First published in NZBusiness
Spout Milk estimates its reusable milk keg service has eliminated the use and disposal of more than 130,000 plastic two-litre milk bottles over the past six years.
Co-founder Nick Jackson says the service has also prevented about 22,000 kilograms of emissions - an amount equivalent to driving a petrol car around the Earth 4.5 times. Those savings come from production and transport efficiencies.
The idea started when Nick teamed up with Jo Mohan and Luka Lucil at a course on how to run a start-up business, hosted by Creative HQ in Wellington in 2019.
“The emphasis was on identifying a problem that needed to be solved,” says Nick.
As visitors to the capital city, the trio had noticed piles of empty plastic bottles waiting to be picked up from outside dozens of cafes. They started thinking of ways to tackle the problem. At first they considered glass bottles.
“We soon realised that the solution was to supply milk in bulk. We looked at a few different things, but kept coming back to the beer model because that's something that clearly works and has been working for a long time. It didn't seem like there were any reasons why it couldn't work for milk as well.
“We wanted a plastic-free solution to deliver premium milk without the waste.”
By beer model Nick means using stainless steel kegs with taps as used in bars around the world.
Following a six-month trial at a Dunedin cafe their idea was developed into a milk on tap service called Farm to Flat White. The business sources milk from two dairy farms, one near Christchurch and one in Southland. The farmers pasteurise the milk using a heating process that kills bacteria. It is then put into 10-litre stainless steel kegs and delivered directly to customers. When empty, the keg is picked up and returned to the farm to be sterilised and refilled.
The milk kegs are smaller than beer kegs to make them easier to handle and use. Customers using big quantities of milk are supplied a standalone refrigeration system that holds up to five kegs and has a bench-mounted tap. Smaller users simply put the keg into their own fridge. The keg comes with an electric pump and tap.
Nick says other milk on tap services use single-use plastic bladders or reusable plastic kegs.
“We’ve gone plastic-free by using stainless steel kegs. We've got hundreds of kegs in our fleet. Some of those are six years old and are still going strong. Potentially, we should get decades of use out of them.
“The reason we started was to get rid of those plastic bottles. Last year we hit an initial target of eliminating 100,000 bottles. That was a big, big milestone because it was tangible. I feel like we’re achieving something here. The more customers we bring on, the more bottles we're saving each week.
“Our approach is not just environmentally impactful but also scalable, offering a practical solution to a widespread waste problem in Aotearoa.”
Spout Milk is now led by Nick and Jo and the growing business supplies milk to venues in Christchurch, Dunedin, central Otago and the lower South Island. Those venues include cafes, hotels and large businesses. They can order full cream or low fat milk. Earlier this year Spout Milk added oat milk which is already proving a popular option. Like its dairy milk, oat milk is produced locally.
Nick says there are two main challenges to get customers to switch from plastic milk bottles to a milk on tap service.
“Price is key. Margins are tight, particularly in the hospitality sector. We are competitively priced. If you’re already buying a premium milk product, we are cheaper.”
Spout Milk customers simply pay for the milk they order. There is no charge for the kegs or refrigeration and tap systems.
Space can be a challenge for small cafes, but many are willing to make room for the Spout system.
“Small cafes have limited space. Where possible they’ll make it work as they love the quality of the milk and the aesthetics of having milk on tap which gives them a novel point of difference.
“A lot of our customers are more sustainability-minded and that's one of the reasons they join us.”
Local production and distribution is a strong selling point. Reducing delivery instances also reduces transport emissions.
“With standard milk deliveries, you don’t know how far it's travelled. It’s gone from a farm to a processing facility, which could be a few hundred kilometres away and then to a distribution centre, and maybe a supermarket, before it gets to the end user.
“Our product goes directly from the farm to you. Plus, we can point to the paddock and the cows that it came from.”
Spout Milk is part of the Sustainable Business Network and is included in our Next 95 list of innovators and visionaries.