The introduction of the deposit system for cans and some PETs was said to be part of the German effort to meet stringent EU packaging directives. Consumers apparently approve of packaging laws but Aldi shoppers had got used to the cheap own-label canned beer sold to attract consumers into stores. Significant numbers deserted Aldi when the deposit scheme was introduced and bought their beer in returnable bottles by the crate in cash and carries, hypermarkets and drinks warehouses.
There are now some fears the UK may be tempted to introduce a similar deposit scheme to help the country meet tough EU recycling targets set for 2008. UK retailers, as well as brewers and soft drinks producers, would vehemently oppose any such move. As the concept of returnable bottles in the take-home drinks trade died out some 20 or so years ago, then deposit schemes would also affect bottles and PET packaging.
The thought of millions of cans and bottles being returned to stores every day — with consumers claiming the deposits back — would be the stuff of nightmares for retailers, large and small. The switch to just-in-time deliveries means space for spare stock is limited in most stores, let alone space for returned drinks containers to be sorted and stored awaiting collection.
Tony Woods, director at the Metal Packaging Manufacturers Association (MPMA), says: “It certainly is a concern. The political nature of the scene in Germany has complicated the whole piece and the effects as far as we are concerned are disastrous. We know the UK Government is considering it, but if it did happen — and if it was imposed in a discriminatory manner in that it penalised one of the packaging formats — then it would be unwelcome.”
Even if the UK went down the deposit route, provision would have to be made to handle the returned bottles and cans. “The deposits were introduced [in Germany] with no infrastructure for taking back used cans. What happened? The supermarkets stopped selling drinks in cans,” says Woods.
The markets in Germany and UK for drinks cans are similar, with volumes in Germany around 7bn units in 2002, compared to 7.5bn units in the UK. “We forecast this year [2003] sales in Germany will have reduced to about three billion. It is dramatic and the economic effects of that have been felt very widespread,” says Woods.
Historically, the German beer market has been dominated by a proliferation of smaller breweries, which tended to sell their beers in the retail market in returnable bottles. But in recent years, German consumers have turned increasingly to cans, particularly for the cheaper brews, and local brewers have responded in kind.
The drinks can industry in the UK remains steadfastly against mandatory deposit schemes for drinks packaging, particularly if it discriminated against one packaging format. Consumers, says Woods, would also feel the impact by a sudden and dramatic rise in the retail price of canned drinks. A deposit scheme on beer cans could add £4 to the retail price of a case of lager, blowing a large hole in the promotional strategy of most of the major supermarkets. Over Christmas, cases of Stella Artois and Carling were retailing for under £10 in some outlets.
“We are concerned it might happen in the UK but we are thinking positively that good sense will prevail and it will be seen as not the right way forward,” he says. “Retailers are dead against any deposit scheme or any return system.”
The idea of selling returnable drinks containers died out in the UK retail trade many years ago, although pubs still return used bottles to suppliers for re-use. Deposits on drinks cans were introduced in Germany even though the recycling rate is higher than in the UK, where it stands at 44% for steel cans and 26% for aluminium cans, although recently announced new targets should increase those UK rates to 55% for steel and 35% for aluminium by 2008.
The MPMA argues those targets can only be achieved through the collection of household waste and so more local authorities need to introduce kerbside collections. “Consumers are very willing to recycle as long as they are given the tools to do it. In this country, it needs to be kerbside collections. If that is the case consumers are very keen to do it,” says Woods.
EU nations have been set targets by the EC Commission but member states decide how to meet these targets and the timing can be flexible, according to James Ensor, retail analyst at Strategic Vision. “If the targets are missed — and they may be raised — then the countries will be fined,” he says. “The producers will have to be pay. Beer and soft drinks are the first to be hit, but all food packaging is involved. This has enormous and costly implications.”
Deposits, or discriminatory taxes, on one-way packaging are now in force in six European countries (Belgium, Germany, Sweden, Denmark, Finland and Switzerland), with the Netherlands and Austria likely to follow suit. Cans are not the favoured drinks packaging in those countries, with the exception of Germany, as returnable beer bottles are the norm.
Ensor says German retailers in 2003 decided to stock just one kind of drinks packaging. “Discounters opted for PET bottles for both soft drinks and beer, while hypermarkets chose re-usable bottles in crates. Recycling laws have made them take a single material, discarding alternatives,” he says. “Considerable space is needed to take back packaging. Reverse vending machines, conveyors and crushers take up 300sq m and it is too costly to duplicate this for more than one material.”
He says the UK is now a non-returnable bottle market and he believes the “political clout” of the major supermarkets should deflect any deposit scheme. “Recycling is low and the habit of returning bottles to stores has long gone,” he says. “A system of tradable certificates, chargeable to producers of packaging waste, acts as an incentive to recycle. But the price, below £50 a tonne, is not much of an inducement. Once the price inevitably rises, manufacturers will face increased costs.
“As in France, [UK] municipalities are relied upon to collect and sort domestic rubbish. But Britain has no charge for rubbish bags. Councils are left to work out their own schemes and some early efforts failed to understand the populace. Plastic returnable crates issued for rubbish were pilfered off the door-step,” says Ensor.
