(Bloomberg Businessweek) -- Last fall, Porchlight, a Southern-themed cocktail lounge in New York City operated by the Union Square Hospitality Group, decided to ditch plastic straws. So Mark Maynard, the bar’s director of operations, decided his staff would test some eco-friendly alternatives. They placed 20 different paper straws in glasses of water. The one from Aardvark, the only company that makes paper straws commercially in the U.S., was the standout, he says. It held together better than the rest for well over an hour.
Offering Aardvark’s straws at Porchlight took a little longer than expected. When the bar’s procurement office contacted the Fort Wayne, Ind., company to place an order, it was told the wait time could be as long as three months. “They said, ‘We’re sorry. A lot of people have jumped on board recently,’ ” Maynard says.
Aardvark got back into the business of making straws in 2007—its roots are in a company dating to 1888 that invented the paper straw—largely because of a growing anti-plastic movement and increasing demand for eco-friendly products. Several companies, including Walt Disney Co. and the Ted’s Montana Grill restaurants founded by Ted Turner, reached out to Aardvark that year, asking if it might again make the paper straws it was once known for, according to David Rhodes, the company’s global business director. More than 30 years after the onslaught of plastic put an end to that part of its business, Aardvark reengineered its process, refined the paper and the glues used in manufacturing, and issued a basic white straw.
The business started doubling every year, according to Rhodes. Aardvark was making millions of the product annually—and introducing innovations along the way, such as different sizes and designs and safe colors. What the company hadn’t foreseen was how fast demand would rise. “In 2017 to 2018, it went from double to 50 times the business,” Rhodes says, “Most businesses would have a hard time reacting to that.”
In the spring of this year, Aardvark decided to seek an investor to help it increase capacity. “We didn’t have the resources to grow to the level that we needed to be,” Rhodes says. After approaching several companies, it was acquired on Aug. 6 by Hoffmaster Group Inc., a 71-year-old Oshkosh, Wis.-based manufacturer of disposable kitchen goods. Hoffmaster had been an Aardvark customer and knew about its straws. “Over the past nine years, Aardvark developed the best blend of paper that would be compostable but hold up against liquid,” says Andy Romjue, president of Hoffmaster’s food service division. Hoffmaster also makes paper products, potentially a source of engineering know-how for Aardvark.
“Our short-term objective is, by January or February 2019, to have seven times the production capacity we had when we took over,” says Romjue. Rhodes says the company produces millions of straws per day.
Making paper straws is relatively simple. Large sheets are slit to narrow widths, then wound in spirals around long, skinny tubes to create the shape. There are options for specialty straws, from custom designs to extra-wide ones for shakes. Aardvark’s challenge is making more, faster, and of the same high quality. The Hoffmaster investment is mostly focused on equipment to boost output, as well as expanding facilities and hiring more workers. Aardvark had started ramping up production even before the deal because of the time it takes to have equipment running at full capacity. “It takes a few months to build a piece of equipment”—Aardvark makes its own—“and to train the operators, who function more as artisans,” Rhodes says.
Most of the process is secret, and the company operates a closed plant. It’s also a sustainable business, Rhodes says. The paper is sourced from sustainable forests grown for specific purposes, such as making straws, to avoid deforestation and to provide the greenest substitute for plastic. “If you’re trying to eliminate single-use plastics that get into waterways and get into the ocean, the plastic straw to paper straw movement is the gateway,” he says. “It’s a sustainable option that’s relatively easy and, at only a penny more than plastic per straw, economically viable.” Plastic straws cost about half a cent each, Rhodes adds.
The company isn’t too worried about competition, despite the threat of China. That country’s paper straws are the ones that have given the drinking implement such a bad rap, he says. “Making a good paper straw isn’t easy,” Rhodes says. Also, building an operation to rival Aardvark’s can’t happen overnight. “It takes awhile to develop a sustainable and green business like this,” he says. “You have to get compostability and biodegradability testing and then certification” from the Food and Drug Administration.
The company’s biggest customers are theme parks and major restaurant chains, including McDonald’s Corp. and Disney. “Everybody who has made claims about transitions—restaurants, coffee shops—we are in conversations about servicing them,” says Romjue. “But as each new municipality puts laws in place, we shift to help folks in need. If you can’t have plastic straws in Seattle, we’ll prioritize that over Nebraska.”
However much Aardvark increases its output, Rhodes cautions that the switch to paper takes more time than many businesses realize. “We try to work with new customers and prospective buyers and tell them to be mindful that they can’t just turn this on,” he says. “In the 1960s, when the plastics industry came in to the business, it took them almost a decade to build out the structure to move Americans away from paper straws.”
©2018 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR