Since early May of this year, the Island Leaf Team has pursued an aggressive marketing and networking strategy to find purchasers of biodegradable straws, utensils, and bamboo-compounded resin made by Lastic. As a result, we've garnered considerable interest from potential clients.
Ultimately, we're not surprised that Lastic's products have gained such traction. After all, many companies see the potential value of producing or distributing products made from the game-changing bioplastic called Lastic Bamboo Resin.
We've noticed one notable trend, exhibited by every—and we do indeed mean every—client or potential client with whom we've opened a dialogue. The trend comes in the form of a question eagerly asked by each client, verbatim: Can my company be the exclusive seller for Lastic Bamboo Resin and Lastic products?
Everyone knows plastic straws and utensils worsen plastic pollution. In the United States alone, consumers use about 500 million straws daily. But, many food and beverage distributors, straw and utensil manufacturers, and trading companies yearn to replace these plastic straws. However, most plastic straw replacements, such as PLA, paper, and bagasse straws, have significant pitfalls.
These pitfalls include PLA's inability to biodegrade naturally, bagasse straws' devastating brittleness, and the fact that only masochists can handle drinking from paper straws. So, when we present potential clients with Lastic Bamboo Resin's cornucopia of virtues, they exude giddiness.
This giddiness leads them to pop the exclusivity question. But what is exclusivity? If Lastic and Island Leaf are willing to grant exclusivity, would it be non-conditional? And if it is conditional, what would we require from the procuring party?
What Is an Exclusivity Contract?
Exclusivity, also called an "exclusivity agreement," is a legal term. Thus, a chalk-full-of-legal- jargon contract defines the exclusivity agreement's parameters. Because we're discussing how Island Leaf Commodities and Lastic approach exclusivity for Lastic Bamboo Resin and Lastic products, and because we have little legal experience, we're not going to delve into any dry and awful-to-read legalese. We will, however, give a general overview of an exclusivity agreement, which we can do with ease. This is because we've received several draft exclusivity contracts from eager clients.
An Exclusive Overview of Exclusivity
Most of the time, exclusivity agreements involve at least two parties, a buyer and a seller. Although all exclusivity agreements will differ, they all have the same idea. The seller (or producer) can only sell the contract-stipulated product to the contract-mandated buyer. No other party can purchase the contract-mandated product from the seller (producer).
The contract will mention other essential elements following the buyer, seller, and product details. The contract's most basic stipulations include products purchased, product quality and specification, pricing, monthly quantities, shipping times, and other logistics directives. This basic information is nothing new to both parties as it was discussed before and during the negotiation.
An exclusivity contract's most important details are the areas in which the buyer will have the exclusive rights to buy and then sell the goods, the purchasing volumes, the contract length, and the performance required of the buyer. Like the ones mentioned above, these critical elements will have already been subjected to a thorough discussion and astute negotiation.
Here's a pro tip for all those hoping to sell Lastic products exclusively. The very first element we consider is geographic area. We once had a buyer propose to get Lastic exclusivity for the entire western hemisphere. This was much too big of an ask.
We also place a major emphasis on performance requirements. In fact, we require that the buyer fulfills certain conditions and responsibilities for an award of any exclusivity.
Lastic and Island Leaf's Thoughts on Exclusivity for Biodegradable Lastic Bamboo Resin and Products
Even though we may know that a potential client approaching us has access to abundant capital, we need to clarify two things to illustrate our position. First, we've received neither P.O.s nor payments from this client. So, we don't know how well these clients may perform. Second, granting a client exclusivity, especially for a wide-spanning and populous geographic region, immediately squashes any other outlets for us. When a party immediately asks for unconditional exclusivity rights, we don't merely play the "let us discuss this internally" card. Instead, we resoundingly retort back with a laconic "hard no."
However, if you read the above carefully, you noticed "unconditionally." Indeed, we'll never give any business unconditional exclusivity rights for Lastic Bamboo Resin anywhere—not even in Nome, Alaska. The key here—and curious clients take note—is conditional. Or, better yet, the conditions we require of clients to earn the right to exclusively buy Lastic Bamboo Resin and Lastic products from Island Leaf and then sell them in any region, whether it be the U.S. eastern seaboard or Nome, Alaska.
Conditions for Lastic Exclusivity Rights
Clients aren't immediately granted exclusivity rights. After a few email exchanges and Zooms, we'll send the purchasing company an official quotation. Nothing on the quotation will be new or surprising, as our team will have already informed the customer about pricing, lead times, and transit periods. It's important to note that the first quotation will usually only be for one container's worth of products.
We'll only explore exclusivity rights after the client tests the Lastic product in his or her market. While we're 100% confident that a given market's consumers will fall head-over-heels in love with Lastic products, we need to ensure that the client operates at a certain level of competency. We need assurances that clients will pay on time and are responsive to communication.
After a client proves to be trustworthy, responsive, and able to pay, we'll begin serious discussions about granting him or her exclusivity rights. Let's briefly overview how we approach exclusivity for Lastic Bamboo Resin and Lastic products.
