff of smoke like that, that puff of air. Yeah, it was fascinating. So you guys are going to be there. They're going to love what you're doing, because it's going to be even easier for them to sort the material.

Emily Stolarcyk: 14:09

Yeah. And so with this, I'd neglected to say this before, but when we were talking about those database, the database that you can assign, so a big one with sustainable patchy packaging is identifying correctly food versus non-food package. Because we want packaging, that's been used for food to go back into food packaging, and we don't want non-food packaging going into food packaging. So a big one for us is that ability to really easily incorrectly store food versus non-food packaging in a recycling setting.

Cory Connors: 14:40

Well, that's excellent. And anything that increases and improves recycling rates all four, so well done. So let's talk about. The holy grail to point out. I can't wait to discuss this with you, which one of you wants to tell us what that means. Can Emily tell us what it means and how are you involved with it?

Emily Stolarcyk: 15:02

Yeah. So holy grail is an initiative by AME or the European brands association, and it is powered by the Alliance to end plastic waste. So this is a collaborative. And it's designated to solve one of the largest optical obstacles facing plastic recycling, which is this insufficient sorting at recycling centers or recycling facilities. So Murph's or perps. It is three test phases over three years. We're in the final year now 2022, and we have four countries. So there's Belgium, Denmark, France, and Germany are all participating. There are roughly 160 members of this effort. So it's an initiative and it's, there's a large membership. About 40 of those members are some of your largest CPGs globally. So we have Procter and gamble leading the way Unilever Mondelez, some of the largest companies out there who've make the most packaging in the world. And then we are also working with the two largest sortation equipment companies in the world. So this is Tomara located in Germany and Polanque located in France. So we're all coming together. To one, enhance the packaging with a digital watermark and then build these detection units that would be deployed in the recycling facilities to then identify and stored the packaging that has the watermark on it. And we've finished phase two at the end of 2021. And we had enhanced roughly 260 S K use. So different types of packaging, about three quarters of that was flexible package. And a quarter of it was the rigid packaging. So all different types of rigid, rigid substrates. And we had done about 120,000 pieces of plastic. So we're testing this. And when we talk about these objection rates and detection rates of 99 and 95%, that's what we're doing on those hundreds of skews, over a hundred thousand pieces of packaging coming through a waistline setting. So we're mixing it, soiling it, crushing. Putting it on a belt, run, running it underneath these cameras and then correctly supporting it. So it's a big test, multiple years, multiple countries, many diverse stakeholders. So that is the holy grail. 2.0 initiative.

Cory Connors: 17:26

That's excellent. Eric, did you want to speak to it as well?

Eric Ferguson: 17:31

No. I just think it's really, you know, obviously this work is being done in Europe, but EPR legislation is happening globally. So there are a lot of eyes on this program and these are multinationals that are stakeholders in it. So it don't just pigeonhole it as a project in Europe. Right. It's something that we know that has application in use or just around.

Cory Connors: 17:52

Absolutely agree. And it seems like the people that are successful with this kind of a program will spread it amongst the world. As it becomes successful. My friend, Chandru runs a pet recycling facility in South Africa and they started extended producer responsibility last November . And they've seen major impact from this legislature over there in a, in a, mostly a very positive way with people actually wanting to recycle more. And because there's a value tied to that material

Eric Ferguson: 18:23

now, and there's actually has a criminal penalty for, for an eye that for gross, I guess, misuse or or fraud cases of fraud. So that one's particularly. Oh, wow. But yeah, you mentioned that.

Emily Stolarcyk: 18:40

Yeah, we heard about it, Eric and I were on some calls with with different people in South Africa when this was, was happening. Yeah. We were aware.

Eric Ferguson: 18:49

So do you

Cory Connors: 18:50

think. The most recycled material I believe is pet for plastic. Do you think most of those soda and drink containers will have a, did you mark marking on them or do, do we already know how to recycle those? And we're focusing on other materials?

Emily Stolarcyk: 19:08

It's a great question. And there are certainly people in both camps. So we do have some stakeholders in Europe who manufacture pet bottles saying, Hey, our recycling rates are already really high. You know, we don't, we don't see the point of, of a digital watermark. So there are those people who feel that way. And by all means, Hey, if it ain't broke, don't fix it. But at the same time, we know that it's not all recycled. So maybe it is the most common resin recycled, but the recycling rate of that material. Are, you know, it's, it's not as good as it could be. So if a digital watermark can get you to, again, 99 or 95%, then that's where we want to be. So yeah. And that would be my answer to that.

