Ukrainian firm creates sustainable packaging from hemp and mushrooms

S.Lab is fighting plastic pollution with revolutionary biodegradable packaging made from hemp stalks and mushroom mycelium that decomposes in soil within a month.

S.Lab, a small Ukrainian firm, makes biodegradable packaging from discarded hemp stalks and fungus mycelium. The startup, which positions itself as a plastic-free alternative, is responding to increased environmentally conscious needs from businesses worldwide.

The co-founders of Yuliia Bialetska and Yevhen Tomilin were inspired during a 2017 vacation to Bali, where they observed mountains of plastic garbage destroying beautiful coastlines, the pair told Economic Pravda. As an alternative, they looked into eco-friendly packaging supplies.

“We began by watching videos, reading research, and researching what eco-friendly materials are currently available on the market.” “We wanted to make something that had the same functionality as plastic, foam, or cardboard but was completely safe for the environment,” Bialetska explained.

When the pair returned to Ukraine, they immediately sought alternative options. Both had IT backgrounds, with Byaletska adding biotech knowledge.

“‘Every year, over 2 million tons of Styrofoam packaging are produced worldwide, resulting in 12 million tons of CO2 emissions.” Styrofoam is also non-recyclable and takes 300 years to disintegrate. Styrofoam covers 30% of the world’s landfills! As a result, the switch to eco-friendly packaging positively impacts climate change,’ said S.Lab’s CEO.”

S.Lab ultimately opened in Kyiv after several years of studying options and experimenting with production processes. S.Lab experimented with generating meals, decor, and building materials before settling on packaging materials as a speciality. After being buried, the packaging decomposes in about a month. It is an insulator that may be moulded into boxes, trays, inserts and wraps for various products.

“When we first made the samples, we received 90% positive feedback.” However, there were concerns that the products could have appeared more appealing. “This isn’t the plastic people are accustomed to,” Bialetska explained.

The founding pair invested $40-50,000 funds into developing S.Lab. Early sales revenue was reinvested in the business. Small innovation grants provided additional funding.

Bialetska mentioned that essential resources such as leftover hemp stalks and mycelium are relatively cheap. Scaling up manufacturing capacity from hundreds to thousands of units monthly to meet customer demands and collaborate with large organizations was a major hurdle for S.Lab. However, machinery to automate processes necessitates a significant capital investment. Initially, the startup’s small-scale operation could not meet requests for tens of thousands of packing units.

S.Lab was preparing to enter the larger European market just as the Covid-19 epidemic hit in early 2020. This meant altering plans to concentrate sales efforts in Kyiv.

The startup swiftly recruited local culinary and hospitality clients. Altruist, a Kyiv restaurant and shop, requested ornamental products, gift set packaging and environmentally friendly upgrades. Enterprises in the beauty, fashion, electronics, and décor industries also asked for custom packaging orders. However, Russia’s full-fledged invasion put a halt to many Ukrainian companies.

“Our entire team left Ukraine after the 24th of February.” We were forced to leave the Kyiv laboratory, albeit we could keep part of the equipment. “We moved to Spain because it has one of the largest industrial hemp markets in Europe, and it is easy to find suppliers here,” said S.Lab’s co-founder.

By April 2022, the team had begun looking for potential in Scandinavia, with plans to extend to other EU countries later.

S.Lab operates in a variety of market segments. Cosmetics and personal care firms appreciate the packaging’s insulating capabilities during shipping. Luxury fashion designers and jewellers are using S.Lab’s sleek mushroom packaging to replace plastics. In addition, the company is courting food and pharmaceutical companies, albeit delicacies still require certification.

“We anticipate that natural materials will soon completely replace plastics.” “The eco-packaging segment is already growing at a rate of 15-20% per year, even though market demand is much higher,” Bialetska explained.

Although the EU accounts for 70-80% of sales, Ukrainian enterprises increasingly return as clients. Positive feedback is also generating new local interest.

“‘Whereas previously 80% of our clients were from Ukraine, we now anticipate that 80% of our sales will soon be in the EU.” Before the conflict began, all experts recommended diversifying into other markets rather than depending entirely on one. As a result, we are boosting manufacturing quantities and geographically expanding. Simultaneously, we are developing revolutionary technology for further expansion in Ukraine,” Bialetska explained.

The company is currently focusing its capital on developing a production line, a strategic priority given the rush of pre-orders. The creators want to have the production line up and running by the end of the year.

“From May to June, clients began to return to us. However, we are consciously deciding not to deviate from our principal purpose. A fully running production line is a more strategic and substantial goal than little, short-term deals. ‘We intend to have it operating by the end of the year,’ Yuliia said.

According to Byaletska, large firms want to replace millions of plastic packaging inserts with S.Lab’s eco-alternative. However, the setup currently needs help to handle such quantities.

S.Lab was chosen for the Startup Wise Guys accelerator in 2022, receiving €80,000 in investment. The competitive three-month program allowed for study into Scandinavian markets.

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