Kenco Cappuccino 10/19

A New Way to Recycle

Scotland is getting ready to transform the way we recycle. The country will soon be the first part of the UK to introduce a deposit return scheme for drink containers; making it easier for everyone to recycle their used bottles and cans, including all drinks sold in PET plastic, metal and glass.

Take Stock asked David Visick from the FWD to explain the new scheme and how it will affect the industry…

How will it work?
The Scottish Government wants to introduce a Deposit Return Scheme by April 2021 which will put a 20p deposit on drinks containers, including PET, steel, aluminium and glass. Drinks suppliers will be targeted to collect 90% of their containers by year three of the scheme, either collecting their own packaging from retailers and other return points, or via wholesalers.

And the problem is?
Where to start? Introducing a scheme in Scotland only causes huge issues in the UK supply chain. Two selling prices means two sets of SKUs, and in effect we’d have a hard border for drinks between Scotland and England. So wholesalers would have to segregate stock, which might require a significant increase in warehouse space. Our Scottish partner organisation, the Scottish Wholesale Association have surveyed their members and some estimate their additional warehousing requirements could cost between £500k and £3m. So that’s point one – if DRS is introduced,  it should be a single UK-wide scheme. A separate scheme for Scotland will increase operational costs, reduce efficiency and increase the likelihood of fraud by creating a trading border between Scotland and the rest of the UK and the EU.

20p doesn’t sound like a high price to pay to save the planet…
Try scaling it up! A 20p deposit would have a significant impact on wholesalers. It would add £300,000 per week to the cost of buying drinks for the average wholesaler. That’s a major impact on cash flow. We might also find that producers and consumers switch away from single-use containers, which are a staple of the wholesale channel. So we argue that the deposit should not rise above 10p.

Anything else?
Including glass in DRS represents a health and safety challenge for retailers, particularly small convenience stores who have less space, and potentially wholesalers if they are backhauling returned materials. There’s a consumer impact as well: DRS is also particular inconvenient to the elderly, those with mobility issues and those who don’t have access to a car.

So it’s unfair on wholesalers?
The proposals affect our sector disproportionately. And the timing’s not ideal, wholesalers and others in the drinks supply chain are already dealing with the trading and economic uncertainties of Brexit. We explained all this in our submission to the Scottish Government’s call for evidence, and recommended that the commencement date for a single national scheme should be 2023, with a sell through period of two years. The Westminster Government will be consulting on DRS for England next year, so a later launch of a nationwide scheme is far more realistic.

Brexit Update

In its election manifesto the FWD set out a number of clear policy priorities for the next administration. Now that there is a clear majority in Parliament we look forward to working with the government to push for a comprehensive, frictionless trade deal after Brexit which keeps tariffs or trade barriers to a minimum. We encourage the new government to show restraint on National Living Wage increases and to take forward further measures to tackle alcohol duty fraud and sugar tax evasion. We will be working to ensure the government maintains the current exemption for distributors around packaging, without which our members would see cost increases of up to 300%, and we are also campaigning for a mandatory allergens database to guarantee consumers access to full and accurate information on the potentially harmful ingredients in the food they purchase. We look forward to working with the new administration on these priorities and actively championing the wide economic contribution of wholesale in Parliament.

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