By Jim Davis <i>HBJ Editor</i>
ARLINGTON — Fly on a plane with United Airlines this month and you’ll sip your coffee from a cup made in Snohomish County.
Same with Alaska Airlines. And Virgin America.
Innovative MicroGreen Polymers secured deals in the past several months to provide in-flight hot beverage cups for those airlines as well as Allegiant Air.
It’s part of what is fueling growth for the Arlington company that created the environmentally friendly cup made from plastic that is intended to be recycled again and again.
“Making a product that is better, able to hit price points that are attractive to the market and is environmentally sustainable, that’s a killer app, if you will,” said Tom Malone, MicroGreen’s CEO and president.
The deals are major for the company started just eight years ago by a pair of University of Washington graduate students.
But the company has its eyes set on more.
“If you think about that coffee cup that you get from any coffee stand around here, it’s a plastic-lined paper cup,” Malone said. “It’s neither fish nor fowl when it comes to its end of life. It can’t go into the plastic stream, because there’s paper there. It can’t go into the paper stream, because there’s plastic there. So it’s destined for the landfill.
“There’s 58 billion of those produced in North America every year.”
The company’s main product is its InCycle cups, developed by Krishna Nadella and another UW graduate, who is no longer involved with the company.
The goal was simple: Reduce the amount of waste that goes to landfills.
The company uses chopped up water bottles, melts them down and then blends them with more plastic pellets to create giant sheets of recycled plastic.
These sheets are saturated with food-grade carbon dioxide and then heated. The heat produces microscopic bubbles — about 40 bubbles per the width of a human hair.
The cups use a fraction of the plastic of other cups. Without any chemicals or coloring added in, the cups can be easily recycled.
Most of the company’s competitors use plastic that’s not easily broken down such as the ubiquitous red cups used at parties and picnics.
Even compostable cups are intended for a single use and sent to the landfill to degrade.
InCycle Cups are meant to be used over and over — and that’s where it gets its name: a non-ending life cycle.
MicroGreen operates its 40,000-square-foot plant at the Jensen Business Park near Highway 9. It’s undergoing an addition at the moment. And the company is in talks with developers to construct a new building adjacent to the plant.
In total, the company would have about 100,000 square feet for manufacturing after expansion. That will allow the company to make 2 ½ million cups a day.
The company has grown from 50 employees just two years ago to more than 100 full-time employees today.
With the expansion, the number will grow.
“We expect to have as many as 200 to 250 people working here,” Malone said.
Projected revenues will be between $24 million to $36 million a year after the expansion, Malone said.
MicroGreen has contracts to supply cups to casinos, hotels and even beer gardens. The company also has been aggressively targeting airlines.
Alaska Airlines started using the InCycle Cups in September. Virgin America started using the cups in March. United Airlines starts this month, although the cups have been in use for a while in the club rooms for high-mileage flyers.
The cups are lighter in weight than traditional plastic ones and that appeals to the fuel-conscious airlines. A cases of plastic cups can weigh about 40 pounds, said Chris Jacobs, vice president of marketing and product development.
“A case of our cups is 23 pounds,” Jacobs said. “So that’s half the weight.”
A plane only carries a few sleeves of cups for any flight. Still with thousands of flights a day, the reduction in weight adds up, Malone said.
There are other advantages: The InCycle Cups are better insulated than other plastic cups, Malone said.
“So flight attendants don’t burn their fingers when they’re serving,” he said.
And they think that drinks taste better in their cups.
A prospective client put the cups to the test recently, Malone said.
“Professional coffee taste testers compared InCycle with other cups and it tasted better,” he said. “There’s no leeching, there’s no off-gassing, there are no monomers that come off plastic.”
All of that is secondary to the price, Malone said.
“When we got the Alaska Airlines contract, we met the price of a cup made in China,” Malone said. “We’re manufacturing in the United States using a technology developed in the United States.”
Now the company is looking at expanding to other items from trays to bowls to lids.
It’s also looking at using the same technology to create products for other industries, from building construction and electronics to transportation.
“The beachhead landing is the airlines,” Jacobs said. “From there, the technology just really blossoms.”
When they first started this business, the InCycle cups weren’t able to handle hot beverages. They’ve now been able to create one — and that opens up the attractive coffee market.
“The big idea here is to sell coffee cups in the Northwest or up and down the West Coast … recover the coffee cups and use them again so that have this great virtuous cycle where nothing is wasted,” Malone said.
The private company has attracted investors interested in both the concept and the prospects for creating an environmentally sound product.
“What’s cool on a technological level is also cool on a financial level,” Malone said.
Waste Management was an early investor.
The Stillaguamish Tribes put $5 million into the company in December 2012 after tribal members read about the business in The Herald.
“We are pleased that our investment in this young company has resulted in creating more than 100 jobs in our local community,” said Shawn Yanity, chairman of the Stillaguamish Tribe, in a statement.
The Confederated Tribes of Grand Ronde, Ore., put $10 million into the company in two payments, one last year and one this year.
And the tribes loaned the company money to purchase new equipment for the expansion.
“One of the reasons they’re excited about this is the idea that if you can make a big impact both financially, but also environmentally, well you’re doing the right thing,” Malone said.
The company’s goal is to grow as fast as possible. It’s seeking to raise another $12 million for its newest expansion.
What will the business look like in five years? Malone described it in a single word: “Bigger.”
“It’s a $7 billion market,” Malone said. “Even if we grow as fast and as hard as we can, we’ll still be a tiny fraction of the market.”