Forestry firm Stora Enso to supply Diageo pulp for paper whisky bottles

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Bottles made out of pulp fibre are seen in this undated handout photo. Stora Enso/Handout via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT

Finnish forestry firm Stora Enso (STERV.HE) said on Tuesday it would start supplying pulp for sustainable packaging company Pulpex, a research and development venture of British beverage maker Diageo (DGE.L).

Stora Enso and Pulpex will also work together to build a scalable high speed production line for bottles and other packages out of pulp fibre in a commercial capacity in 2022, the companies said in a joint statement.

"The first high-speed line will be a demonstrator to show whether we can do this on an industrial scale and at the cost level we are expecting," said Sohrab Kazemahvazi, senior vice- president of Stora's formed fiber unit.

In addition to Diageo's brands, Pulpex said it was working with Pepsi (PEP.O), Unilever (ULVR.L), GSK (GSK.L) and Castrol, which are committed to together produce 750 million paper bottles in a year.

The bottles are made by molding the pulp directly into shape, skipping the step of first making it into a flat board, Kazemahvazi told Reuters. The bottle is then lined with food-grade water-based coatings and will still fit into the paper waste stream, he added.

"We use no PET barrier, and if we use plastic, we want to keep the bottles recyclable and in case they end up in Nature, biodegradable," Kazemahvazi said.

The European Union is prioritising recycling of package materials and limiting plastic use in a plan to halve waste by 2030.