Eric Ferguson: 19:49

Let me throw out two and not to get too big brother around this. But you know, when you're tracking these things in the, in the recycling stream, right? You're not just tracking objects, you're kind of tracking behaviors too. And so if you want to change behavior, you have to measure it in some way. So there are a lot of different kind of notions around this, but I think that. Measurement or qualification around behavior is really important, especially for marketers. So there's a specific use case here, I think for packaging, engineers and sustainability people, but there's an opportunity for marketers to, to understand their consumers a little bit better. So there's a lot of.

Cory Connors: 20:27

That's a great point. I hadn't thought about it from a, not just sustainable, but from a sales perspective. Well done. Now, could this be beneficial to some, to a state say in the United States like Oregon, that has a bottle deposit could, could you put that on the container somehow to show the recycling facility that, Hey, this is worth 10 cents, pull it out, you know? Is that something. Yeah.

Emily Stolarcyk: 20:53

So we've definitely we've we discuss different deposit return schemes often, and need to think about how, how to best place a digital watermark in that system so that it adds to it. So I think again of course, you know, in packaging, there are a lot of diverse opinions and stakeholders about what's best to do. And you have states like Oregon and states where I am in New York. But then you have. There are states that are maybe resistant to a deposit return scheme. So yes, digital watermarking has an immense amount of value across many use cases. So we hope to see this deployed. I mean, we also hope to see that I know a bill was introduced at the federal level for a federal deposit return. So I hope that we see that in the United States whether we view or whether we don't, I still think very much fully that there is a case where digital watermarking.

Eric Ferguson: 21:43

Yeah, I would suggest too that some of the better deposit return schemes are looking at serialized payloads for that they want to know, right. Did that bottle of specifically get a deposit paid and therefore I need to pay this individual person the return on it. That's reliant on some digital printing or digital technology to be able to serialize that in a unique way. And so some of this is still. Being developed. Right? So these are things that we're utilizing brand new technology and pushing the limits of technology to be able to do, which is another exciting thing for people that work in packaging, because packaging people are problem solvers. We are, I

Cory Connors: 22:20

agree. That's a great point. Yeah. It's, it's something we've been trying to do for many years. They say my friend Bob from spring, just, just post a report states that have bottled deposits. Have recycling rates that are more than double of states that don't for that material, you know, for aluminum cans, for, you know plastic bottles. So that, to me, if we could do that nationally just makes sense.

Eric Ferguson: 22:46

Changing behavior, isn't it? Yeah,

Cory Connors: 22:49

yeah, yeah. Yeah. Here in Oregon, we were the first ones to do it and I don't remember last time I saw a bottle or can in a ditch, you know, they, they get picked up they're there. They're valuable. So. Well, tell us about what you guys think. What's the future what's, what's kind of what's coming next that we should all be aware of and be ready for.

Emily Stolarcyk: 23:11

Well, we've touched, we've touched on it today. So I would say connected, connected packaging, I think is a, is a big one. I believe that the moment that a major CPG sees the benefit of connected package, that everyone is going to want their packages developing. And nobody's not going to want

Cory Connors: 23:28

that anymore for our audience. Can you, can you say what CPG means? Oh, sorry.

Emily Stolarcyk: 23:33

Consumer packaged goods. Yep. So,

Cory Connors: 23:37

yeah. Sorry.

Emily Stolarcyk: 23:38

You learned to speak in acronym. Yeah, so CPG consumer packaged goods, so that the companies that make the majority of packaging in the world. Specifically food packaging. Right? So I would say connected and intelligent packaging is going to be a huge part of the future of packaging. We've also touched briefly on consumer engagement. So as a consumer, if I can scan and in this, we already do this today with QR codes, but I think that this is only going to become more common. And we've certainly talked with groups on, you know, with our technology. We could have somebody with their smart. Scan their product and it can tell them whether or not that that is recyclable based on their geo location. So if you're in one location, Hey, your municipality accepts that as part of a curbside collection program. And another is no, don't put that in there. That's going to actually be a source of contamination in the recycling stream. So that's. Yeah. And then all the things that Eric was mentioning about marketing and tracking behaviors. I think again, when we talk about consumer engagement, connected packaging, These are, these are trends. I also think in the, when we start doing this on the packaging brands, we'll have much more visibility on what is actually happening with their packaging. So with our technology, we can tell a brand how many of this type of your package was recycled, where. So they already know some of this data because they have they're tracking point of sale. But now we can go back to say Unilever and say, this many of your soap, shampoo bottles were recycled in this amount of time in this location. So that's something we can do all by this. Yeah. The individual, the actual product. So not. A pet bottle versus an HDPE bottle. We can actually tell, you know, it was