How Exclusivity for Lastic Bamboo Resin, The Best Bioplastic, Works
Currently, Lastic mass-produces four resins that are available to the public. Two are injection-grade, and two are extrusion-grade.
Lastic's injection-grade bamboo resins are primarily used to make utensils. The extrusion-grade resins allow for a wide-application array, including straws and sheet. Producers can manufacture several sheet-made products. These include lids, food boxes of various shapes and sizes, bowls, and more.
Because so many resin application possibilities exist, we won't (at least currently) grant exclusivity to resin purchasers wishing to make anything other than straws.
Part of our hesitancy to grant exclusivity for the resin that makes these products stems from the fact that Lastic is still working to mass-produce these specific biodegradable applications. If you read the first sentence carefully, this part gleamed with opportunity: "…we won't (at least currently) grant exclusivity for resin purchasers wishing to make anything other than straws." Straw makers, read on carefully. The following is for you.
Exclusivity for Biodegradable Straw Makers
Let's take a hypothetical situation involving a party yearning for exclusivity rights to purchase biodegradable Lastic Bamboo Resin for straw making. After meeting the conditions, the party is ready to start making moves to set up its straw-production business. First, however, for the party to earn vaunted exclusivity rights to purchase Lastic's LABMEX008 Extrusion Resin for making straws, they must meet the below requirements.
1. The client must purchase enough straw-making machines to make a minimum 5% of the total straws sold in their country annually. To make operations as ideal as possible, in-house Lastic engineers designed special machines for Lastic Bamboo Resin-specific use. These are the same machines Lastic uses to manufacture straws at their Taiwan facility. We require a 50% up-front deposit (or a payment guaranteed by a letter of credit) on these machines. One machine with optimal settings can produce over 20 million straws monthly.
2. The client must purchase enough resin to produce a minimum 5% of the total straws sold in their country annually. The client must pay a 50% down payment for the resin--but not for the entire annual amount at once. Deposit due dates will be set on a predetermined and monthly basis; using a letter of credit is acceptable here as well. For reference, one metric ton of the biodegradable Lastic LABMEX008 Extrusion Resin makes about 833,000 straws.
The straw-making machines are nearly fully automated. Near-full automation allows biodegradable straw manufacturers to save production space and reduce cost margins, potentially fattening their bottom line.
Notably, the straw-making machines require minimal accessories for operation. One drier is enough to finish the straw-making process for up to four machines. Likewise, a single air compressor serves as a cooling device for four machines. Any dryer and air compressor brand which meets the required specifications will work with these technologically savvy straw-making machines.
Ultimately these Taiwan-made and Lastic Bamboo Resin-accommodating straw machines use minimal energy while maximizing efficiency. One machine itself costs less than $180,000 delivered to ASWP (any safe world port). It will comfortably, snuggly, and safely fit into a 20' high-cube shipping container. Lastic will even send an engineering team to the client's place of business to ensure proper assembly and a smooth operations launch.
How Exclusivity for Purchasing Lastic Products Works
Lastic currently produces straws and utensils (including knives, forks, and spoons) at their factory in Taoyuan, Taiwan. So, since we can only sell these end-products, we can only grant exclusivity on these end-products. However, in the near future, we aim to produce food boxes, lids, and other products.
What's required for Lastic product exclusivity rights? We follow the same logic we use for Lastic Bamboo Resin exclusivity rights. Therefore, after ordering a trial container, a client must purchase a minimum 5% of their country's annual straw or utensil sales from Island Leaf. This follows the two steps outlined above.
Current Exclusivity Rights Applicant Status for Biodegradable Lastic Bamboo Resin and/or Products
Currently, Island Leaf and Lastic are negotiating straw-production exclusivity rights with three parties in Europe. For reference, one party is working on placing an order for about seven trial containers of straws.
This party has a foothold in a densely populated European city and already has access to well-connected distributors. Since we're confident Lastic's straws will enamor this party's customer base, we've set a goal to begin the exclusivity contract no later than early December this year. This company aims to order 12 straw-making machines and purchase 250MT of resin monthly.
For those aiming to purchase Lastic Bamboo Resin and straw machines, we'd like to refer to the case of Eurostraws, a Czech Republic-based biodegradable straw manufacturer. Eurostraws only uses Lastic Bamboo Resin for straw making. Early this year, they purchased and set up two Lastic straw-making machines. While they've operated for just 8 months, they've grown at a lightning pace. On pick-up days, distributors regularly cause traffic jams on the roads leading into Eurostraws' factory.
We hope that we've clearly construed why we have exclusivity standards. Ultimately, we understand that several clients will have questions about exclusivity rights' more nuanced details. Luckily, we enjoy answering what some may consider difficult questions. We believe doing so builds character and camaraderie. Send the Island Leaf team any questions about the quick-to-biodegrade Lastic Bamboo Resin, and we'll enthusiastically answer your questions.
If you want to learn more about Lastic and Lastic products, the Island Leaf team creates Lastic-related content weekly! Just navigate to The Island Leaf Blog page, where digital reams of Lastic-dense information await your consumption.
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