Eric Ferguson: 25:28

this, this particular think about the implication of that in food and beverage, right? Like, I mean, I know there's a best before date or there's a lot of discussion about best before dates and what they actually need. But what if our brand really knew like how long that product was actually in the consumer's hands or went through that journey and finally wound its way to recycling. What would the implications be for food waste? Right. If you could, if you could really specify exactly how long that was in the market. I don't know. I think the implications for sustainability are far beyond just recycling, recycling, and compostability. For the short term, I do think that consumer engagement is the thing I've been dying to have like a scannable, you know, package that tells me what to do with the entire thing. Do I need to. Not just me. Right. But other people were packaging professionals. And half the time I look at something and I double-check like, is this, these plastic rings that hold my cans together. I know it's recyclable material amount of material, but it has to go into the landfill. It can't be recycled because it's going to gum up my system. I know this as a packaging person, but what. Average consumers know that, or do I leave the cap on or off? Do I pull the shrink sleeve on or, or like leave it on or pull it off? Right. So there, I think within, if you think more holistically about the packaging system, rather than just individual materials we have an opportunity right now to do a better job educating consumers, and that's a sort of a personal mission.

Cory Connors: 26:59

Oh yeah. And I'm sure you guys get phone calls and text messages, like. Hey, is this recyclable? What should I do with this?

Eric Ferguson: 27:07

It happens every Christmas, right? It's just wrapping paper because that one wasn't because it had the little glitter on it. Right? Same kind of thing.

Emily Stolarcyk: 27:14

I want to add if I can, one more thing about the future of packaging that we talk about a lot. And I think if you're a packaging company, you also maybe think about this a lot. We either if it's voluntary or mandated, we are seeing the push to incorporate more PCR post-consumer resin, recycled plastic into packaging. And we already know that they're for all of the companies out there who are saying either by 20, 25, we're going to include some percentage. Either we're going to voluntarily do this, or we're being mandated to do this, that we have to include, you know, 25% or 50% or whatever it is. So if you add all of those companies together, the amount of post-consumer resin required is far below the supply today. So we see this huge gap. With digital watermarks, not only now, will you increase the volume of that? Post-consumer recycled content. You'll also increase the purity. So you have more of it, and it's more pure to go back into your packaging. So we have added performance, you know, versus your traditional recycled material. So things don't have to be down cycled as much. So that's going to be a bit. I think a big part of the future is meeting those mandated or those voluntary PCR inclusion percentages. And then how do they actually get there?

Cory Connors: 28:36

You're exactly right. It's a huge Delta from where we are today to where we want to be. And what are we, where are we going to get all this recycled material? And it sounds like Digimarc is a big part of that solution. Yeah, we hope so. So how do we get in touch with you guys? Eric? You want to tell us what's the best way to read that

Eric Ferguson: 28:56

you can find me on LinkedIn always, right? Or you can email me directly at Eric that's ERI C dot Ferguson. That's dot F E R G U S O N at Digimarc, D I T I M a R C dot.

Cory Connors: 29:11

And you Emily. Yeah.

Emily Stolarcyk: 29:12

So yeah, I'd say LinkedIn's ideal. My last name is tricky to spell with you. So if you look up Digimarc, you know, you can see the people who work there and we'll pop up.

Cory Connors: 29:24

I'll put it in the show notes so people can just click on it and get, yeah. Thank you so much for being on the show. Thank you, Landsberg Orora for sponsoring. We truly appreciate it. If you're listening, take a second to review it and share it with your friends. Make sure you're subscribed. So you don't miss the next episode. Thank you guys. Really appreciate you. Thank you.

Eric Ferguson: 29:41

And Corey. Yeah.